Freedom through cash? Peace through weapons?

I have been following the debate on the abolition of cash for a relatively long time and the more I read about it, the more I am confused by the opinions of even seasoned economists. Apparently, in order to maintain a complex, fragile and costly system, everything ideological is being thrown into the balance. It’s not that surprising, because the factual arguments are not in favor of continuing to develop and print coins and notes.

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Factually incorrect

This article was triggered by a short book review of Max Otte’s polemic “Rettet unser Bargeld” (Save our cash) in the Handelszeitung. The assertions made in the book are evidence of the kind of short-sightedness that probably only people who can’t question the status quo can develop. A few samples?

“Freely circulating, stable, state money is an important component of a free society and transparent economic order”

I can’t explain why he thinks that. Cash is neither stable nor does it promote a transparent economic order. Quite the opposite. Money is a political instrument that is used to enforce national claims without hesitation. The bill for these maneuvers is always, absolutely always, paid by the citizens of the countries. And a transparent economic order: please, it is precisely the lack of transparency in the flow of money that has allowed economic crime and tax fraud to become so enormously popular. And it was anonymous money that made the unspeakable links between politics and business possible in the first place.

“Facebook, Google and Apple – the data octopuses – will then get even more data”

More data than now? What nonsense. Has Max Otte ever paid cash for an app? This kind of argument is pure window dressing. Logical at first glance, sheer nonsense at second glance. The majority of the world’s monetary transactions cannot be carried out with cash even today. This applies to both small and very large amounts. Tech companies don’t get any more relevant data than they already have today.

“The operators of these payment methods can charge a fee on every transaction and thus make a huge profit at the end of cash.”

Of course, transaction providers earn fees on cashless means of payment. Should the costs, as with cash, be paid collectively by the state and therefore by us taxpayers? People keep forgetting how much cash actually costs. And how irrelevant it has become for our payment system.

“The consequence for consumers: they can no longer compare goods and services, there is no price transparency. In addition, all privacy disappears.”

Max Otte’s argument is that the abolition of cash would lead to individualized prices. I don’t see what that has to do with cash. To effectively introduce individualized prices, you need a lot of data about the customer and, most people forget, about the context of the purchase. This is the only way to skim off additional margins for companies in line with the polluter pays principle. Individualized prices have much more to do with acceptance than with transparency. The aviation industry shows us how this works. What does this have to do with cash? I can’t see it.

Moreover, when we talk about price transparency, where does today’s unprecedented price transparency come from? From cash? You can see for yourself.

And so the whole thing continues. 48 pages of backward, end-time writing. A lot of noise where there should be signal. It goes against the grain, but I have to write it so clearly.

The dear freedom

Cash advocates unpack the ideological club when they come up with freedom. This is sacred to us. When we hear the word freedom, many people want to take up arms and stand at the border to defend everything that is dear and loyal to us. In these moments, we forget that this is something very individual for each person on closer inspection. The author of the pamphlet is also aiming for this effect. How can we be against our freedom?

However, everyone’s freedom in a community ends where it stands in opposition to the overriding interests of that community. The perfidious thing about this is that what politicians sometimes sell to us as overriding interests are not necessarily really overriding interests. It is worth being critical.

It’s the same with cash or weapons. We want to abolish tax evasion? Well then we need to create a fully traceable and transparent monetary system that makes such crimes impossible. But you can’t do both: abolish tax evasion and still have free and anonymous money. It’s as simple as that: you have to make a choice because you can’t have both.

New technology = new possibilities

If we wanted to invent money today, would we use coins and bills again? Hardly. The disadvantages are huge.

I think there are simply much better technological options for making personal, smaller payments today. The first providers in this area are paving the way for a more comprehensive reform of our monetary system. Because in the long and short term, what has the most advantages for the end customer will prevail. And things are not looking good for cash.

Blockchain

What such a system could look like is slowly but surely emerging. Blockchain as the basic technology could guarantee the transparency and security of transactions.

Another issue is the diversification of money. Centralization was a necessary evil because the various currencies could not be controlled and were very cumbersome. With blockchain, this would become obsolete and a state could create the framework to allow private currencies. This opens up completely new dimensions for financing and can significantly reduce costs. An index currency could be created for everyday transactions and price marking. Such a system would be far less susceptible to collapse and political influences and would be much, much cheaper.

Eliminating the technical debt

All of this is only possible if the technical prerequisites and public acceptance are created. Cash is incompatible with this. It is too rigid, too intransparent and too susceptible to counterfeiting in daily use. It is not without reason that we are working on replacing cash. It is a first step towards a financial system that is better for the community. And not an attack on freedom. Or something like that.