Government seems determined to get people off cash using any means possible. They can’t stand having a method of transaction tat is untraceable and more importantly, un-taxable. Their excuses for the clamp down on cash are designed to tug at your fear emotion. It’s used by terrorists, drug dealers, it’s used to laundry money!
Europe is leading the way with this. Several European countries and their banks have called for less cash, with Norway’s biggest bank, DNB calling for a ban on cash. Very few places in Europe will accept the 500 Euro bill and the war on cash is ratcheting up. Germany just declared a ban on cash purchases over 5,000 Euros. It will likely come to the US soon too, you can see it starting from the image below. Everyone is a criminal unless proven otherwise…
Why is this bad for us consumers? Banks and credit card companies get their 2% cut on every transaction. When everyone everywhere is forced to pay with such methods, it’s no different from an additional 2% tax on our purchases (prices would increase to pay off the transaction fees), only that 2% tax goes to private banks not public government.
It is also problematic because our money is only electronic form and we don’t have the freedom to extract our money from the system if we wish to. Say banks start failing and people want to get their money out, all government would need to do is a Greek style capital controls to limit withdrawals and keep the banks afloat. Needless to say you can’t force a bank to be solvent and such methods will attract a lot of social unrest.