Times of severe crises are characterised by the fact that politics and the economy, out of pure instinct for self-preservation, are forced to take measures that stabilise the system in the short term, but undermine it even more in the long term. Exactly this development is currently emerging in the topics of cash containment and cash abolition.

For months, countless journalists have been trying to convince the public how old-fashioned, cumbersome or even inconvenient the use of coins and banknotes is and how modern and efficient the use of credit or chip cards is (which unfortunately falls on the ears of many young human beings). At the same time, politicians go into overdrive warning about the dangers of cash: it promotes money laundering, favours tax evasion, encourages corruption and makes it easier for terrorists to obtain money.

The unbiased observer wonders why these issues are being raised now – after all, money laundering, tax evasion, corruption and also terrorism have existed for decades. The wonderment is justified. All four reasons are pretexts and have nothing whatsoever to do with the real motives behind the containment and possible abolition of cash.

The real motives behind the current campaign against cash are solely two factors: the replacement of bail-out by bail-in, which has now been implemented throughout the Eurozone, and the impact of negative interest rates on the financial behaviour of working human beings.

The global financial system could only be kept alive in 2008 by a bail-out. i.e.: States stepped in with taxpayers’ money and kept numerous doomed financial companies artificially alive on the grounds that they were ‘too big to fail’. The latter did not use the preferential treatment as an opportunity to contain their own risks, but as a free pass to take even higher risks and accumulate even more debt. Since the states now simply do not have enough money to bail them out again, another bail-out will no longer be possible in the next emergency situation.

For this reason, bail-in has now been introduced: Financial companies will be rescued in the future by first and foremost resorting to the assets of savers, small investors and small shareholders. This form of expropriation has already been practised in Cyprus, Italy and Portugal. However, it has consequences: Many human beings try to protect themselves from it by clearing out their accounts and hoarding their assets in the form of cash.

The aim of curbing or abolishing cash is to deprive human beings of this means of retreat. If there is no more cash, they are forced to keep their money with credit institutions and disclose their assets to them. In the event of a crisis, the state and the financial sector can thus easily fall back on private deposits.

The second reason for the abolition of cash is the rapid decline in central bank interest rates. These are almost everywhere close to zero, in many countries already in negative territory (e.g. Switzerland, Japan, EU). Although it takes a while for the banks to pass on these negative interest rates to depositors, the subsequent scenario is the same everywhere: instead of paying depositors interest on their savings at the end of the year, a certain percentage of their money will be taken away from them in future.

Working human beings also do not simply accept this form of creeping expropriation. As the example of Switzerland shows, a large part of the population withdraws its money from the bank after the introduction of negative interest rates and hoards it at home. This is precisely the development that the state and the financial industry are now trying to prevent by pushing for the immediate containment and abolition of cash.

However, bail-in, negative interest rates and the abolition of cash were not conceived by the state and the financial industry of their own free will in order to get their hands on the money of working human beings. Rather, they are the necessary consequence of the development of a financial system that has long been bankrupt: they had to and must be introduced to keep the system itself alive. The last of the three measures, the abolition of cash, creates a new problem that threatens the existence of the system in the long term. It leads to working human beings looking for other ways to save their savings from the banks and the state – and therefore increasingly turning to precious metals, especially gold.

Private demand for gold bars and coins has increased quite considerably since the introduction of bail-in and negative interest rates and has already led to a significant rise in the price of gold. If this process continues (and it will increase exponentially in the case of complete cash abolition), it will unhinge the existing system. Why? We have been living for 45 years now (to be precise: since the 15th of August 1971, when US President Nixon decoupled the US dollar from gold) in a system built only on trust in paper money. This trust, however, has been dwindling rapidly, especially since the crisis of 2008, and since then has only been kept alive by manipulating and deceiving the public.

In the field of precious metals, this is done in a variety of ways. One of the most important of these is the sale of papers that make the holder believe that he or she owns gold. i.e.: The bank does not sell a customer physical gold, but a certificate that entitles him to a certain amount of gold. The problem is that, due to a lack of control, the banks have meanwhile sold many times the existing amount of gold (nobody knows the exact figure, it is estimated at 150 to 250 times, but can also be higher).

A ban on cash would immediately lead to a run on physical gold and thus to the discovery of this gold fraud by the banks. This in turn would cause the price of gold to skyrocket and the value of all paper money in the world to collapse – an absolute disaster for the global financial system.