Thursday, March 8, 2012

Doug Casey on Cashless Societies

Interviewed by Louis James, Editor
International Speculator
Wednesday, March 7, 2012

http://www.proactiveinvestors.com/columns/casey-research/928/doug-casey-on-cashless-societies-0928.html

L: Doug, we've had a lot of questions from readers about the apparent push governments are making to go to paperless currency – all electronic, no cash. Do you think that's likely, and what would be the implications?

Doug: I think it's probably inevitable. It's not just cash, but the whole world is becoming increasingly digital. Credit cards already work very well all around the world, and everyone in the world, it seems, will soon have a smartphone – or at least everyone who might have any cash.

But it's not just a question of evolving technology. Governments hate cash for lots of reasons, starting with the fact it costs a couple of cents to print a piece of paper currency, and they have to be replaced quite often. As the US has destroyed the value of the dollar, they've had to take the copper out of pennies, and soon they'll take the nickel out of nickels. Furthermore, with modern technology, counterfeiters – including unfriendly foreign governments – can turn out US currency that's almost indistinguishable from the real thing. And the stuff takes up a lot of space if it's enough to be of value. So sure, governments would like to get rid of tangible currency. They'd like to see all money kept in banks, which are today no more than arms of the state. But it's not so simple: increasing numbers of people trust neither banks – most of which are insolvent – or currencies – most of which are on their way to their intrinsic values.

L: Hm. On the technology front, when I was in central Africa a few weeks ago, plastic money was accepted happily everywhere I went – Rwanda, Burundi, the DRC, and Kenya – though not by street vendors yet. And I had access to the Internet everywhere I went, even in the middle of the jungle…

Doug: Yes, the move towards digital currencies is already happening, and not just as a result of government efforts. Remember Bitcoin. And, as you know, I'm a big fan of Goldmoney.com, which is leading the way to a sound digital currency. Although Goldmoney.com has bowed to government pressure and has suspended its service allowing customers to transfer funds among one another, it's another sign of the times…

L: Yes, and Goldmoney.com is not the first attempt, nor will it be the last. We should mention to new readers that you are an investor in Goldmoney.com.

Doug: The world's going to digital currencies is in part a good thing, because it's convenient. But it's definitely a double-edged sword, because of government involvement in the field. If it were a strictly market phenomenon, I'd have no problem with it. It'd be just another choice. But if the state runs it, it would reduce people's choices – and privacy. But that's entirely apart from the fact that government – and I know this assertion will be shocking to most readers – has no business creating currency or minting money. Money, of all things, should be a purely market phenomenon. Government, as an institution, inevitably and necessarily corrupts everything it touches. Money is far too important to be left to the tender mercies of the state.

L: Sure. A completely digital currency would be an unlimited license to print and spend. Need to give people more welfare? Just tap a few keys, and it appears in their bank accounts. Need to buy more missiles? Just a few more taps on the keyboard… But the privacy issue is even scarier: digital money would seem like Big Brother's dream come true. They wouldn't even have to send their minions out to go through people's trash. They could see everything anyone ever spent money on and where they were physically when they did it, search for activity nearby, and much more, just by having computers report the details of people's accounts.

Doug: Exactly. They would justify it with a host of phony excuses ranging from the so-called War on Terrorism to the so-called War on Drugs. Maybe they'll tie it in to their disastrously failed War on Poverty. As the War on Islam heats up, one front will be an attack on the excellent Muslim hawala system, which allows cheap and reliable transfer of money between countries; that system, which is kind of a private SWIFT network, is excellent for evading FX controls. Ironically, Islamic countries are some of the very worst perpetrators of currency controls.

L: Maybe that's why the informal network exists in the first place? But yes, they gotta stop those evil money launderers from washing their money and hanging it out to dry…

Doug: Don't get me started on "money laundering." It's a completely artificial crime. It wasn't even heard of 20 years ago, because the "crime" didn't exist. Now, everyone speaks of it as though it were a real crime, like murder. It's ridiculous, and further proof of the totally degraded state of the average person worldwide, absolutely including US citizens – what we used to call Americans. The government proclaims something as a law, and "sheeple" robotically assume it's part of the cosmic firmament. If an official tells them to do or not to do something, they roll over on their backs like whipped dogs and wet themselves out of fear. The War on Drugs may be where "money laundering" originated as a crime, but today it has a lot more to do with something infinitely more important to the state: the War on Tax Evasion.

Incidentally, not that a US citizen can open an account with a Swiss bank anyway any longer – except with at least seven figures and loads of paperwork – but now the policy in Switzerland is to insist that clients prove that their funds are all tax paid. The situation is out of control. And the world's governments are increasingly working together to make sure no one slips through the net.

Read the rest of the article.

For further reading:
"The Assault on Financial Privacy Goes On", Kevin Brekke, December 22, 2011

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