Will Cash Soon Be Regarded As A Barbarous Relic?
Edmund Conway argues for the abolition of physical cash-notes and coins.
Doing so would indeed have its advantages-including making traditional robberies for money impossible, and it would save us the cost of making physical cash.
Yet for those of us skeptical of unlimited government power there are reasons to oppose the abolition of cash.
First of all, it would further increase the ability of the central bank to manipulate the economy as the zero bound barrier would disappear and central banks could impose negative real interest rates. Conway the Keynesian of course thinks this is an advantage and the use of quantitative easing is reducing the advantage or disadvantage associated with it, but it remains a factor and if you realize the role of central banks in creating the problems they claim to fight, this is a reason to oppose it.
Secondly, it would further increase the dependence on banks, which in turn will increase the demand for government support and regulation of. Conway argues that we are already well advanced on that path, which is true but from that it doesn't follow that we should go furter.
Thirdly, it would remove the possibility of protecting the privacy of your transactions, and move us further towards an "1984"-style control society. Conway mentions this objection, but claims that cryptographic techniques can be invented to make protect people's privacy. I'm not an expert on this field and so it may be possible, but I doubt it.
Conway contradicts himself by saying that this would stop "black market" activities and so prevent people from evading taxes. But if these great cryptographic techniques exists how can "black market" activities be prevented?
And the elimination of "black market" activities might not be a good thing even for tax payers, as the elimination of the treat that tax increases could increase "black market" activities could encourage politicians to raise taxes even more. At the same time, many useful activities which can't be performed in the official economy because of high tax rates won't be done at all if they can't be performed in the "black market".
Cash, in short, fills the same function as gold once did in limiting government power (though not nowhere near as well as gold did). But for government officials and supporters of more government power, that is likely just another reason to abolish cash, which is why more and more of them are likely to argue for it in the future. Just like gold is will therefore soon be dismissed as a "barbarous relic" by statists.
Doing so would indeed have its advantages-including making traditional robberies for money impossible, and it would save us the cost of making physical cash.
Yet for those of us skeptical of unlimited government power there are reasons to oppose the abolition of cash.
First of all, it would further increase the ability of the central bank to manipulate the economy as the zero bound barrier would disappear and central banks could impose negative real interest rates. Conway the Keynesian of course thinks this is an advantage and the use of quantitative easing is reducing the advantage or disadvantage associated with it, but it remains a factor and if you realize the role of central banks in creating the problems they claim to fight, this is a reason to oppose it.
Secondly, it would further increase the dependence on banks, which in turn will increase the demand for government support and regulation of. Conway argues that we are already well advanced on that path, which is true but from that it doesn't follow that we should go furter.
Thirdly, it would remove the possibility of protecting the privacy of your transactions, and move us further towards an "1984"-style control society. Conway mentions this objection, but claims that cryptographic techniques can be invented to make protect people's privacy. I'm not an expert on this field and so it may be possible, but I doubt it.
Conway contradicts himself by saying that this would stop "black market" activities and so prevent people from evading taxes. But if these great cryptographic techniques exists how can "black market" activities be prevented?
And the elimination of "black market" activities might not be a good thing even for tax payers, as the elimination of the treat that tax increases could increase "black market" activities could encourage politicians to raise taxes even more. At the same time, many useful activities which can't be performed in the official economy because of high tax rates won't be done at all if they can't be performed in the "black market".
Cash, in short, fills the same function as gold once did in limiting government power (though not nowhere near as well as gold did). But for government officials and supporters of more government power, that is likely just another reason to abolish cash, which is why more and more of them are likely to argue for it in the future. Just like gold is will therefore soon be dismissed as a "barbarous relic" by statists.
posted by stefankarlsson at 7:10 PM
<< Home