A cashless society is suicide for the shekel – Bring on the cashless society!
Imagine a world where every single transaction you make can be tracked with perfect precision. The tax authorities automatically know exactly what you buy and what you sell. There are no secrets from Uncle Shmuel anymore. He knows everything, and all taxes are applied with 100% enforcement.
Ever had your bank account frozen for not paying some fine or fee? I know many in my neighborhood. The only way people like that can survive at all is by using cash.
Have you ever paid a carpenter or mechanic or plumber or contractor in cash? What do you think happens to the prices of those services when cash payment is no longer an option? The answer is that prices go way up, because now they all have to pay every single tax in full.
What about the open market shuk, that bastion of cash transactions? Do you think the people who barely eke out a living at the shuk report all of their income? Of course not. But in a cashless society, they will, automatically. Imagine what happens to food prices then.
What about your 15-year-old kid, learning the value of work by babysitting on weekends for cash? So much for that in a cashless society.
The prospect of a cashless society is terrifying if you reason through the initial implications. But it is only terrifying up to a certain point. Why is that? Because going cashless will hasten the demise of all fiat currencies, and that will ultimately free us from tax slavery.
Consider, it is obvious that heavy restrictions against cash will cause the prices of everything to rise so much faster than they already are. On top of that, the shekel supply is already being inflated at a near vertical clip since the COVID lockdowns of 2020. Add cash restrictions, and it will quickly cause the collapse of the shekel entirely.
As Israel saw so acutely in 1984 with the "old" shekel, at a certain point prices rise so fast that the priority of the public shifts from accumulating shekels to getting rid of them as fast as possible. At that point, prices rise to infinity and the currency itself dies.
But this is not 1984. This is 2022, and there's a huge difference. Back in 1984, the Bank of Israel could still reset the currency system pretty quickly by pegging the new shekel to the dollar. How? By effectively pledging to copy the monetary policy of the Federal Reserve stride for stride, namely to inflate the shekel supply only as fast as the Fed inflates the dollar supply, and to keep the two currencies trading within a range.
On that basis, a new price system could be established quickly, one based on the US dollar. To this day, the New Shekel is backed only by a hoard of dollars and nothing else. The Bank of Israel owns no gold whatsoever.
Now, the dollar is also on the verge of dying a hyperinflationary death, as all fiat currencies throughout all of human history have died before it. Here are the two money supplies, US Dollar and New Israeli Shekel, since 1984.
Both money supplies are headed to infinity, simultaneously, as are all other fiat currencies, and so there will be no possible way to peg any "New New" Shekel to anything else this time. Reestablishing a fiat currency by pegging to a different one will be impossible. The only option for the public will be to return to the original money, to kesef, literally, to physical silver itself, and of course to gold as well for large transactions. There will be no other way to reestablish a division of labor that measures anything economically.
A cashless society will be terrifying, maddening, unjust, but in the end ephemeral. Even evanescent. Fiat currencies are already at the end of their rope, and going cashless will just speed up the process of their final demise. Once the dollar and everything else based on it, including the shekel, collapse once and for all, the entire power center of the Israeli government, and all governments, will collapse along with it.
The value of the shekel as a viable dollar substitute is what enabled lockdowns, quarantines, mandates of all kinds, and tyranny of all stripes. With no ability to pay their bureaucrats and enforcers with a currency that can buy any food, governments will have no means of enforcing their cashless societies, or anything else for that matter.
The dreaded reset will be in the public's hands, not Klaus Schwab's or any other tyrant. Get ready by accumulating real money, gold and silver, now. The end of the fiat monetary system that fuels global tyranny can't come soon enough. Bring on the cashless society, and let's get this over with already!
Rafi Farber is an Austrian school economist and publisher of The End Game Investor, a daily commentary on the gold and silver markets in the context of the approaching end of the fiat monetary system.
