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May 17, 2018 | Cash Money

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Six peanut butter cookies, two scones and a muffin at Kate’s Sweet Indulgence. “Nineteen dollars,” the tattooed sweet young thing said. I dropped a $20 bill. “Ooo, paper money,” she responded. “Haven’t seen that in a long time.” She looked at it lying there, and bit her lip a little. “Cool.”

Munching, I reflected on currency, wealth and debt. How many moisters end up with nothing at the end of the month after debiting in Sbux, Applepaying at Whole Foods, or charging life’s essentials with a single click on Amazon or Wayfair? The days of going to the bank, withdrawing cash from your dwindling account then spending what was actually in your pocket are long gone. When the sight of a twenty arouses a girl, is money becoming an abstract idea?

People routinely buy houses costing hundreds of thousands, or millions, without cash. Equity is transferred from an existing place, topped up with unseen mortgage funds and, bingo, you have the keys. Ditto for lines of credit secured by houses. You arrange it, write a cheque to buy things, then ignore the debt. Four in ten people make no payments, with the line just expanding a little each month until some far-off limit is reached.

Paycheques are direct-deposited, then bled away in bill payments through online banking. Most people apparently save nothing. A third never pay all that they owe. Not an actual piece of money is ever involved. Utility payments route through credit cards, giving the ability to finance them over weeks, or months. Banks now refuse to hand over any significant amount of cash. Want ten grand? Forget it. The ‘money’ in your savings account, investment account, bank mutual funds or GIC is an abstraction. If you ask for it, you can’t have it – without advance notice, an appointment and an explanation of why you want it.

If you’re looking for excitement, try taking $25,000 into the bank for deposit. [email protected] won’t touch it until you’ve filed the proper paper with FINTRAC and even then it may be refused. Cash is tainted. It now means suspected criminal activity, terrorist financing or something to do with Stormy Daniels.

On the phone this week to reset a banking password the EasyLine guy ended the convo by saying the business Visa card I carry (limit $5,000) could be increased to $40,000. “Just confirm this and we’ll put it through.” Wow. Thirty-five thousand free dollars, for losing my PW. I laughed.

Banks would rather deal in credit than cash. Servicing people in actual money means they need vaults to store it, tellers to count it and bank branches in which to house them. It’s inefficient and massively costly. RBC alone has 1,209 branches, most of them associated with real estate and all of them populated by expensive employees.

I was reminded of this this week, as I wandered through my abandoned Bank of Montreal branch, now being turned into personal offices. After 110 years of continuous operations BeeMo walked away and replaced the entire shebang with a website and a machine next door. They left the wickets, the night deposit box, the vault, the bullet-proof glass, safety deposit boxes and the manager’s office with the private can. The disappearance of branches all over everywhere will accelerate, as we’re forced online to complete the simplest of transactions – but never with folding money involved.

Banks get robbed, too. The branch I bought has panic buttons everywhere. And 12-inch-thick floors with rebar. But the bankers know you can’t rob a website (just hack it and steal hundreds of thousands of credit cards).

They say Sweden will be the first country to go cashless. Merely 13% of transactions now use kronas, and the number of bank notes in circulation dropped by a third in just two years. Within five years nobody will use them. So the central bank will stop printing, and is now considering digital currency instead – the e-krona. This is fitting for a country in which all personal tax returns are public, and financial privacy is unknown. The perfect socialism.

Cash money represents unspent wealth. It’s like the energy stored in a battery, ready to be deployed and unseen before a switch is flipped. But as all transactions go digital and ultimately online, there’s no assured privacy. Have you ever had the experience of a bank employee calling you to suggest that money in your chequing account should be invested? She can see it. You never agreed to that visibility. Nor can you stop it.

So what happens when the lights go out, the grid goes down, the servers die and ATM won’t work? Then you can’t shop, gas the car, buy food or pay your mortgage. The web of dependency is complete when cash disappears. It won’t be long.

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May 17th, 2018

Posted In: The Greater Fool

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