The cashless control grid may still be coming, but it is not going to
replace cash anytime soon.
Though millions of people have started using digital devices to pay for
goods and services, the appeal of physical cash is soaring, not fading away.
Outlook for currency production shows an astounding 5 per cent increase
per year for the foreseeable future in the printing of bank notes for
currencies across the globe.
That’s because, in pure and simple terms, people are demanding cash in
times of crisis, and there is plenty of crisis ahead. Greece is the perfect
example of what may be coming to your neck of the woods – perhaps even when
you least expect it. According to FT:
One reason for the enduring appeal of cold, hard cash is the
global economic downturn. Giesecke & Devrient expects banknote
production to rise by 5 per cent a year for the “foreseeable future”, despite
projections of double digit increases in the use of cards and other forms of
electronic payments.
“Cash is 100 per cent reliable in times of crisis. It’s
in periods of panic where a solid financial system has to prove itself,” said
Ralf Wintergerst, a Giesecke & Devrient board member. “In a
crisis situation, the demand for cash typically rises sharply. The reason for
this is trust in real currency.”
The turmoil in Greece, which not only sparked speculation of a return to
the drachma but also led to a surge in demand for cash, is a case in point.
The Financial Times reports that banknotes were also in high
demand after the 2008 collapse began.
When, and if, that time comes, people are prepared to deal in physical
money and barter/trade in useable goods and services. Digital currencies,
while they offer incredible purchasing power inside a global market on the
Internet, may be worthless in a crisis or disaster – particularly if the
situation involves power outages or cut off access from online networks.
People do not want to be corralled into a situation of complete dependency
on government assistance once a crisis or disaster hits. Physical cash, if it
is stuffed under the mattress, or withdrawn before the banks close, can be
used over the table, or under the table, to meet needs in a disaster.
Though the system of fiat currency itself is flawed, the physical notes,
verifiable and holdable, are reassuring – perhaps deceivingly so.
The enduring appeal of banknotes is not just down to the financial crisis.
More than half of payments in stable, advanced economies such as Germany’s
are still made in cash, while globally the figure is about 80 per
cent.
One of the reasons people flock to notes during financial panics
and natural disasters lies in the way they look and feel. The desire to store
your wealth in a physical object increases as the world around you becomes
more uncertain… The difficulties in replicating their design and
their status as legal tender create intrinsic value. (Source)
In extreme situations, however, where hyperinflation or currency
instability is major – the currency, whether physical cash or digital
currency can collapse leading to the kinds of scenarios seen in Weimer Republic or the more recent events in Zimbabwe or
Argentina.
Gold and silver, along with other precious metals, also remain solid stores of wealth in times of great system
disruption or complete currency failures. Though their prices are continually
suppressed now, their true importance will become clear when they are perhaps
most in need. Smaller denominations of value, such as offered by silver
ounces, or small weights of gold, such as European sovereign coins, offer
appropriate sizes for payments without the need to liquidate larger holdings
in less than secure environments.
As SHTF previously reported, “When the
system collapses, commodities become money. It’s as simple as that.”
Read more:
What is Money When the System Collapses?
Food, Guns, Gold: “The Record is Rather Clear On the Side of
Commodity Money”
Chapman: Will we look like Weimar, Zimbabwe or Argentina?
You Can’t Eat Gold… But It’s Portable, Easy To Trade and
Confiscation-Proof