Scandinavia’s War on Cash

The Scandinavian countries have long been at the forefront of the war on cash. Cointelegraph reports today that Norway’s largest bank, DNB, has proposed ending the use of cash as payment in Norway. Denmark is already well on the way towards a cashless society, with the government proposing the elimination of all cash payments, and Sweden is not too far behind.

According to the Cointelegraph article, Trond Bentestuen, DNB Group Executive Vice President for Personal Banking Norway, said:

Today, there is approximately 50 billion kroner in circulation and [the country’s central bank] Norges Bank can only account for 40 percent of its use. That means that 60 percent of money usage is outside of any control. We believe that is due to under-the-table money and laundering.

Notice the phrase “outside of any control.” Cracking down on the use of cash is all about control. The authorities want to know how every last cent is spent, and if they can’t do so then they have to eliminate any means of spending money outside of the banking system’s purview.

Imagine a statement like this:

Today there are around 100 million cars on the street but the FBI can only track about 40 percent of their movements. That means that 60 percent of car travel is outside of any control. We believe they are engaged activity such as road racing and drunk driving.

Or this:

Today there are around 300 million people on the Internet but the FBI can only track about 40 percent of their activity. That means that 60 percent of Internet activity is outside of any control. We believe they are engaged in illegal activity such as supporting terrorists and viewing child pornography.

Those would be ludicrous and laughable statements. But of course, so is Mr. Bentestuen’s statement. To think that a majority of cash transactions are due to money laundering or black markets is absurd. Yes, black markets exist, but why? Because governments have enacted such onerous tax and labor regulations that it makes more sense for businesses to operate under the table. Black markets aren’t a sign of criminality, they’re a sign of a government that has gone overboard with regulation. If governments would allow markets to operate freely, black markets would disappear, and thus one of the supposed reasons for controlling or banning cash payments would disappear along with them.

Banks and governments don’t like cash because it is a restraint on their activities. If businesses don’t like the high tax rates they’re being charged, they can choose to operate more often in cash. It’s a good bet that not all their cash income will be reported to the authorities, so their cost of doing business decreases. And if they pay their employees under the table in cash, that income won’t get reported either, so the employees get a good deal too. Governments hate that, obviously, as it deprives them of tax revenue, which is why the war on cash was started. Governments would love for all transactions to be electronic, where they can easily be monitored and taxed.

Many banks don’t like cash either. It costs money to handle, sort, store, and transport. Eliminate cash and you eliminate all those costs to banks. But what if you’re a bank customer and you get fed up with your bank’s increasing fees or its poor customer service? Well, then you can withdraw your money in cash and store it wherever you like. And without those deposits, the bank can’t make new loans with that money. That’s why banks would prefer that cash be banned, so that your money stays deposited within the banking system with no possibility for you to withdraw it.

Cash withdrawals and cash holding are the ultimate check on the bad behavior of banks and governments, which is why banks and governments are colluding to ban cash. Once cash is banned, your money is stuck within the banking system. The only way to get it out is to exchange it for goods, i.e. purchase something with that money. But that transaction is recorded by the bank and can be reported to the government, which can then come after you to tax you or seize your goods. Everything you own and everything you do will be open to scrutiny. A cashless society is not a free society, which is why the war on cash must be combated at every turn.

Image: Adapted from Stephan Rosger