Be wary of a cashless future

03 March 2020

We live in an era of hyper-transactionalism, whereby most of what we do is subject to the exchange of money and market pricing. Whereas in the past much of humanity was bound to a political system, now most of us are bound to a globalised monetary system. That is why a proposed change in Australia to how we use cash should receive far more attention than it does. It is not just a technical matter; it is about how power is expressed.

There is a proposal to make Australia a cashless society. The Reserve Bank has declared that physical currency will become a ‘niche payment’ that may only end up being used in emergencies; cheques will be phased out all together.

It is, inevitably, being touted as a good thing because it will improve ‘productivity and efficiency’ although there is, as ever, an element of circularity here. How do we measure efficiency and productivity? With money. What are we measuring? Money.

Another possible change being considered is a ban on any cash transactions above $10,000, which would have an interesting effect on those Chinese purchases in Australia’s property market where the buyers, literally, arrive with suitcases of cash.

In one sense, going cashless seems more convenient. In another sense, it is disturbing, because it means it will be possible to monitor everything we do financially — an issue that will become increasingly important. This is the era of transactions, and nearly all of us are mired in it — although Papua New Guinea is an exception. Eighty five per cent of the population, mostly in the highlands, is not in the formal economy and does not earn money. At least there is one part of the world that has escaped for now.

The hyper-transactions have many levels, the biggest of which is the cross border capital flows, which, according to the Bank for International Settlements run at over $US4 trillion a day (annual global GDP is only about $US80 trillion). That is a staggering volume of transactions; the global capital markets sit atop the earth like a giant roulette wheel threatening to crush us all — as nearly happened with the global financial crisis in 2008.

'Transactions and reality are not the same — money is only something we create — but it is all too easy to allow transactionalism to take over.'

Another level is the encroachment of transactions into human activities that were not part of the pricing system.

ECONOMICS

Be wary of a cashless future

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