Just when Americans thought they might be out of the woods from their government seeking to ban cash, a Nobel-Laureate economist participating at this year's Davos World Economic Forum has proven that to be incorrect. In fact, the topic of banning cash in the U.S. as well as elsewhere around the world is on the menu of this week's forum, and Joseph Stiglitz is the chef serving that main course.
Indian Prime Minister Narendra Modi has already removed 86% of his country's currency from circulation in an attempt to curb tax evasion, tackle corruption and shut down the shadow economy.
Should the US follow suit?
Joseph Stiglitz, Nobel Prize-winning economist, thinks so. Phasing out currency and moving towards a digital economy would, over the long term, have “benefits that outweigh the cost,” the Columbia University professor said on day one of the World Economic Forum's Annual Meeting in Davos.
Stiglitz was speaking in the session Ending Corruption alongside Mark Pieth from the Basel Institute of Governance and APCO Worldwide Founder and Executive Chairman Margery Kraus. Stiglitz and Pieth co-authored a report, Overcoming the Shadow Economy, in November last year.
Quantifying the scale of the problem, Stiglitz said: “You can put it into the context of one of the big issues being discussed in Davos this year – the backlash against globalization, the darker side of globalization ... The lack of transparency in global financial markets, the secrecy havens that the Panama Papers exposed, just reinforced what we already knew ... There is a global framework for both corruption and tax evasion and tax avoidance.
“The fact that you can hide ill-gotten gains so easily in these secrecy havens really provides incentives for people to engage in this activity as they can get the economic returns and then enjoy the benefits of those returns. If there were not these secrecy havens then the benefits from engaging in these kinds of illicit activity would be much diminished.”
One of the countries that has not done enough to fight corruption is the US, Stiglitz went on to say, and one remedy could be to phase out cash and embrace digital currencies. - World Economic Forum
As we have seen in India, the European Union, and Venezuela these past few months, governments are not afraid to eliminate currencies or formulate policies meant to ban cash entirely from an economy. And this leaves the only recourse for the common man to simply opt out of the system, and get their wealth into physical gold, silver, or bitcoin, and offshore as much of it as possible so that it is outside the hands of the financiers who want to take it from you.