It came from a voice that has, by law, the ear of the German government. Peter Bofinger is a member of the German Council of Economic Experts – the “Five Sages on the Economy” – which in its official function advises the government and parliament on economic policy issues. These folks are taken seriously.
So Bofinger told the German magazine Der Spiegel in an interview (full interview behind paywall) that cash should be done away with.
“But the additional time is not the largest benefit of the elimination of cash,” he said. “It dries out the markets for moonlighting and drug trafficking. Almost a third of the euro cash in circulation consists of 500-euro notes. No one needs those for shopping; light-shy figures use them for their activities.”
To forestall that these criminal elements switch to other currencies, he said that “it would be better if the Eurozone, the US, Great Britain, and Switzerland give up cash at the same time.”
And then he added the real reason for abolishing cash in such a coordinated, wide-ranging manner:
“It would be easier for central banks to impose their monetary policies. At this time, they cannot push interest rates appreciably below zero because the savers would hoard cash. If there is no cash, the zero bound is eliminated.”
So, given that this needs to be a multinational effort, should the German government throw its weight behind the elimination of cash on the international scene?
“That would be at any rate a good topic at the G-7 summit,” he said, which is coming up on June 7–8 in Bavaria.
And there was another problem: Cash enables individual citizens to “escape the reach of the state” when their intentions are not legitimate, including moonlighting, which has the illegal dimension of tax evasion, he said. “But moonlighting is often for those affected the only chance to earn a livelihood at all.”
So deprive them even of that?
Cash is one of the few ways to escape for a tiny moment the powerful octopus arms of our seamless, borderless surveillance society. And it is one of the last, if feeble, checks on the absolute power of central banks. And it represents an aspect of “freedom,” as Feld put it. Hence the by now overt war on cash. Cash simply must cease to exist.
Full article: “Cash Is Coined Freedom”: War on Cash Becomes Official in Germany, Reaches G-7, Draws Withering Fire (Wolf Street)