Gold’s Role in a Cashless Economy

by Rebecca in Gold with Comments Off on Gold’s Role in a Cashless Economy

Most of us interested in gold coins, gold bullion, and gold rollovers have read some articles and heard rumors about a cashless society.  Any major change can be upsetting both personally and financially but there are other things to consider, too.  What about personal safety and liberties?  How does a person protect themselves from the consequences of going cashless?  Can gold and other precious metals protect you when currency has been made obsolete?

People who educate themselves are able to minimize the impact of important changes in their lives, whether those changes are personal or financial.  By finding all the available facts about the impending cashless society and dispelling baseless, sensationalist rumors you can protect yourself and your loved ones and even thrive in the economy of the future.

What is a Cashless Society?

It’s hard to imagine doing business or everyday errands without currency or coin but in the 21st century that’s what many of us do, for the most part.  It began with the checking account; people could write checks that represented money in order to pay bills or buy goods and services.  Banks encouraged check writing because it left a lot of room for error—those who did not keep track of their account balance often “bounced” checks and the banks could charge them a penalty for doing to.  Checking accounts are quickly falling out of favor now that banks issue debit cards, and electronic way to immediately access cash from a bank account.  Plus, if someone doesn’t have enough money in their account they can use a credit card.

A cashless society would depend on credit and debit cards for purchases.  No one would have coins or currency, only cards or access numbers.  There are already hand held key fobs that one can swipe rather than a card and some think that a human UPC code is not far behind.  These methods made purchases and payments very easy but they also have many disadvantages.

You may not think that a cashless society would be so bad.  Crime would presumably go down since people would no longer carry cash.  You would no longer be shortchanged as computers and not cashiers would be making the final transactions.  There would be no more fumbling for the proper change or quarters for toll booths.  Children would no longer lose lunch money.

So much inconvenience could be done away with!  However, any conveniences from a cashless society would be outweighed by its impact on personal freedom.  As with many conveniences, a cashless society could come with a heavy price.

Why do Banks and Governments Want to Ban Currency? 

Currency can be hidden away, nearly impossible to find by anyone but the person that stashed it.  It can also be collected from sales of illegal goods or services than “laundered” through legitimate businesses, thus protecting criminals and allowing their businesses to thrive.  If we had only digital currency it would be nearly impossible for criminals to disguise the trails of revenue.

Without currency there also won’t be “runs” on banks.  In 2015 the Greek economic crises sent the populace into a panic; $894 million was withdrawn in just one day.  That kind of activity could collapse the U.S. economy as well as many others.  The banks can’t control your cash very efficiently but they can control digital currency—and they do!  Have you ever deposited a check only to be told that the bank will hold it for days until it is deemed to be good?  They can do that even with a cashier’s check.  Many banks even make you present identification if you dare to deposit cash!

Paper money keeps controls things like negative interest, which benefits banks.  Basically, negative interest means that you are paying the bank to handle your money.  For instance, most banks charge a monthly fee for checking accounts and even for savings accounts.  If these rates become too great, consumers can just withdraw their money and hoard it at home.  This leaves the banks with a big chunk of their assets gone.  Getting rid of currency gives the banks control of your wealth because it will all be digital and you can be locked out at any time with a few keystrokes.

A cashless society would also allow government agencies to manipulate accounts, impose and collect taxes, and punish dissenters by freezing or confiscating their money.  You could not even get medical help unless the government decided to permit you to by leaving your finances alone.  Now, these are admittedly over the top theories and projections but you need to prepare for the worst and hope for the best when it comes to the future, both personally and financially.

There is every reason for the banking industry and the government to encourage a cashless society.

When Can We Expect Cash to be Eliminated?

There have been proponents for a cashless society ever since the dawn of the digital age.  In recent years many people have encouraged the government to start eliminating currency including Willem Buiter, chief economist at Citigroup, and Kenneth Rogoff with Harvard University.  In the last couple of years they have proposed what’s come to be called Economic Totalitarianism, the elimination of cash from all rungs of society.

Believe it or not, there have been some actual test runs of a cashless society to find out how consumers would react.  In 2014 a group of Manchester, England shops banned the use of cash and accepted credit or debit only to see if British citizens would welcome a cashless economy.  The buses in London stopped accepting cash payments that same year and the dealers on the Currency Exchange started a campaign to offer debit cards rather than cash, citing the greater safety of the cards.

You may think a cashless society is in the distant future given the number of countries in the world and the inability of governments to work together.  However, the world’s finances are controlled not so much by governments as by wealthy individuals with a great deal of influence over their governments.  A cashless society could come at any time, especially since consumers prefer ease over liberty.

How Does Gold and Other Precious Metals Protect Me?

Gold and other precious metals will always be valuable even when alternate forms of trade are worthless.  In a society whose wealth structure lies in the digital universe, where is the underlying value?  A cashless society requires trades on assumptions of wealth; your bank says you have five hundred dollars to spend but there is nothing to back it up.  There is no paper currency, no metal coinage, and no guarantees whatsoever.  All you have is numbers in cyberspace representing wealth with no physical goods to back them up.

A cashless society is prone to inflation, deflation, and stagflation (persistent deflation with accompanying low employment and low demand for goods).  Since there is nothing backing the method used for purchase, there is no value in the goods and services themselves.  If I trade you digital numbers for a window that you bought with digital numbers that is not true commerce.  That type of transaction is like passing clouds back and forth—worse, because at least clouds have water, which has real value.

Eventually a cashless society will either collapse or achieve total governmental control of all physical, mental, economic, and health aspects of its population.  Given the love of liberty in human nature, a collapse is more likely.  Whoever has something valuable to trade when the collapse approaches will come out in better shape than those who have none.

Gold and other precious metals have many advantages over jewels, art, and other physical investments.  It can actually be used industrially, as can silver.  It comes in a variety of shapes and sizes, thus it can be traded for a variety of good or services.

Practically anyone can own gold no matter how much money they have.  You don’t have to buy a whole ounce of gold in bullion or coin, although that’s the method many people prefer.  You can buy small increments of gold and other precious metals in a variety of forms.  You don’t have to be the victim of a cashless economy and a society in chaos unless you choose to be.  You can protect yourself and your family with the enduring value and security of gold.



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