Half a world away at the World Economic Forum in Davos, Switzerland, Nobel Laureate economist Joseph Stiglitz made remarks earlier this week that the US should “get rid of currency.”
He means paper currency, as in the US should not only get rid of $100 bills… but ALL paper currency– 50s, 20s, 10s, 5s, and even 1s.
You guessed it. Stiglitz suggests that regular people don’t need paper money, and that it’s only useful for drug dealers, terrorists, tax evaders, and money launders.
This thinking is so 20th century, and it’s simply wrong.
ISIS is a great example.
The US military has literally blown up more than a billion dollars worth of ISIS’s stockpiles of physical cash during airstrikes.
But this hasn’t affected their terrorist activities one bit.
That’s because the most notorious terrorist group on the planet famously uses both the world’s oldest currency (gold) and the world’s newest currency (Bitcoin).
Professor Stiglitz has likely never been anywhere near a terrorist, so he likely doesn’t have a clue how they conduct financial transactions.
Stiglitz also relies on the old claim that cash facilitates illicit activity.
Again, this thinking only highlights a Dark Ages mentality.
In the today’s world, drug dealers and prostitutes accept credit cards.
No matter what you’re selling on a street corner, whether it’s hot dogs or marijuana, there are plenty of solutions (like Stripe, Square, or PayPal) to easily allow anyone to accept credit card payments.
But these intellectuals seem stuck in a Pablo Escobar fantasy that drug dealers have entire rooms filled with cash.
What Stiglitz, and perhaps many law enforcement agencies, fail to realize is that one of the biggest tools in masking illegal activity is actually Amazon.com.
Specifically, Amazon gift cards.
If you’re looking to quietly and easily pay large sums of money, even tens of thousands of dollars, you can do so with Amazon gift cards.
Amazon gift cards are essentially a “cash equivalent”.
Amazon sells just about everything on the planet, so its gift cards can either be spent or quickly resold for cash.
(You can obscure a financial transaction even more by using an Amazon gift card to buy another gift card…)
Curiously there are no loud, universal calls to ban Amazon gift cards. That’s because these policymakers and academics are stuck in the 1980s.
Instead, they’ve nearly all jumped on board the “cash ban” bandwagon.
These guys just don’t get it.
Cash isn’t about tax evasion or illegal activity.
It’s about having a choice.
Any rational person who actually looks at the numbers in the banking system has to be concerned.
In many parts of the world, banks are pitifully capitalized and EXTREMELY illiquid.
This is especially the case in Europe right now where entire nations’ banking systems are teetering on insolvency.
In the United States, liquidity is also quite low, and banks play all sorts of accounting games to hide their true financial condition.
Plus, never forget that the moment you deposit funds at a bank, it’s no longer YOUR money. It’s the bank’s money.
As a depositor, you’re nothing more than an unsecured creditor of the bank, and they have the power to freeze you out of your life’s savings without even giving you a courtesy call.
Physical cash provides consumers another option.
If you don’t want to keep 100% of your savings tied up in a system that’s rigged against you and has a long history of screwing its customers, you can instead choose to hold physical cash.
There’s very little downside in doing this, especially since most people are barely making any interest in their checking accounts anyhow.
Physical cash means there is no one else standing between you and your savings.
But Professor Stiglitz and his colleagues don’t want that.
They want a massive, centralized bureaucracy to have control over your savings.
This, coming from a man wrote in his 2012 book The Price of Inequality,
“[T]he success of [Apple and Google], and indeed the viability of our entire economy, depends heavily on a well-performing public sector. There are creative entrepreneurs all over the world. What makes a difference. . . is the government.”
Sam Walton, Richard Branson, Steve Jobs, and millions of other entrepreneurs are apparently worthless. To paraphrase Barack Obama, “They didn’t build that.”
All that matters is the government.
Just like his call to eliminate cash, Stiglitz’s entire book is an impassioned argument for MORE centralization and government control.
150 years ago, Francis Galton’s appalling ideas were considered science.
Stiglitz’s ideas are what pass as science today.
They’re equally ludicrous.
And one day our future descendants will look back on our own time and wonder how so many people could have allowed themselves to be fooled.