Last week, news broke that the Bank of England’s new polymer £5 notes contain animal fat. This, apparently, has upset many vegetarians and vegans in the UK. (But, on the plus side, at least it will have some nutritional value when it eventually becomes worthless as money).
This new and comparatively insignificant negative consequence of fiat currency has made one group of people in society (non-meat eaters) acutely aware of a certain reality that everyone else is usually not mindful of – that being forced to use government money means we cannot avoid any negative consequences of doing so.
Vegans and vegetarians in the UK will soon be practically unable to avoid handling on a daily basis something containing animal fat, which for more than 100,000 of them is so undesirable that they consider it intolerable. Hence the petition to the government. It’s curious how it has happened, but one group of people in society is currently feeling the vexation of being forced to use government money; a feeling that many more of us should have. But for a different reason.
We should all feel a deep frustration at having no choice but to use government money because the cost of this lack of economic freedom is immense and profound. It is an unseen cost but it is real none the less. The cost to us all is the, perhaps, twice as wealthy lives we would be leading (everything else being equal) if the purchasing power of everyone’s money hadn’t been steadily and relatively rapidly eroded over time.
Which is the result of generations of economic central planners covertly pumping more money into the economy via the electronic balance sheets of banks, which was and still is done to create voter-pleasing short-term economic booms. But which can only come at the greater cost of long-term economic busts, as well as destroying the value of our money.
And the cost to us is not just the higher quality or quantity of goods/services and more leisure time that we would otherwise have in our lives (and even the multitude of psychological, social and health benefits these lead to). It’s also each and every endeavour, idea and ambition that we cannot afford to pursue, but would have been able to if the purchasing power of our government money had remained relatively stable in the way gold or silver has.
I guess, usually, we are more inclined to imagine how we would live if our income was doubled, but try to imagine how you would live and what you would do if the same income had twice the purchasing power that it has now. Everything you can see yourself having and doing in this imagined state is the unseen cost to you of the government’s legal monopoly on money supply.
If there were a free market for money in the UK, then at the very least it would be possible for an alternative vegetarian and vegan-friendly currency to come into being if it didn’t already exist, or for another existing provider of currency to change its production methods in response to customer feedback. Which it would have strong incentive to do in a free market environment where there was competition.
If the government ignores the complaints of vegans and vegetarians, then it’s obvious what these people will do: they will stop using cash notes and use electronic payment methods instead. That would augment the natural and steady decline in cash as a payment method that’s been happening for the last decade in the UK. In the near future, the rapidly rising use of electronic payment methods could prove helpful for the UK’s economic central planners because it would likely mean less public resistance to abolishing cash.
Currently, the Bank of England’s official stance is that cash is here to stay, but there are plenty of reasons why central planners would want to abolish cash. Indeed, in several countries the process has already began – albeit stealthily and unofficially. And so I think it’s a reasonable assumption that, behind closed doors, the Bank of England’s top dogs may already be planning the process or at least seriously considering it.
If and when the UK government commits to abolishing cash, then the idea of the cashless society will likely be sold to the public on the basis that only criminals use cash and that it will greatly reduce the ‘evil’ of tax avoidance in the form of undeclared (and untraceable) earnings – thus increasing government funding for schools, hospitals, transport etc.
But putting more money into government coffers is no guarantee of improvement in the services it monopolises. The government’s been receiving more and more funding for several decades and yet public education, healthcare and transport have, as compared to the private sector, only decreased or stagnated in quality and risen in cost.
What putting more money at the disposal of politicians does guarantee is that those resources will be redistributed towards ends that do not correlate to the most urgent ones of the many millions of rightful owners, who would themselves have directed that money towards satisfying those ends had they not had the power to choose taken from them, but which are most beneficial to solving the immediate problems of politicians – i.e. getting elected or re-elected.
The great economists Ludwig von Mises, once remarked that “capitalism breathes through loopholes.” Cash-in-hand payment is the most common and simplest way of avoiding tax because it doesn’t require accounting tricks. Also, cash means savings can literally be kept out of reach of the banks and the government. Anything that limits the supply of money available to banks and the government, the two institutions that are systematically destroying the value of everyone’s incomes, is a good thing.
Abolishing and banning cash would lead to further impoverishment and would be a significant step towards suffocating the system of spontaneous order that has enabled humanity to make such enormous and rapid advances, in terms of the quality of the common man’s life, over the last few centuries.
Government fiat money is unsound money that is not fit for purpose. There is nothing natural or inevitable about money that consistently loses its purchasing power and eventually becomes worthless, or about rising prices. These are man-made and government-made problems, which have emerged from the flawed theories of Keynesian economics and interventionism, that could be avoided or at least greatly mitigated in a society where currency was a product of free market capitalism.
There’s nothing inherently wrong with or bad about cashless economies, the path of technological progress may well lead to them, but for as long as money and banking is centralised under state power, they are a step towards tyranny and poverty and away from liberty and prosperity.