A proposed federal law in Australia that is due to kick in January 1st, 2020, will make
it illegal to use more than $10,000 cash in one transaction with penalties of up two years
in jail and fines of $25,200.
The Federal Government claims that this will help fight the so-called black economy, but
I have one word for that — bullshit.
Think about it.
If there’s a criminal who is selling something illegal (just say, a briefcase full of illegal
stuff worth $50,000), is that criminal now going to stop letting his customers use cash
just because there’s a new law that could send him to jail for two years?
Of course not!
He’s a criminal.
He’s already selling something illegal.
As if the extra two-year jail term is going to make him reconsider things.
“Sorry, we only accept PayPal, Visa, or Mastercard.”
This law will have no effect on the actual black economy.
So if that’s true, why are the Government bothering?
What’s the real motive behind introducing this law?
I’ll tell you why.
It’s to give the Government greater control over your behaviour during economic recession.
This is not a new idea that’s just been plucked out of thin air.
The international body responsible for global economic stability, the Washington-based International
Monetary Fund (IMF), made a blog-post earlier this year titled “Cashing In: How to Make
Negative Interest Rates Work”.
In it, they talk about how many countries have very little room to manoeuvre when it
comes to interest rates.
Their solution?
To phase out cash.
They propose to “make cash as costly as bank deposits with negative interest rates,
thereby making deeply negative interest rates feasible”.
How low can you go?
According to the blog post,
“In a cashless world, there would be no lower bound on interest rates.
A central bank could reduce the policy rate from, say, 2 percent to minus 4 percent to
counter a severe recession.
The interest rate cut would transmit to bank deposits, loans, and bonds.
Without cash, depositors would have to pay the negative interest rate to keep their money
with the bank, making consumption and investment more attractive.
This would jolt lending, boost demand, and stimulate the economy.”
They went on and spoke about the problem with cash.
And I quote,
“When cash is available, however, cutting rates significantly into negative territory
becomes impossible.
Cash has the same purchasing power as bank deposits, but at zero nominal interest.
Moreover, it can be obtained in unlimited quantities in exchange for bank money.
Therefore, instead of paying negative interest, one can simply hold cash at zero interest.
Cash is a free option on zero interest, and acts as an interest rate floor.”
Yes, the IMF don’t like cash.
Cash is stopping central banks from around the world from implementing negative interest
rates.
Earlier this month, the Reserve Bank of Australia’s Governor Philip Lowe was asked about unconventional
monetary policy.
He responded,
“Monetary policy is less effective than it used to be.
Once upon a time, when we lowered interest rates, people were very quick to run off to
the bank to borrow more to spend.
In today's environment, people don't run off to the bank to borrow more when interest rates
fall; they are more likely to pay back their mortgage more quickly.”
Yeah, stupid people! Paying off their mortgage early instead of getting into more debt!
To be fair, Australia’s not the only country trying to phase out cash.
France has already banned cash transactions above 1,000 euros; Spain above 2,500 euros;
and Italy above 3,000 euros.
I wonder if the Sicilian Mafia are now accepting EFTPOS?
Hmm…
Pauline Hanson’s One Nation have already said they will not support the proposed law
in Australia with Senator Hanson saying,
“The Government claims the legislation is to combat the ‘Black Economy’, but the
truth is, it’s legislation the Government hopes will stimulate the Australian economy.
The bill is a social experiment.
Flushing ‘Mattress Money’ out of the shadows and back into bank accounts will leave deposits
vulnerable to negative interest rates, prompting those with savings to spend the cash on investments
or consumption items.”
The Australian Labor Party said the will probably support the new law with the Opposition Assistant
Treasurer Stephen Jones saying that the ban should also apply to Bitcoin.
What are your thoughts?
Should Australia embrace a cashless society knowing that negative interest rates are to
come?
Or should we fight back against these proposed Orwellian laws?
Leave your comments below.