Are we witnessing the slow but certain death of cash in this generation? Is a truly cashless society on the horizon? Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether. We are being told that such measures are needed to battle illegal drug traffic, to catch tax evaders and to fight the war on terror. But are we rapidly getting to the point where we will have no financial privacy left whatsoever? Should we just accept that we have entered a time when the government will watch, track and trace all financial transactions? Is it inevitable that at some point in the near future ALL transactions will go through the banking system in one form or another (check, credit card, debit card, etc.)?
The truth is that we now live at a time when people who use large amounts of cash are looked upon with suspicion. In fact, authorities in many countries are taught that anyone involved in a large expenditure of cash is trying to hide something and is probably a criminal.
And yes, a lot of criminals do use cash, but millions upon millions of normal, law-abiding citizens simply prefer to use cash as well. Should we take the freedom to use cash away from the rest of us just because a small minority abuses it?
Unfortunately, the freedom to use cash is being slowly stripped away from us in an increasingly large number of countries.
In fact, as countries like Mexico "tighten the noose" around big-ticket cash purchases, our freedom to use cash is going to erode rather rapidly.
The following is a summary of some of the very tight restrictions being placed on large cash transactions around the globe right now....
Mexico
In Mexico, a bill before the legislature would completely ban the purchase of real estate in cash. In addition, the new law would ban anyone from spending more than MXN 100,000 (about $7,700) in cash on vehicles, boats, airplanes and luxury goods.
$7,700 is not a very high limit, and this legislation has some real teeth to it. Anyone violating this law would face up to 15 years in prison.
Greece
In Europe, some of the "austerity packages" being introduced in various European nations include very severe restrictions on the use of cash.
In Greece, all cash transactions above 1,500 euros are being banned starting next year. The following is a comment by Greek Finance Minister George Papaconstantinou at a press conference discussing the new austerity measures as reported by Reuters....
"From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards"
Italy
Even Italy has gotten into the act. As part of Italy's new "austerity measures", all cash transactions over 5,000 euros will be banned. It is said this is being done to crack down on tax evasion, but even if this is being done to take down the mafia this is still quite severe.
The United States
The U.S. government has not banned any large cash transactions, and hopefully it will not do so any time soon, but it sure has burdened large cash transactions with some heavy-duty reporting requirements.
For example, your bank is required to file a currency transaction report with the government for every deposit, withdrawal or exchange over $10,000 in cash.
Not only that, but if a bank "knows, suspects, or has reason to suspect" that a transaction involving at least $5,000 is "suspicious", then another report must be filled out. This second type of report is known as a suspicious activity report, and it is also filed with the government.
But the reporting does not stop there. As Jeff Schnepper explained in an article for MSN Money, if you are in business and you receive over $10,000 in cash in a single transaction you must report it to the IRS or you will go to prison.....
If you're in a business and receive more than $10,000 in cash from a single transaction, or from related transactions within a 12-month period, you have to file Form 8300 and report the buyer to the IRS. Don't file, and you go to jail.
The IRS isnt kidding. I had a client who was a dealer in Corvette sports cars. He told me he didnt have time to file the forms. I told him several times to file. He thought he knew better. He went to jail. So did his children who were involved in the business.
This is very, very serious.
Just because someone forgets to file a certain form with the IRS, that person can go do serious jail time?
Yes.
According to Schnepper, quite a few Americans have already received very substantial sentences for this kind of thing....
In fiscal 2004, the Internal Revenue Service initiated 1,789 criminal investigations. There were 1,304 indictments and 687 convictions -- and an 89.1% incarceration rate. The average sentence: 63 months.
In fiscal 2005, the IRS started 4,269 investigations, winning 2,406 indictments and 2,151 convictions and an 83% incarceration rate. Average sentence: 42 months.
The reality is that governments around the world are getting very, very sensitive about large amounts of cash and they are not messing around.
They don't want all of us running around with big piles of cash. They want our money in the banks where they can track it, trace it and keep a close eye on it.
On the one hand, it is a good thing to catch criminals and terrorists, but on the other hand how much privacy and freedom are we willing to lose just so that we can feel a little safer?
And as cash becomes criminalized, are all of us going to be forced into the banking system whether we like it or not? If we cannot pay for things in cash, what other choices are we going to have?
The truth is that the more you think about this issue, the more disturbing it becomes.
So what do you think about all of this? Feel free to leave a comment below.
i cant change the world i just live in it.
no problem for me if come a world without cash. because this is to mouving forward. why? just think when the men invented the fire can you imagine the others who not loved it. or when the men invented the wheel can you imagine the others who dont aproved? the same is and for tooday.
Phil Camp. “Other reasons for discouraging cash are:
a) Keeping the money in the bank allows the bank to have more reserves w/ which to make more loans.”
@Phil Camp,
Phil, It’s easily understandably why you believe this to be true, However the truth is banks don’t use deposits for loans. The money the bank loans you is created by the loan itself. That is to say, it is your signature on the IOU which brings the money into existence. The promise to pay back (IOU, bank note etc) is legal tender within the industry.
