Why the War on Cash Must be Won, Firs

Many years ago, my wife and I found ourselves stuck at a petrol station in the middle of the Nullarbor Desert. It was straight out of a movie. There were two Swedish backpackers in a Wicked van, whom some truckies had taken under their wing, an English petrol station attendee trying to renew his working holiday visa by working in a remote region for 90s days, and a lot of sand.

We were all stuck for the same reason. The phone network had failed, the internet had stopped working with it, and the payment processing system was down. Only those with sufficient cash could purchase fuel and continue their journey through the desert.

No doubt the truckers had plenty of cash with them. But the Swedish backpackers and my wife and I didn’t.

The English petrol station attendee, happy to have others sharing the politically persecuted fate of a working holiday visa holder nearing the end of their first year, helpfully told us that, ‘The last time this happened, it took two weeks to fix.

We could pay for fuel with our last $20 note and either choose to risk the journey across the rest of the desert or go back the way we came. Either way, the real problem was that the subsequent petrol station may face the same issue…we’d just get stuck on the edge of the desert instead of in the middle of it.

In the end, my wife remembered that my father in-law had left us his Aussie currency before flying back home to Japan and we did indeed have enough cash after all. It was just carefully hidden somewhere amongst our entire earthly belongings packed in the car.

A few minutes later, we filled up and waved goodbye to the sullen Englishman. I still wonder what happened to those Swedish backpackers…

Anyway, the point is that, when all else failed, cash was still good as gold. Well, almost…

Today, I want to convince you that putting up with the inconvenience of using, or at least having, cash is actually the most important thing you can do in your financial life today. Maybe even in your political life. Yes, more important than voting.

I’m the first to admit that this inconvenience is a pain in the neck. I almost never use cash. And yet, every time I see ‘cash only’ or ‘cash preferred’ signs at the markets, I feel a flush of relief.

You see, the only thing which really keeps governments at bay is their ability to enforce their stupid ideas. That’s why they need things like wars, pandemics, and climate crises to impose them.

There’s no question what politicians and civil servants will do when given the opportunity — all the meddling they can come up with. The real question is what stops them.

When John James Cowperthwaite was asked how poor countries should turn around their economies, he recommended abolishing the office of national statistics. Why? Because, given such information, policymakers simply cannot help themselves but to meddle. And when they meddle, it turns into a disaster.

By refusing to collect such statistics, Cowperthwaite managed to engineer an economic success story we call Hong Kong…

The point being that governments must be stopped somehow if they are to be kept at bay at all. Taking away their information is a good option.

But I suspect cash is our most powerful weapon in doing so today. For a simple reason. It offers an escape hatch.

If you can escape a government policy, then it won’t work. And most won’t even be tried without a reasonable level of compliance.

But escape hatch from what?

From how governments are attempting to gather such a vast array of information that Cowperthwaite would’ve churned up his grave. And also an escape hatch from how governments are planning to control our behaviour in the future. A method so powerful and absolute that it offers complete control of you.

I’m talking about CBDCs, of course. Central Bank Digital Currencies would allow central banks to monitor every single transaction on your account because they would hold all the information. CBDCs are also programmable, making it possible to impose economic policies on your ability to use money at all.

It’s worth noting that those monitoring these CBDCs will not be elected politicians who can be held democratically accountable. They’ll be central bankers — mad academics with ideas so dangerous that they were kept in ivory towers to protect the rest of us, only escaping occasionally to engineer things like the Cultural Revolution, Holodomor, and hyperinflation.

But let’s not get too dystopian.

Here’s the thing about CBDCs. People jaywalk all the time. CBDCs are the equivalent of having the pavement jump up and kick you in the shins if you even try to. It won’t be enforcement, it’ll be control.

Cash offers the escape from CBDCs because it is the precise opposite. It doesn’t create a record of spending that can be monitored. It can’t be programmed to control your spending. It can’t be frozen.

Even the de-banked, like Nigel Farage in the UK, can still use cash easily. Imagine what would’ve happened to the tens of thousands of people who would’ve been de-banked if they didn’t have cash to resort to?

But my real point is that governments can’t use CBDCs against us until they get rid of cash first. Because their stupid policies simply won’t work if people can just evade them by using cash. And so, governments won’t bother imposing those policies in the first place. If we can keep cash, we won’t see so many of the plans floated by politicians and academics today.

It’d be easy to enforce 15-minute cities using CBDCs. You just wouldn’t be able to spend your money outside of your ‘cell’, as they call them in the UK. But with cash…

It’d be easy to ban gas stoves using CBDCs. The transaction simply wouldn’t work. But with cash…

You get the idea.

Australia is, once again, getting a reputation for itself when it comes to cash. After excelling ourselves in the lockdown fest, to international acclaim, we are now leading the crackdown on cash in news reports around the world too.

In Germany and Japan, two societies familiar with governments that are given too much power, have remarkably high cash use, despite their otherwise technologically advanced economies. Privacy is their key concern.

I think it’s time to fight back, as Nigel Farage did in the UK when he was de-banked. If we can keep cash, we can evade so much else the government has planned for you.


Nick Hubble Signature

Nickolai Hubble,
Editor, The Daily Reckoning Australia Weekend

PS: My colleague Brian Chu is of the same mindset when it comes to protecting our wealth from government control, only, as a gold bug, he sees it prudent to store some of his wealth in gold. Interestingly, he found that central banks bought more gold last year than at any time in the last 50 years. And according to Brian, it’s not a random occurrence. It’s part of a serious shift in the global monetary system, one that could have big implications for investors, particularly here in Australia. More on this next week…

All advice is general advice and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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