‘War On Cash’ Update: A Brighter Outlook (Part II) – OpEd

Finally, a victory for the State 

Central planners and paper pushers of all stripes are not generally known for their acumen or their ability to recognize and successfully seize opportunities in time. They always tend to lag behind more or less every other member of society: from the innovators and entrepreneurs, to the criminal masterminds, which is why all upstanding citizens still retain a modicum of freedom, but also why we all still have to see any evidence that the State is there to “keep us safe” from bad actors. 

Still, the pandemic was arguably too great and too obvious of an opportunity to miss, even for this group of chronically myopic people. The way they made use of it to further their goals and to mount new, bigger, better attacks against cash, was admittedly rather crass and juvenile, but it worked all the same. While not the most elegant of propaganda schemes we’ve seen in modern history, linking the fear of disease with paper money was undeniably effective in scaring significant numbers of people away from cash and really moving the needle in this war. 

On the face of it, the central claim of the authorities, namely that there was a real and serious risk of “catching the deadly covid virus” from merely touching a dollar bill, might have seemed like a feeble move, one that was more likely than not to have the opposite effect on rational, thinking individuals. There was zero scientific evidence to back it up when it was first uttered, and even as months went by, no proof was presented. Surely, no sensible citizen would take this guidance seriously. 

The problem was that the covid crisis clearly revealed that sense and reason are actually in woefully short supply in the West. Where the fear of all those cash-loving jihadis and dollar-bill-stacking cartel bosses failed, the “invisible threat” succeeded. People started to shun paper notes, most in a “better safe than sorry” kind of way, others because they were actually, earnestly terrified. There’s an abundance of news stories from that period of people microwaving and bleaching their paper notes, a fact that is both amusing and deeply depressing at the same time. 

Naturally, it wasn’t only the state-sponsored fear campaigns that drove this shift away from cash. The lockdowns and forced business shutdowns made it literally impossible to use cash in many cases, so it is evident that this “victory” was also thanks to extreme coercion too. Nevertheless, the fact remains that entire swathes of consumers successfully changed their behaviors. Even more importantly, even when the lockdowns were lifted, cash use didn’t just snap back to what it was. 

Many continued to use digital payments and stuck to the habits they developed at the height of the pandemic. As prematurely and as naively as always, central planners rushed to celebrate their final triumph. The “cashless society” they had envisioned for decades, was now essentially a fait accompli.    

Not so fast…

One thing professional scaremongers should have seen coming is that if there’s anything scarier than the threat of maybe contracting a virus that will maybe make you sick, is the idea of definitely missing rent or mortgage payments and certainly ending up either starving or homeless. And this is exactly what has been happening since the start of the year, very swiftly reversing all the gains that the “cashless society” zealots made during the covid crisis. 

Recent reports have revealed that changes in cash use were among the many effects that inflation has had on consumer behavior. As more and more households have found themselves in financial distress, unable to cover basic expenses and dreading what comes next as the winter starts to bite and energy prices are at record highs, going back to using paper money was among the first “instinctive” moves many consumers made. Different people chose to return to cash for different reasons, but among the most commonly cited ones were the fact that one can keep better track of their spending this way. 

For more sophisticated and forward-thinking citizens, other reasons prevailed. For many who recognize the trajectory we’re all in, economically and politically, putting their trust in banks and in governments is an increasingly tall order. It wouldn’t take anything as dramatic or unimaginable as a bank run (although the citizens of Lebanon might beg to differ on the probability of such an event) for people to lose access to their funds, or at least have it severely restricted. Especially under the present geopolitical conditions, the present inflationary catastrophe, the downward spiral of most advanced economies and an ongoing energy crisis, one can imagine government measures with similar effects being imposed, in the name of “solidarity” and for the “common good”. 

One great example of the public fleeing back to cash can be found in the UK, one of the advanced economies most brutally ravaged by inflation, and one of the nations where digital payments had gained the most traction. The trend reversal is already glaringly obvious, according to recent reports by the Post Office, which has been seeing record levels of cash withdrawals over its counters. As Euronews reported, “Last month, the organisation handled a record £801 million (€951 million) in personal cash withdrawals, up almost 8 per cent month-on-month and up over 20 per cent year-on-year. In total, over £3.3 billion (€3.9 billion) in cash was deposited and withdrawn over Post Office counters. This is the first time figures have crossed the £3.3 billion threshold in a single month in the Post Office’s 360-year history.”

Naturally, as any precious metals investor knows, keeping one’s savings in pieces of paper of no value whatsoever other than blind faith is not a particularly wise investment strategy. In a severe crisis or a mass collapse of faith in government, the only use those dollar bills and euros will have to their owners would be whatever warmth they could provide once set alight. However, it important to acknowledge this trend as a step in the right direction and as a reason to keep hoping that perhaps sense and reason might once again become more commonplace in our societies.