Cash (And Our Privacy) Is Under Siege
On Tuesday evening November 8th, India’s Prime Minister, Narendra Modi, made a most unusual announcement on TV to a stunned nation. He explained that the 500 and 1000 rupee notes would no longer be legal tender as of 12:01am Wednesday morning. 80% of India’s currency was suddenly deemed void and citizens had until December 30 to deposit those notes or forever lose them.
Mr. Modi claimed that this move was a “fight against corruption, black money, fake notes and terrorism.” The truth is that the drastic action was really about tax revenue. You see, in India, only about 1% of citizens pay taxes.
What many of you may not realize is that the movement to reduce or eliminate cash is a worldwide phenomenon:
- In Venezuela, the government is voiding the 100 Bolivar note—taking half of the country’s cash out of circulation
- In Sweden, over half of its 1600 banks no longer keep any cash on hand. The country (like the rest of Scandinavia) is targeting a 100% cashless economy within 5 years.
- In Australia, Citibank no longer accepts notes or coins
- In Uruguay, it is now illegal to pay workers in cash
- In Thailand and South Korea, all coins will be eliminated by 2017
On top of this, we are hearing that both the U.S. and EU are currently contemplating the elimination of large denomination notes. Rest in peace Ben Franklin.
So, what’s behind this trend?
One of the biggest motivations to eliminate cash is that governments around the world are deeply in debt and are trying to raise tax revenue by uprooting underground economies and exposing tax cheaters. Another argument many governments make is that cash is the life blood for black markets and terrorists, and by eliminating cash, it makes it much harder for bad guys to stay in business. Finally, there’s the consumer-focused argument that cash is less convenient than digital currency, so it is in all of our benefits to switch over.
While it is true that all of these points do have merit, there’s also a critical consequence that government’s don’t like to talk about- our privacy will be further invaded.
In the U.S., the NSA can and already does archive the details of our online lives: our postings on Facebook, our Google searches, our purchases on Amazon, etc. It can even listen in to our private conversations that are in earshot of a hacked mobile phone.
If cash is eliminated completely, then governments will be able to track every cent we earn or spend. This information will then be used to deduce the smallest details of our daily lives.
I know some of you are thinking “If you got nothing to hide, then you have nothing to worry about”. In the medium-term, I agree with you. The problem is the longer-term.
Once a government has complete access to all of its citizen’s transactions, store of wealth, conversations, whereabouts, and web searches, it has total power.
Now, I’m not suggesting that President Trump would act in a malevolent fashion towards Americans. I honestly don’t think he will. But what happens if a more extreme leader with totalitarian tendencies gets elected in the future? We are already seeing the rise of alt-right nationalistic leaders across Europe (graph from New York Times).
Can a citizenry mount a successful movement to retake its country if the existing government can track all of our communications AND our money?
The Bill of Rights includes the 2nd Amendment which stipulates “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”
Perhaps it is time that we add a new amendment for the right to keep and bear cash?