There is much talk lately by bankers and mainstream economists about implementing negative interest rates, where depositors pay rather than receive interest in their accounts. The ostensible purpose is to discourage saving and encourage consumer spending to revive the stagnant global economy.
The conundrum facing policymakers, however, is that any such move below the “zero bound” would provoke mass withdrawals and the hoarding of cash under mattresses. So the chief economist of the Bank of England and other advocates of negative interest rates are proposing that coins and bills and be eliminated and universally replaced by digital transactions over smartphones and other electronic devices. Digital transactions are already commonplace in Scandinavia and Africa. Critics like the pseudonymous blogger Don Quijones linked to below charge that the unintended consequences of the accelerating move to a cashless society make it possible for every transaction to be recorded, scrutinized, and profitably exploited by banks, and for negative interest rates to be imposed on depositors deprived of recourse to withdrawing cash. Quijones calls this potential misuse of the new technology a “tragedy” and blames the “general public” for inadvertently becoming the “the governments' and banks’ strongest ally in their War on Cash…As long as people continue to abandon the use of cash, for the sake of a few minor gains in convenience, the war on cash is already won.” However, the problem, as always, is not the development of the new technology which arguably offers more than a few minor gains but whether it is democratically controlled and regulated in the public interest. The imposition of negative interest rates and the surveillance state are not foregone conclusions. http://wolfstreet.com/2015/11/07/first-they-came-for-the-pennies-in-the-war-on-cash/ _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
