What Happens If the IMF Forces Us to Go Cashless   1 comment

A part of my study on the International Monetary Fund (IMF) came across an IMF proposal to abolish cash recommending member countries adopt measures to restrict its use. My gut tightened and now the proposal is working its way into Transformation Project.

Why does something like this concern me? Don’t we all use our POS and credit cards pretty much exclusively? What’s the big deal.

“The European Central Bank (ECB) does not want that depositors to keep their money under the pillow. If any bank in Europe goes bankrupt, then depositors have a guaranteed right that the state will return them the amount of up to 100,000 euros. But not more,” economist Hans-Olaf Henkel, former head of the Federal Association of German Industry (BDI) told Sputnik Germany.

Henkel believes that one of the main reasons behind this proposal is the desire of financial institutions to force people to keep their money in banks. The downside to this is that, if a bank goes bankrupt, people who have savings on deposit of over 100,000 euros will only get 100,000 euros back. Their “excess” savings will be forfeited.

The same thing would happen here in the United States, by the way, although you can have multiple bank accounts to get around that.

Image result for image of pain spending cashIn Europe, many people do not keep their cash in banks, Henkel argued. According to him, the banks want to abolish cash to regain access to the money that people keep at home.

Financial institutions, including the European Central Bank, also justify this measure as a means to combat organized crime. Henkel doubts this explanation:

“Since when is the European Central Bank responsible for combating crimes?” he asked.

From the IMF’s perspective, Brad and I engaged in organized crime this weekend by using cash. We went to a garage sale and bought a lightly-used mountain bike for half what we would have spent for a new one at the store. The private citizen we bought it from didn’t take credit cards (go figure?), so we paid cash. Then we went to another friend’s house and bought raw (unpasteurized) goat’s milk and “accidentally” left money on her table on our way out.

The IMF report did not offer any direct instructions with regard to the issue but recommended member countries to adopt measures aimed at restricting the use of cash in various operations.

According to Henkel, cash is also important in social terms, especially for young people.

“If they go to a party with 20 euros in their pockets and at some point notice that they have only two euros left, they won’t drink anymore. And if they pay only with a credit card, they will never know the value of money,” the expert concluded.

When I was teaching my kids the value of a budget, I operated in cash from envelopes a lot. We would have these conversations in the grocery store aisle or while shopping for school clothes:

The envelope has $100. That’s all we have to spend. Yeah, I know you’d like it if I bought the $40 steak or the $200 dress, but the envelope only has $100 in it. So, no to the dress, find something cheaper. What do you want to do without for the steak? Oh, the $10 steak now looks more appetizing? Progress!

My daughter says this has served her well as an adult living on her own with the limited financial resources of a gypsy bluegrass musician. She knows a lot of young adults on that circuit who never learned those lessons and they are frequently hungry, cold and out of gas. When you’re a musician who has to sell your instruments because the alternative is starvation, you really aren’t winning. And, no, the answer is not easier-to-access welfare programs. It is learning how to budget your money, which is much harder to do with plastic than it is with cash.

The pleasure and pain centers of the brain react in different ways to the use of cash compared to plastic. Several MRI studies have shown that using plastic stimulates the pleasure centers while using cash activates the pain centers. In our consumer-driven society, we need more people in touch with what it actually costs you to spend money … or to rack up debt. The financial crisis of 2008 taught some of us that, but there are so many who still need to renew this lesson. Apparently, the IMF didn’t learn it at all.


Posted June 1, 2017 by aurorawatcherak in economics, Uncategorized

Tagged with , , , ,

One response to “What Happens If the IMF Forces Us to Go Cashless

Subscribe to comments with RSS.

What's Your Opinion?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Upward Bound

Exploring the invisible and visible realms of God through writing & pictures

Angie Sim

"tonight we honor the hero"

Written In Shadows

Welcome to Valcrest

beard with a blog

grab life by the beard

Words Sweeter than Honey

"The pen is mightier than the sword." - Edward Bulwer-Lytton

The Naked Reviewers

Expose Yourself To A Book Review

Times and Tides of a Beachwriter

Drift among the scribbles of writer Janet Gogerty

Discobar Bizar

Welkom op de blog van Discobar Bizar. Druk gerust wat op de andere knoppen ook, of lees het aangrijpende verhaal van Harry nu je hier bent. Welcome to the Discobar Bizar blog, feel free to push some of the other buttons, or to read the gripping story of Harry whilst you are here!

Frank Parker's author site

A Septuagenarian's ramblings

Wolfe's Rants

A writer's life - advice, works and musings by Wolfe Butler

Matthew Winters (Comeback Pastor)

The life, ministry, & thoughts of a Christ-follower, husband, dad, & minister

Thoughts of Dymphna

Reality is Subjective; enter mine.

Leo X. Robertson

News of my latest publications, events, and episodes of the Losing the Plot podcast!

Sherry Parnell

Author of "Let the Willows Weep"

Emerald Book Reviews

Book Reviews and Promotion Services

YA Chit Chat

The Ponderings of YA author J. Keller Ford

madchen863's Blog

Planet Earth: home of life


Radio for the Awake and Aware

%d bloggers like this: