Cashless economy means financial transactions are conducted through the transfer of digital information (usually an electronic representation of money) between the transacting parties. In layman terms, it means to scrap out the usage of liquid money or paper currency for any business.
When does the idea of Cashless system came into existence?
Cashless system idea was circulated/promoted by the European Central Banks and American Central Banks as the customer deposits in the Western banking system were depleted due to endless printing of the currency by European Central Bank and American Federal Reserve and thereby diluting the currency and making it worthless. Federal Reserve balance sheet has grown from 500 million Dollar to 4.6 trillion Dollar thereby increasing the base currency, which in turn has reduced the purchasing power of Dollar. Similarly, European Central Bank printed Euros.
Every country must export to other countries so that the trade balance is maintained and to achieve this country tend to devalue their currency and do wealth transfer from poor and middle class to rich class who owns assets. The inflationary policy adopted by the central banks has paved the way for huge assets bubbles where assets price has grown multiple folds, benefitting the richest. Who owns the assets like mines, gold, real estate, bonds etc.? The businessman, political class etc. Majority of the assets in any economy are owned by rich and any hike in asset price benefits only the rich and middle class/poor will get poorer as they don’t own any asset and don’t have enough money to buy assets as their salaries are not increasing as per inflation.
For example – During 1950s, medium size home prices were somewhere around $10000 and now for the same home one must pay $500000 -$1 million. The salary of a teacher was $1000 per month. So basically, with 10 month labour, one had the power to buy a house.
Now after 67 years, for the same job one is earning around $3000 – $4000 per month and it will take 12 – 20 years of his/her life earnings to be able to buy a home. The fact is that the home is same but the value of the currency is reduced and this is called Inflation. This is how central banks are responsible for poverty in whole world. Inflation is a tax which common people never understood.
Why people stopped keeping their savings in banks?
Due to Inflation – For example – If a depositor saves $100 in bank when the inflation is 8%, the actual value of saving is reduced to $92. Adding the banking interest rate of 4%, the saving is reduced to $96 (92+4) and thereby robbing the depositor of $4.
Due to Negative Interest Rate – For example – If someone invests 100 dollars in bonds, FDs with 3% interest rate for a period of 10 years and inflation is 5% each year, the return is 80 dollars after 10 years i.e. the investor is suffering 2% loss every year.
Because of the these reasons, it became obvious for people to not save money in banks. Even big economies like China, Japan etc. started removing money from federal reserve.
Impact of reduced deposits on Federal Reserve?
Banks operate by taking in deposits and making loans to lenders. They can do this because not every depositor needs his/her money on the same day. Thus, banks can lend out some of their depositors’ money, while keeping some on hand to satisfy daily withdrawals by depositors. This is called the fractional-reserve banking system: banks only hold a fraction of total deposits as cash on hand. To understand this, imagine that you deposit $100 at your bank. The bank is required to keep $10 as reserves but may lend out $90 to another individual or business. This loan is new money; the bank created it when it issued the loan.
Banks were not able to lend loans due to decreased deposits and liquidity was decreased.
But bankers wanted to print unlimited currency and hence they created cashless society to avoid the people from withdrawing money from bank.
Impact of cashless society on common man?
Banks levy transaction charges on digital payments and earn huge amount from this. These charges are again a burden on working class as they struggle hard to meet their basic necessitates due to high cost of living owing to inflation. Banks in turn use this money to waive the bad loans of big cooperates and thus benefiting the richest. In a cashless society, there is no way out of this banking system. Government can misuse, increase liquidity and decrease currency value as per its policies. Government can anytime block the transactions and can unauthorize the transactions for buying gold, silver, bitcoin etc. The biggest fear is the risk of identity theft. Since we are culturally not attuned to digital transactions, even well-educated people run the risk of falling into phishing traps. With the rising incidence of online fraud, the risk of hacking will only grow as more people hop on to the digital platform. Given the tedious process and poor grievance redressal, people will have no easy recourse if they lose their entire lifetime savings online. There is no stringent legal process to deal with this kind or scale of fraud in many countries. Add to it the mass identity theft from banks’ or companies’ databases and it can turn into a financial nightmare akin to the data breach in the organizations like JP Morgan, CIA, NSA etc.
Conclusion – This is the worst attempt to enslave humanity forever in the rigged financial system. Once it is implemented in whole world, there will be no chance to skip it.