Swedes Stashing Money in Microwaves as War on Cash Heats Up
Swedes are reportedly hiding money in microwave ovens in a desperate attempt shield it from the negative effects their central bank’s “war on cash.”
As Business Insider puts it, the Nordic country is “shaping up to be the first country to plunge its citizens into a fascinating — and terrifying — economic experiment: negative interest rates in a cashless society.”
The Swedish central bank, the Sveriges Riksbank, on Wednesday held its benchmark interest rate at -0.35%, the level it has been at since July. Though retail banks have yet to pass that negative rate on to Swedish consumers, they face increased pressure to do so as long as the rates remain where they are. That’s a problem, because Sweden is the closest country on the planet to becoming an all-electronic cashless society.”
This represents another salvo in a “war on cash” quickly gaining steam around the world. Central banks and governments justify this war as a means of fighting terrorism, money laundering, and other illegal activities.
As we reported earlier this year, France announced severe new restrictions on cash transactions. As of the end of September, French residents can no longer make cash payments of more than 1,000 euros. The limit was formerly 3,000. Foreign visitors’ cash payments are now capped at 10,000 euros rather than 15,000. A proposed Danish law made public last spring would allow shops to refuse cash and require some form of electronic payment. Policymakers claim the law would “ease administrative and financial burdens.”
But as we’ve reported, the war on cash is about more than stopping terrorism or catching tax evaders. Central bankers yearn to abolish cash because they can more easily manipulate the economy in a cashless environment. This lies at the root of Swedish policy. Business Insider summarized the desired effects of Swedish central planning:
If banks charge customers negative interest rates in a cashless society, those customers are not able to withdraw their money as cash to shield it under their putative mattresses. Consumers’ only choice in such a scenario is to spend it or let the bank take it. (The theory is that by forcing people to spend cash rather than save it, you can spur economic growth.)”
Instead of forcing interest rates deeper into negative territory, Riksbank recently opted for another round of quantitative easing. But analysts say the pressure to drop rates deeper into negative territory in order to drive cash into the economy is growing. Switzerland has a similar policy. Negative rates cost Swiss banks $1 billion a year. So far, they have not passed the cost on to consumers, but it seems unlikely banks will continue to absorb these losses much longer.
So, we see two trends coming together in Sweden.
- The country uses less and less cash.
- The country is in an environment of negative interest rates.
That means many Swedes increasingly have no way to shield their money.
Apparently, some Swedes see the writing on the wall, according to Business Insider:
A resistance is forming, and some people are protesting the impending extinction of cash. Björn Eriksson, former head of Sweden’s national police and now head of Säkerhetsbranschen, a lobbying group for the security industry, told The Local, ‘I’ve heard of people keeping cash in their microwaves because banks won’t accept it.’”
It’s only a matter of time before these policies come to the United States. In fact, the war on cash has already crossed the Atlantic. Louisiana has made it illegal to use cash when transacting secondhand goods, and for years, American banks have been required to file “Suspicious Activity Reports” for cash transactions or withdrawals above $5,000. While US interest rates have not yet dipped into negative territory, they have hovered near zero for years.
One way to avoid the war on cash is by owning physical gold and silver. It keeps your savings safely in your possession in a liquid form that the government cannot manipulate. This provides some security should we evolve into a large-scale cashless society.
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