by Peter Schiff, Schiff Gold:
Yesterday, an Israeli law went into effect banning the use of cash in business transactions over 6,000 NIS ($1,700). Private cash transactions can’t exceed 15,000 NIS ($4,360). This is yet another escalation in the “war on cash.”
Any transaction above those thresholds must be made via digital transfer or a debit card.
Israel placed limits on cash transactions in 2018. Under the original law, business transactions in cash had to be below 11,000 NIS ($3,200).
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“We want the public to reduce the use of cash money,” an Israel Tax Authority official said. “The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash. By limiting the use of it, criminal activity is much harder to carry out.”
Government officials advocating cash limits always tout them as a crime-fighting tool. They also laud the convenience of digital transactions. But it won’t be terribly convenient for the 1 million Israeli citizens without bank accounts. But these are not the real reason for the war on cash.
It’s really about government control.
The elimination of cash creates the potential for the government to track, tax, and even control every monetary transaction, and it would make it even easier for central banks to engage in manipulative monetary policies such as negative interest rates.
In addition to limiting cash transactions, many governments are toying with the idea of digital currency. Last year, the Chinese launched a digital yuan, and earlier this year, the Federal Reserve released a “discussion paper” examining the pros and cons of a potential US central bank digital dollar.
Imagine if there was no cash. It would be impossible to hide even the smallest transaction from the government’s eyes. Something as simple as your morning trip to Starbucks wouldn’t be a secret from government officials. Government officials could even have the power to “turn off” your ability to buy or sell.
As Bloomberg put it in an article published when China launched its digital yuan pilot program, digital currency “offers China’s authorities a degree of control never possible with physical money.”
Economist Thorsten Polleit outlined the potential for Big Brother-like government control with the advent of a digital euro in an article published by the Mises Wire. As he put it, “the path to becoming a surveillance state regime will accelerate considerably” if and when a digital currency is issued.
Governments around the world have quietly waged a war on cash for years. Back in 2017, the IMF published a creepy paper offering governments suggestions on how to move toward a cashless society even in the face of strong public opposition.
Israel isn’t the first country to try to limit the use of cash. In May of 2016, the European Central bank announced it would stop producing and issuing 500-euro notes by the end of 2018. Not long before the EU announcement, a former Obama economic adviser/ex-Treasury secretary floated the idea of eliminating the $100 bill in the US.
The good news is you don’t have to play the game their way. You don’t have to become a casualty in the war on cash. You can take back some of that power. As SchiffGold precious metal specialist Joel Bauman said in an article, buy gold and silver.