Finance Corner

Some time ago I wrote about proposed legislation that would have imposed up to two-year jail sentences on people for buying something for more than $10,000 with cash. The alternative to jail was a potential fine up to a ridiculous $25,200.

Officially the proposed legislation was called the Currency (Restrictions on the Use of Cash) Bill 2019 and it was supposed to commence in January.

Many people made submissions against the legislation and it was recently defeated in the Senate. People power does work when it comes to violations of civil rights that governments think they can just impose at will. Not to lose face, the government has said that the legislation was not appropriate in the current COVID-19 climate. How easy has it become to blame COVID-19 for everything these days!

The legislation was proposed on the pretence, somewhat unsubstantiated, that banning large cash transactions would curtail the black market and various illegal activities. That was what we were all supposed to swallow, and indeed few would argue against that motive. However, that was a smoke screen; the real agenda was to entrap people in the banking system so that negative interest rates could be imposed. Let’s face it there is not much more wiggle room when it comes to monetary policy. When you are paying the bank to hold your money, suddenly the mattress looks like a sound alternative!

Of course, with your money trapped in bank accounts, it is relatively easy for it to be confiscated in part in what is known as ‘bail-in’ policy. After all, if the economy is in a tailspin, we should all pay for it by offering up our money so that the financial institutions don’t collapse!

It is easy to argue that very few people use more than $10,000 in cash to buy things so what was the problem? However, what most people didn’t realise was that with virtually the stroke of a pen that five-figure sum could be reduced to say $5,000 and then $1,000. Therefore, faced with jail terms, people would then prefer to pay through bank transactions rather than with cash.

It was good to see this proposed legislation defeated. However, there are still fears that when the COVID-19 issue has passed and the economy returned to normal, if that is possible, it may rear its ugly head in a few years time.