Back in 1973, the Steve Miller Band song "Your Cash Ain't Nothin' but Trash" ended with "but I'm sure going to get me some more."
That's when cash was king.
Maybe not so much anymore.
These days some governments, academics, bankers, and tech innovators say cash is a relic. They say cash is destined for the trash bin.
A lot of people are frightened by the progress they're making banning it, repackaging its bits into bytes, and even replacing it with cryptocurrencies that reside entirely in cyberspace.
If you're stashing cash, you need to know what the arguments against it are all about and what's going to replace it.
Here's what you should do with your stash before it's trash…
The War on Cash
It started years ago.
The United States once had $100,000, $10,000, $5,000, and $1,000 bills. The Treasury stopped printing these big denomination notes in 1946, and the Federal Reserve recalled the last of them in 1969.
Now there's talk about doing away with $100 bills.
The European Central Bank announced in May of last year that its 500-euro note would be gone by the end of 2018.
In a surprise announcement last November, India's Prime Minister Narendra Modi said the country's 1,000-rupee banknotes (worth about $15.32) would cease being legal tender but could be redeemed at banks and post offices until Dec. 30, 2016. Modi also did away with the country's existing 500-rupee notes (worth $7.66), announcing they would also no longer be legal tender, but would eventually be replaced with new notes.
The problem with cash is it's not traceable.
While governments say it's a matter of national security, that free-flowing cash is feeding terrorist groups, financing the drug trade, that all kinds of illegal activities are cash-driven, and that cash can be counterfeited, the primary reason for the war on cash is taxation.
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The reason Prime Minister Modi killed the 1,000-rupee and 500-rupee notes is together they account for 86.4% of the value of all rupee bills in circulation. By forcing the population to exchange expiring notes for new notes, authorities can ask where the money came from, if a tax has been paid on it, and if depositors can prove it. If they can't, the tax will be taken from it and a fine totaling as much as 200% of the tax owed will be levied and taken.
The shadow cash economy is believed to be 20% of India's entire GDP, and only around 20 million individuals and families, amounting to 1.6% of India's population, are paying any income tax (data as of 2013, the most recent available).
Breaking the back of corruption where bribes are paid in cash and being able to collect income and transaction taxes could only be accomplished by attacking the old cash economy.
Soon, It'll Be Time to Cash Out
Cash accounts for less than 1% of all legal private and business transactions in the United States. The rest is conducted on plastic, by checks, and via electronic credits and debits, which is fine with the U.S. government, banks, and the Federal Reserve. They're in control of all the payment, settlement, and transaction monitoring systems.
Still, that's not enough.
About the Author
Shah Gilani is Chief Financial Strategist for Money Map Press and boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker. The work he did laid the foundation for what would later become the Volatility Index (VIX) - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk and established that company's "listed" and OTC trading desks. Shah founded a second hedge fund in 1999, which he ran until 2003. Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see. On top of the free newsletter, as editor of The 10X Trader, Money Map Report and Straight Line Profits, Shah presents his legion of subscribers with the chance to earn ten times their money on trade after trade using a little-known strategy. Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on FOX Business' "Varney & Co."