War on Cash?

Will the next war waged by the federal government be a war on cash? Former Treasury Secretary Larry Summers has come out in favor of eliminating the $100 bill, arguing that it will stop terrorism. Yes, Terrorism! Summers writes in the Washington Post:

I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime. Since the crime and corruption in significant part would happen outside European borders, I suggested that, to paraphrase John Connally, it was their currency, but would be everyone’s problem. And I made clear that in the context of an international agreement, the U.S. would consider policy regarding the $100 bill.  But because the Germans were committed to having a high denomination note, the issue was never seriously debated in international forums.

Paul-Martin Foss over at the Carl Menger Center writes:

The other “problems”, such as drug trafficking and money laundering, that those who want to ban cash point to are all effects of government action. Want to eliminate drug trafficking? Legalize drugs. Want to eliminate human trafficking? Make it easier for people to cross borders legally. Want to eliminate corruption and bribery among government officials? Don’t give them so much power that it’s worth someone’s while to bribe them. Want to stop tax evasion? Stop stealing so much of people’s money. Want to stop money laundering? Stop criminalizing consensual business transactions. Want to stop terrorist financing? Don’t let the CIA create dozens of guerilla groups around the world in pursuit of short-sighted, short-term foreign policy actions.

But perhaps it’s too much to expect people from Harvard to acknowledge that government policies are behind most of the problems in the world and that governments therefore are incapable of coming up with solutions. If you start out with the premise that only government action can solve problems then the only solutions you’ll come up with are those that involve more heavy-handed government action.

The war on cash also goes much deeper. What happens when “criminals” use the $50 bill? Ban that? What about the $20 bill? Can’t have drug dealers buying drugs with a $20 bill so let’s ban that too!

Cash allows anonymity. It allows people to make transactions without leaving a paper trail via a credit or debit card transaction. But I have nothing to hide you might say! Financial transactions can tell a lot about a person, however. Information you may not want anyone else to know. They can reveal if you have a medical condition, what religion you practice, what organizations you support, and even more.

Imagine if you had to make all your purchases electronically. Since the government is already collecting our phone metadata, its not a huge leap to think that the government will start looking over our financial transactions as well in the name of “fighting terrorism.”

C4L will keep an eye out for any such legislation but hopefully this dream of eliminating the $100 bill is just a fantasy.