To clarify further. If you take out a $100,000 mortgage, the bank note you sign is deposited into an account and counted as real reserves. The borrower creates the money he borrows and using this example,thanks to fractional banking, he also creates roughly another 900,000 for the bank to lend to other customers…. at interest.
u folks should b thinking along lines of 1 hog, six sows. 1 dozen chickens, some rabbits, gardening, storing non-hybrid seeds for future planting,harvesting and butchering supplies, and canning supplies; more difficult to tax,what u think? however, there are government programs from the war years to allow assessment of value in order to tax; so plant in the deep woods. some of this is tongue in cheek,but food for thought. a good book: the self-sufficient life and how to live it. amazon.com
Always remember, if we stand by and let them take our cash, for the good of the nation, of course, then by extention our guns will be next and there goes our freedom.
Do not let this Camel get it’s nose under the tent!
The Constitution of the United States was drawn up in such a way as to protect us from this form of government tyranny. When we allowed the monied and political elite to impose a debt based currency administered by a central bank,rather than the gold and silver basis as mandated under the Constitution, we opened the door to the degradation of Liberty as was intended under the Constitution. We get what we deserve, for being STUPID!
In cashless society, how would would precious metals be treaeed? When such is owned by an individual. Suppose a person sells $500,000 of precious metals to buy a house? What problems result?
If all transaction were electronic it would open the door for an easy “transaction tax”, it could replace sales and income taxes. I can see “just” a 2% tax on all deposits and payments. That would caputure every penny of commerce in the country. Not so good for those in illegal enterprises. I hate taxes and Gov’t but this idea might not be so bad (So long as the total net tax paymetns are not more than they are today for all the various taxes we pay.)
The government is continually moving towards the point of being able to monitor where everyone is and what they are doing at all times. Of course, the information overload would be enormous and the actual monitoring will be done by computers looking for anomalies, unless the authorities have some other reason to suspect you.
Clever criminals will figure out how to work just under the limits of triggering an alert.
Those who try to avoid the banking system will find out their pay has to be directly deposited and they can’t get cash in exchange for it. Hoarded cash will be made worthless by recalling the currency.
Using an alternative such as gold or silver will probably also be made illegal, though some underground activity will probably go on, particularly in the drug trade.
Barter will be the only viable alternative, but that is so cumbersome that it will be limited. You have to find out who has something you want and if they want what you have in exchange. Using the internet or even phone system to do so will trigger an alert with the government.
If the coming solar flare of 2012 smokes every computer in the world,i will believe there is a God.
As a small business remodeling contractor, I suppose this makes me have to report down payments, Progress payments and even the final as they happen. IDK if I’m ready for all that extra paperwork.
Every merchant must remember that beginning 1/1/2011 the IRS will require all credit card processors to report all client merchant’s credit card transactions to be reported to the IRS with a 1099 to be sent to the merchants at the end of the year. Everything has got to match or the IRS will confiscate 25% of the merchant’s gross proceeds as means of taxing the transactions. Our morons in Washington did not understand that merchants are taxed on their net not the gross.
Our legislative morons, when they passed the Obama Care, set up a series of 1099′s that must be reported to the IRS and issued by small and most other businesses that have annual transactions with their customers that are $600 or more.
The noose of the Government continues to tighten around the neck of Personal Freedom while the Administration thinks that tax credits for small businesses will solve the unemployment problem. Folks, our problems are just beginning.
Although I am not religious in any way this article reminds me of a Bible scripture in Revelation ‘ And no man be he great or small was able to buy, sell or trade without the mark of the beast’.
Perhaps forgotten……from 1975 to 1979 a communist crazy man named Pol Pot took absolute power and control over Cambodia. He had studied communist doctrine in France and was determined, for the good of his country, to brutally and drastically enforce every communist concept he could think of.
In just 10 days he forced the capitol city of Phenom Penn to totally evacuate (people were needed to increase rice production 3-fold.) Ladies had their babies along the side of the road, there were no shelters or latrine facilites at the rice paddy sites, people would work till they fell over and died and if anyone complained they were executed with a sharp blow to the lower back of the head (bullets were just too expensive).
Interestingly, all money was confiscated and outlawed. He had noted bribery and corruption as a big problem….money was the medium of that corruption….so he just totally elliminted money.
I havn’t begun to touch on the brutalities the Cambodian people suffered…but when he and his thugs were finally driven deep into the mountain jungle, over 1.7 million Cambodians had died from either starvation or murder. That was about 1/5th of the population.
Mass confusion reigned for years. Private property records had been destroyed, families scattered, there was no medium of exchange and the all important intellectual class from which come doctors, educators, etc…had been executed. There were no schools, nobody knew who owned what or where they should live or what they should do.
So, going back to our discussion on money…in the middle of all this was the total confiscation of money in any form.
What do you think?
Great article.
You only left out one very important piece in the “United States” section: Louisiana can no longer use cash in second hand transactions. Just make sure they accept Visa when you go to a garage sale.
END THE FED
RON PAUL 2012
cashed out IRA account that had been in bannk for some 30 years .Am i requitred toeport this cash I own?Some $165000.