Austrian Minister Calls for a Constitutional Right to Pay in Cash

One would load it on either an ATM (using your regular debit card) or an authorized shop (using cash), and the card itself would store the balance.

They eventually discontinued in 2006, since it didn't really caught on.

Not really. Inflation happens when there is a real resources constrain. You are demanding more from the economy that the economy can produce. If you have doubts about this, just look into the result of the QE programs that have generated not inflation.

Negative rates don't need this condition and don't make really sense. First they push money in the system and then they pull money from the system, but everything continues the same.

In fact, negative interest rates can be seen as a way of avoiding doing the logical thing: fiscal policy and direct investment.

In fact this makes me think of all the nice things we could have if support for simple mechanisms was legally required in various areas of life.

Pros:

- Enhance the tax base, as most / all transactions in the economy could now be traced by the government;

- Substantially constrain the parallel economy, particularly in illicit activities;

- Force people to convert their savings into consumption and/or investment, thereby providing a boost to GDP and employment;

- Foster the adoption of new wireless / cashless technologies.

Cons:

- The government loses an important alternative to pay for its debts, namely by printing true-to-the-letter paper money. This is why Greece may have to leave the euro, since its inability or unwillingness to adopt more austerity measures, a precondition to secure more euro loans, will force it to print drachma bills to pay for its debts;

- Paper money costs you nothing to hold and carries no incremental risk (other than physical theft); converting it into bank deposits will cost you fees (and likely earn a negative interest) and expose you to a substantial loss if the bank goes under. After all, you are giving up currency directly backed by the central bank for currency backed by your local bank;

- This could have grave consequences for retirees, many of whom are incapable of transacting using plastic. Not to mention that they will disproportionately bear the costs of having to hold their liquid savings entirely in a (costly) bank account;

- Ditto for very poor people, many of whom don’t have access to the banking system; this will only make them more dependent, in fact exclusively dependent, on government handouts;

- We wonder if the banks would actually like to deal with the administrative hassle of handling millions of very small cash transactions and related customer queries;

- Illegal immigrants would be out of a job very quickly – a figure that can reach millions in the US, creating the risk for substantial social unrest;

- If there is an event that disrupts electronic transactions (e.g. extensive power outage, cyberattack, cascading bank failures) people in that economy will not be able to transact and everything will grind to a halt;

- Of course enforcing a government mandate to ban cash transactions must carry penalties. This in turns means more regulations, disclosure requirements and compliance costs, potentially exorbitant fees and even jail time;

- Banning cash transactions might even propel the demise of the US dollar as the world’s reserve currency. The share of US dollar bills held abroad has been estimated to be as high as 70% (according to a 1996 report by the US Federal Reserve). One thing is to limit the choices of your own citizens; another is trying to force this policy onto others, which is much harder. Foreigners would probably dump US dollar bills in a hurry and flock to whichever paper currency that can offer comparable liquidity.

https://handup.org/giftcards

http://www.telegraph.co.uk/news/uknews/crime/11349189/Beggar...

I can do all of these things with Venmo, PayPal, Google Wallet, etc.

> Electronic cash can't do everything it can do with as much simplicity.

I find those online tools a lot easier to use and less cumbersome than cash.

That is police's problem. I am tired of LEO offloading their duties and costs of business to society.

One fundamental thing about taxes is that, when enforcement of each and every law is not totally possible, totally unfair taxes are also not possible.

What you propose is totalitarianism, or eventually leads to it.

Why not? As long as banks operate on a fractional reserve basis (i.e. your bank can lend out your money, but you still "have it" in your account), guarantees are still needed, regardless of how money is recorded.

> Taxes could be collected much fairer and efficient.

Taxes being collected and taxes being fair are two very distinct, and mostly unrelated, concepts.

> Negative interests rates could be implemented without distortions.

Great, I really want someone to keep stealing my money.

I am pretty sure the government can access to my bank statements at will. This setup will make it much more explicit what is (already) going on. Oversight would of course be needed.