Smile, you’re being watched
My readers know that I am an advocate of the phasing out of cash, for macroeconomic reasons outlined across several articles and books. To summarise, negative rates – that we will inevitably see – will only be effective if cash is eradicated, because a world without cash would also be a world without recession. I have met and discussed with a sizeable number of opponents – sometimes detractors – who claimed that the abolition of fiduciary money would spell the end of their liberty and the beginning of a new era where ourselves and our expenses would be tracked by the government.
These wild, even fanatic, subscribers to and supporters of cash seem to ignore the fact that banknotes are never really anonymous since they are all marked with a serial number.It indeed goes without saying that, in our current world, it would be quite simple in technological terms to register the serial numbers of banknotes withdrawn by users at cash machines. What’s more is that the authorities didn’t wait until this technological era of ours to make us of the information printed on these banknotes.
Let’s look back to the Watergate scandal that saw five thieves find their way into the eponymous building that at the time housed the general headquarters of the Democratic Party in Washington, on 17 June 1972. Although they were caught by the police, no one knew their motives until a sum of $3,600 that was found on them served as the vital clue that led to their commanders. These banknotes had serial numbers and sequences on them that – by dint of police requisitions made at official bodies and local Federal Reserves – led to the conclusion, just three days after the break-in at the Democratic Party premises, that these banknotes had been credited a few months before into accounts with Girard Bank & Philadelphia Trust and the Republic National Bank of Miami. Because these banknotes had been deposited into these respective accounts by the “Committee for the Re-election of the President”, the link with Nixon’s teams and with the President himself was therefore very easily drawn…
But let’s now go even further back in time to prove to the zealots of cash that they’ve never been able to hide behind cash, or behind any other equity meant to be anonymous. In 1932 the son of Charles Lindbergh was freed by his abductors after a ransom was paid in the form of anonymous notes that were exchangeable with a certain amount of gold. It was a grimirony for the kidnappers because the gold standard was abandoned in the US in 1933. Not long after, a petrol station owner alerted the authorities when one of these gold-indexed notes reappeared in 1934 as payment for a full tank!
In our contemporary world, a certain number of authoritarian regimes – that we once, more realistically, called dictatorships – are hunting down pro-democracy and pro-human rights movements thanks to the tracking of cash. Under the guise of combatting counterfeit money, the serial numbers of banknotes distributed by machines or over bank counters allow the authorities to track activists, and more importantly, those who fund them.
In summary, may the delinquents, those obsessed with anonymity and the libertarians find other hills to die on, because one way or another – with or without cash – our lives, our consumption habits and our movements are all documented. Admittedly, the health crisis caused an irrational run on cash in the spring of this year, but the take-off, or perhaps the invasion, of digitalisation that has now become omnipotent and omnipresent will lead to yet more phasing out of banknotes, until they become a mere relic of the past.