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Category: Campfire

Around the campfire: The Missing Billions

When was the last time you lost some cash? Simply mislaid it, didn't know where it was or what had happened to it? It's a painful experience – altho...

10 December 2020

Jason Cozens

When was the last time you lost some cash? Simply mislaid it, didn’t know where it was or what had happened to it? It’s a painful experience – although the risk of that happening to you is less if you keep your cash in gold with a Glint debit card.

The Public Accounts Committee (PAC) – a select committee of Britain’s House of Commons, responsible for overseeing government expenditure – has just published a report saying that £50 billion of issued banknotes are “missing” and that the Bank of England (BoE) doesn’t know, and does not seem to care very much, where this chunk of loot is.

The chair of the PAC gave a wrist slap to the BoE saying “it needs to get a better handle on the national currency it controls”. The PAC used the drift towards a cash-free society to suggest this might “leave behind” groups of people who prefer using cash to debit cards as a fig-leaf for calling for greater monitoring over this crucial aspect of our life.

Of course this £50 billion is not ‘missing’ in the sense of being utterly lost – it’s sitting somewhere, and it can only be an assumption by the PAC that it might be being used for “illegal purposes”. £50 billion sounds – and is – a lot, but the total money supply is around £2.7 trillion. In that context it’s a drop in the bucket. Andy Haldane, the BoE’s chief economist, has just estimated that UK households have “amassed around £100 billion of excess savings”; no doubt some of this is in cash.

There are plenty of reasons why people might want to hold cash besides criminal intent.

When the BoE’s base rate is currently 0.1% there is little incentive to park one’s cash in a bank or building society deposit account, the return is so low.

Banks and building societies are also regarded as less trustworthy places to park one’s money these days – after all, the memory of the 2008 financial crash, when people had to queue to retrieve their money from the Northern Rock bank is still fresh in people’s minds.

People also hold cash in case of some unexpected eventuality, guarding against a rainy day. Such as in Hong Kong right now, where many of the local ATMs are without cash as citizens panic withdraw, just to ensure they are in control of what they see as their money. People do not have to explain or justify to anyone why they hold cash. That’s one of the beauties of banknotes – they don’t (unless subject to a criminal investigation) carry any distinctive markers of where they have been, it’s unfortunate though that just having hold of paper money doesn’t protect its value.

There is a sub-text to this message from the PAC, that the BoE (and other agencies) needs to get a clearer understanding of how cash is being used, and by whom.

Underneath this is a latent drive towards monitoring our use of fiat currency. No-one sanctions criminal activity, but any extension of government surveillance under the guise of ‘protecting the vulnerable’ needs to be questioned.

That’s one excellent reason why Glint exists – not to facilitate criminal activity, but to place control over one’s money firmly outside the reach of intrusive government and into the hands of the individual who owns it. If you have and spend gold via your Glint card you know that no-one controls your money except you. And you can’t mislay its whereabouts.

Until next week,

Jason

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