The War on Your Wallet Wears a Mask of “Convenience”

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Posted by The Savvy Retiree on March 23, 2016 in Money Saving Strategies, Personal Finances

Today, as promised, we deliver a few words about the “War on Cash.”

But first, imagine the following scene…

Houston, Texas. Late 2012-early 2013.

Your editor is standing in line at Best Buy with his wife and his father-in-law. We are here to do some shopping. Or rather, your editor’s wife is here to do some shopping…on behalf of our friends back in Buenos Aires.

Draconian import restrictions there have made it extremely difficult for Argentines to purchase certain foreign-made goods. Technology products are notoriously difficult to get one’s hands on.

But, since no government can outlaw demand, Argentines continue to desire shiny new iPhones, SLR cameras and e-readers…even though their elected politicians say they can’t have them. Go figure.

To lend a hand, friends sometimes offer to “mule” items back into the country when they travel abroad.

Today, our shopping list is not short.

After a relatively brief wait, a cheery, chubby young man in his early twenties asks how he can be of assistance.

“Something special we’re looking for today?”

Dear wife, Anya, unravels the scroll as a town crier might unfurl an important announcement in a public square. And though somewhat slight of frame, she nevertheless reels off the items in a quietly confident manner…

“Yes, thank you very much. OK. Let’s see… We’d like one Nikon D500 Digital SLR camera…

“One Nikon 70-300mm f/4-5.6G AF Lens…the one with the UV and cleaning kit…

“Two of the new Apple iPhone 5’s…both in black…

“One pair of Bose noise-canceling, on-ear headphones…

“Two iPad 3s…

“Two of the Kindle Paperwhites with the 3G, ‘no ad’ option…

“One Macbook Pro with the 13-inch screen and…

The young salesman looks at your editor with some measure of confusion. Like us, he’s probably wondering if there will be anything left on the shelves before this role call is over.

Finally, and we do mean finally, Anya wraps the catalog up with, “and something called an ‘Xbox One Kinect Bundle’…whatever that is.”

The fellow is clearly puzzled. “Um…let me just ask my manager something real quick.”

He darts off and, after a few moments, returns at the side of a middle-aged man with a clipboard under one arm and what we can only imagine to be more than enough pens in his top pocket. He wears a vaguely quizzical expression.

“Ah, howdy there, folks,” he begins. “Brian here tells me you’ve got a few items on your shopping list today?”

“Yes,” replies Anya. “Thank you. We’ll need one Nikon D500 Digital SLR camera…”

The man nods to Brian who runs off, presumably to round up the merchandise.

Mr. Supervisor looks at Anya. Then at her husband. Then her father. Then back at Anya.

“And how would you like to pay for all these items, ma’am?”

Anya, looks down into her handbag and thumbs through a stack of white envelopes.

“Cash,” she replies.

We’ll return to our little story below. But first…

***

It’s a rare sight, these days, to see wads of cash changing hands in commercial transactions. Instead, we use credit and debit cards, plastic “keys” that are supposed to correspond with our financial standing vis-à-vis our respective banks.

If we have money in our accounts and/or good credit, the transaction is supposed to be approved. If our accounts are empty and our credit lines exceeded, it is denied.

We are told this is all for our convenience. “We the Customers” and so forth…

And in some instances, this may be true. Nobody wants to schlep around wheelbarrows full of bills to pay for loaves of bread, a la the hyperinflationary days of the Weimar Republic. (Of course, if governments didn’t persistently destroy the value of their scrip, we wouldn’t have to resort to such measures…)

Except, what happens when you have good credit and plenty of savings in the bank…but the transaction is denied anyway?

Say you’re at the front of a grocery line. Your items are bagged. The total is already rung up on the register. A dozen folks stand behind you, waiting their turn. They’re patient, for now…

Your first card didn’t work. “Hmm…must be some kind of mistake,” you think.

You try another. Same thing. And another. Still no luck.

You leave the store, confused. Then, on the drive home, you notice you’re low on gas…

All of a sudden, not having any cash on hand is mighty inconvenient.

Nevertheless, the march toward a “cashless society” is politely applauded by the otherwise incurious. It’s noticed—if at all—as some vague marker of progress. One article we read recently described ol’-fashioned notes and coins as “dirty and dangerous, unwieldy and expensive, antiquated and so very analog.”

