by Jonathan Tilt The Freedom Alliance 11 November 2022 and Debbie Hicks (Keep it Cash Campaign)
The debt based monetary system is dying before our eyes. The collapse in bond prices, currency volatility and the coming collapse in financial assets are merely symptoms of the underlying problem.
With money anchored in nothing of value the financialisaton of the economy has resulted in every asset being levered up multiple times. This works whilst assets are increasing in price but those price increases depend on an increasing money supply. At some point the expanding money supply results in savage inflation. The central banks are then faced with two equally unpalatable options. They can allow credit to contract and implode all assets resulting in insolvency and bankruptcy of most banks. Alternatively they can continue to expand the money supply, perhaps using it to bail out the insolvent banks, and risk an almost certain hyper inflationary collapse. The house of cards has been built to a height at which it is hopelessly instable.
I believe central banks will pick the hyper inflationary route. The £65 billion bond purchase scheme announced last month and the unlimited and unfunded energy market subsidies strongly suggest that the UK is already heading down this route.
The global banking cartels have clearly signalled their desire to move towards Central Bank Digital Currencies ( CBDCs) as the new monetary order. As a system CBDC’s will still be under the control of those who have destroyed existing currencies. For that reason are likely to fail the fundamental confidence test that all money must pass in order to be accepted as a medium of exchange.
CBDC’s provide the infrastructure for a potentially tyrannical digital control matrix. CBDC money is programmable and decayable. The issuer can control how and where it is spent and can issue it with an expiry date. At an even more sinister level bank balances can easily be frozen or even cancelled for those who oppose a particular part of the prevailing state narrative. Trudeau’s freezing of bank accounts of any Canadians who donated to the Truckers campaign shows the willingness of some existing leaders in the supposedly free world to travel down that dystopian road.
Cash is the antidote to CBDC tyranny. Continuing to use cash represents a simple but highly effective step we can all take to guarantee our future liberty and freedom. The signs are good. In the UK many small businesses are reporting an upswing in cash payments. The Bank of England Weekly Report shows cash in circulation increasing from £73 billion in February 2020 to £87 billion last month.( Bank of England balance sheet and weekly report | Bank of England.)
But cash is much more than just the guarantor of our freedom. Cash provides the opportunity to build a robust, resilient, and inclusive economy. An economy in which high streets prosper and in which towns aren’t some identikit version of each other. An economy in which food and goods are mostly produced locally. And most critically an economy which doesn’t collapse every time there is a minor contraction in money supply.
The use and reuse of cash is the key to realising this economic dream.
Cash spending has a number of key attributes that are fundamentally different to digital spending
- It tends to be spent locally.
- It’s frequently used in transactions that contain a high labour component.
- It is more frequently spent in small independent businesses than large multi national chains- many of whom are now banning cash transactions.
- It provides some protection against the over leverage and financialisation of the economy. If you spend on a credit card the debt you create can be resold many times over before you settle the outstanding liability. Not so with cash.
By promoting the use of cash we promote transactions that support employment in diverse local businesses. We also get an economy that is more robust and able to withstand inevitable cyclical downturns.
Cash still needs help. Digital convenience combined with the tax avoidance employed by many multi nationals make this an uneven playing field. Government has a legitimate role in leveling this playing field. At Freedom Alliance we understand how that could be done. We propose that :
- Cash retail transactions should be exempted from all taxes.
- Employers should be able to pay up to 10% of wages in cash and in so doing avoid all payroll taxes.
- Benefit claimants can elect to have one two year period each during which any cash earnings do not impair their benefit entitlement.
We need to ensure that cash remains circulating in the economy. If the employees receiving 10% of their wages in cash simply walk down the road to the bank and pay it in to a digital account there is no benefit. Consequently there should be a transaction tax on cash deposits to the banking system. This will partially offset the taxes foregone by the other measures. Any remaining shortfall would be recovered by additional taxation on purely financial transactions.
The additional cash in the economy will increase cash handling and security costs. But again local employment makes up much of that cost . This is fundamentally different to digital transaction charges that frequently end up being transferred abroad.
Cash in its current format is clearly still an expression of unbacked fiat money. To complete the economic transformation we propose two further measures.
Firstly notes and coins in circulation are backed by hard assets ensuring that they maintain value over time. Secondly the worst excesses of private bank money creation should be constrained by removal of limited liability from the banking sector. The likely outcome of the second measure will be much smaller, focused and more accountable banks.
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