Cash And Stubborn Humankind

     Whoever controls the volume of money in any country is absolute master of all industry and commerce. – James Garfield

     “Control the coinage and the courts — let the rabble have the rest.” – Padishah Emperor Shaddam IV

     There’s a monitory article at Maura Dowling’s place this morning about the World Economic Foundation’s promotion of a “cashless future.” It’s a subject over which a lot of worry sweat has been shed. If it were possible for the States of the world to enforce “cashlessness,” I think I’d worry more. However, as matters – and Mankind – stand, I think we have less to worry about on that score than on several others.

     The anti-cash forces aim at a state of affairs in which all commerce is trackable by central banks. That, of course, would give governments total visibility into who buys what, from whom, where, and at what price. Whether a government could exploit that visibility to impose absolute control over all commerce is the question. The frightening quote at the head of this essay is on point…but is it correct?

     I’ve written a great deal about money and currency. The four essays beginning with this one provide a good overview of the subject for the layman. The central point is the definition of money: a medium of exchange and a store of value. But one should not look at the definition in a state of torpor. One must ask what it implies for the dynamic of money.

     The willingness to treat a specific commodity, be it gold coins or prettily engraved pieces of paper, as a medium of exchange and a store of value varies from person to person. Some people deal exclusively in those prettily engraved pieces of paper. They won’t take a check or a credit card for their wares; they want those slips of paper that say “Federal Reserve Note” at the top. But some disdain the Federal Reserve Note in favor of a check, a credit card payment, an Electronic Funds Transfer, a gold or silver coin, or a hunk of cheese. Their reasons vary widely.

     It is those persons, their preferences, and their reasons for them, that undergird any monetary system. Persons like them, operating in times past, gave birth to money. Persons operating in the present – individuals just like you and me – sustain the monetary system of our time. From day to day and instant to instant, we decide what money is and will be.

     If a nation were to decide to eliminate cash – to establish some digital currency as the “legal tender” of the realm – it would face the severe problem of suppressing all commerce conducted in any other medium. Is that even possible?

     In a micro-country with absolute control over its borders, it might be possible, albeit with the most extreme exertions on the part of the State. In a country of many millions? I can’t see it. In these United States? I’ve come to the conclusion that it’s impossible. The amount of surveillance and police power required for enforcement would be beyond even a nation as totalitarian as the old Soviet Union – and the masters of that experiment in oppression gave it their very best shot.

     Communist societies have repeatedly found it necessary to tolerate their utter antithesis – the black market – lest they collapse from their own ineptitude. But the essence of Communism is rigid State control of all production and exchange: precisely the goal of the anti-cash movement. In practice, the Soviet System and a no-cash America would be indistinguishable. Our federal government would have no better chance of enforcing its dictates than did the Soviet nomenklatura.

     Before the emergence of a generally accepted cash medium, people bartered: they traded good for good, good for service, or service for service. As bartering multiplies, the barterers would “keep accounts:” paper records of who had purchased what and had tendered what as the purchase price. There would be arguments of the “a pair of shoes is worth more than a chicken” variety, which would lead to accruals of small debts. Reputable individuals would emerge as trusted recordkeepers: the first “banks” or “public accountants,” depending on your perspective. Over time, various commodities would be found useful as media of exchange: seed grain, potable alcohols, tobacco, rifle cartridges, fabrics, and eventually the durable, ductile metals. Gradually, the more widely accepted, more durable, and more divisible commodities would displace those that are less so. That’s the process that establishes a money.

     A broadly comparable process would arise in an America that had eliminated its paper currency. Indeed, it might well be in an embryonic stage even now. What could the federal government do to prevent it?

     People are stubborn. They dislike being controlled. (Yea verily, even those who fancy themselves as controllers. Cf. this piece.) As the evil outline of a cashless society emerges, the natural human impulse to rebel against overbearing authority would arise. It would express itself in ways similar to those of the USSR, perhaps even more ingenious.

     The architects of the no-cash / fully digitized and controlled world economy are dreamers. Evil dreamers, of course; did you think Satan had no dreamers in his legions? No matter how passionate they are about imposing themselves on all of us, what they desire is unattainable. Their own machinations would defeat them.

     Get ahead of the machine. Stockpile six months’ worth of your necessities and arrange for safe, dry storage thereof. Buy gold, silver, and copper. And ammo, of course. You can’t have too much ammo, unless you’re on fire. And remember Heinlein’s Maxim:

     Be wary of strong drink. It can make you shoot at tax collectors – and miss.