The naked vulnerability of going cashless.

Another Indian politician, Chandrababu Naidu, Chief Minister of Andhra has called for abolition of Rs 500 and Rs 1000 notes. As always he has a very pious motive for his opinion. Which is that it will reduce corruption among politicians by reducing the amount of black money. He is not calling for police to be free of political interference, for cases against politicians to be concluded swiftly and strict punishment for corruption but for elimination of notes, which will inconvenience ordinary citizens, because prices are so high that you cannot fill a small shopping bag with Rs 1000 worth of goods. Today, politicians have tens of billions of rupees in black money. If that is converted to Rs 100 notes the enormous volume will make it impossible to hide or handle. But it is a canard. Politicians do not store their black money in cash. They have invested in real estate, stocks and have transferred vast sums abroad. One politician is reputed to have $6 billion stashed abroad. The Prime Minister has been calling, not for elimination of large denomination notes, but for elimination of cash altogether. Scandinavian countries are almost cashless where retailers are allowed to refuse cash and many banks do not store cash. This apparently saves money for banks and businesses as transporting large volumes of cash is expensive. Prof Rogoff of Harvard is a vocal supporter of a 'less-cash' if not of a totally cashless society. He recommends eliminating high value notes because these are used by criminals and paying for services with cash avoids taxes. There are billions of citizens and a few thousand criminals, so cause enormous inconvenience to the vast majority for the sake of a few. Paying plumbers or electricians in cash avoids only pennies while multinationals are legally avoiding billions in taxes by keeping money abroad. Ireland has been ordered by the European Commission to collect $14.5 billion in back taxes from Apple, just one company, but has vowed to appeal against the order. The real reason why there is such a clamor for going cashless is because it allows the government to introduce negative interest rate in which you get fined for saving money in banks. Including the 19 countries that constitute the Eurozone, a total of 23 countries have adopted a negative interest rate. Which means the rich get paid for borrowing while the poor are penalised for saving. The central bank in Denmark is having to watch carefully to avoid problems. Denmark has a cradle to grave social security system so citizens do not need to save but in India negative interest rates will be a disaster. At the very least using cards will give the state information about every transaction we make and where we are going at every second. That is a police state. Fortunately, some people are pushing back against this pernicious concept. We hope it dies.