As mentioned in these pages before, this is all part of the “War on Cash,” currently being waged by various governments around the world.

The battle lines are most plainly visible over on the Continent.

  • Spain, the fifth largest economy in the EU, recently outlawed cash transactions over €2,500 ($2,775).
  • Italy, the EUs fourth largest market, banned cash transactions over €1,000 ($1,110).
  • France, too, the third largest economy, lowered its limit for cash transactions from €3,000 to €1,000.
  • And in Germany, the Social Democrats (the junior coalition arm of Angela Merkels’ ruling party) have proposed to limit cash transactions to €5,000…and to eliminate the €500 note altogether.

This latest move, in Europe’s largest economy, is particularly interesting given that less than one fifth (18.7%) of transactions in the country involve plastic cards.

It seems Germans have a lingering cultural reluctance to relinquish control of their hard-earned money to g-man bureaucrats and their bankster cronies. The days of Weimar Republic were not so long ago, after all…

Back on this side of the Atlantic, establishment-mouthpiece Larry Summers is calling for a “ban on the $100 bill.”

A perennial stranger to modesty, Summers grandly suggests that “a moratorium on printing new high denomination notes would make the world a better place.”

Why? You can already guess the “reasons.”

Terrorism…money laundering…tax evasion. The usual non sequiturs.

The real reasons, of course, are far more sinister. For one thing, governments don’t like secrets…unless they’re the ones they keep from us.

Cash tells no tales. Cash leaves no trace. To that extent, cash represents a certain degree of “economic autonomy” for those individuals saving, exchanging, and transacting in it.

Summers and his ilk don’t like cash because it is difficult for the feds to control. Much easier (for them) to have your money represented by digital entries on a computer system…a system they alone control.

Moreover, banning cash is a way to ensure their main weapon of Negative Interest Rate Policy (N.I.R.P) is used to maximum effect.

Faced with negative interest rates, the natural response for individual depositors will be to withdraw cash. But in the utopian world of a cashless society, to which so many seem eager to race, that might not be possible.

Instead, your money—those 1s and 0s sitting on the government’s system—will be at the mercy of those who, with historical reliability, are wont to debase and destroy it.

In the end, both the “War on Cash” and the “War on Savers” are really just two fronts in the one and the same “War on You.”

***

Meanwhile, back in Best Buy…

The supervisor ushers us nervously to the checkout where Brian, the young salesman, is waiting behind our wall of merchandise.

“You say you want to pay cash for all this stuff?”

“Yes sir,” replies Anya. “That’s correct.”

The supervisor looks at your editor.

“The total will be…well…I’m guessing well over $5,000.”

“Oh, it’s not for me,” we reply, nodding toward our father-in-law. “He and I, we’re just here to help carry it all.”

Brian and his supervisor ring up the sale, casting a curious, dare we even say skeptical eye in our direction as the total mounts.

The final amount is read aloud in an almost defiant tone.

Patiently, one by one, Anya counts the $100 bills out onto the counter.

The two men behind it look at each other as if they’ve just been asked to hand over their money.

“Don’t worry,” Anya’s father finally weighs in, apparently ready to put the men’s minds at ease.

“My daughter lives in South America. This is how they do business there.”

Until next time…

Image ©iStock/Rostislav_Sedlacek

T&P Tool Shed

No Shirt, No Shoes, No Smartphone – No Service

By the staff of Truth & Plenty

By now, you’ve undoubtedly seen the countless number of banking apps being pushed by both banks and third-party companies. The convenience of a cashless society is tempting to buy into, but the risks far outweigh the one main benefit (not having to go to the bank every now and again).

These are some factors you should consider before going digital:

  • A digital wallet can be shutdown remotely, exposing you to financial exploitation by hackers and government alike.
  • Hacker’s will always find a way. No matter how secure a company claims to be, the very nature of modern technology makes it vulnerable to attack.
  • Even tech-giant Google was forced to temporarily shut down Google Wallet when a Zvelo Labs researcher casually exposed a major flaw in their security at a tech convention.
  • If you bank solely with a smartphone, you’ll be left high and dry if it dies…or if the app goes down for maintenance…or it’s just one of those times you can’t get a signal.
  • Online companies are notorious for selling your personal info to other firms and passing it on to the government.