Home Payment processors Cash is still king in Switzerland and it pays off

Cash is still king in Switzerland and it pays off

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When I audited an economics course in the Rice University School of Business, the speaker compared inflation to slow growing cancer and deflation to heart attack. The implication was that deflation, which is the fall in prices, is fatal and worse than inflation.

This Keynesian fear propaganda, which allows central banks to dilute currencies, is common but hollow.

Switzerland, one of the most sophisticated and economically prudent nations in the world, presents itself as a example of a counter. This country confirmed George Selgin’s assertion in Less than zero, first published in 1997, and reaffirms that lower prices are a healthy and natural partner in increasing productivity.

The profession of economist, as documented by Econ Journal Watch, suffers from deleterious Prejudices, in particular “government cheerleader”. It’s a small world and this Rice speaker Michael Brandl arrived in a EJW paper for his manual on Currency, Banking, Financial Markets & Institutions. His, along with five other important money and banking textbooks reviewed, presented a ” [that] relies on a biased selection of facts. The cumulative effect of these oversights is a lopsided textbook narrative that could potentially mislead student readers. “

It should come as no surprise that research from central banks and state-subsidized institutions to push the misconception that there is a swap between unemployment and inflation (the Phillips curve), just as they rarely call for austerity and the resulting deflation.

Since inflation is largely the result of expansionary monetary and fiscal policy, recipients of cheap credit and deficit spending welcome it, as do central banks for mission drift. On the other hand, inflation is a tax on lenders, cash holders and fixed income earners.

The Bank of Canada, for example, explicitly aims to two percent annual inflation, as if it were a blessing. Bank of Canada officials, sensing their obsolescence, fear competition from alternative private currencies which seek to avoid inflation altogether.

Swiss National Bank survey data published in June reveals what happens when a nation experiences zero inflation and even prolonged periods of deflation. Over the past decade, inflation in Switzerland only briefly cracked one percent. For 2012, 2015 and 2016 as a whole, inflation was negative.

Has Switzerland had a heart attack?

Far from there. The Swiss stand out for their confidence in their currency and their economy. Swiss unemployment rate remained less than half of from Canada over the past decade. It stands at 2.8 percent compared to 7.8 percent in Canada.

Even during the COVID-19 era, when there has been a migration to online and contactless payments, cash remains the most popular payment method for Swiss residents.

Let us perish the thought: the Swiss even have enough confidence in the franc to hold it as a store of value. As reported by Reuters70 percent of the population hold francs at home or in a safe as a form of insurance.

The past decade has seen a concerted effort by various government institutions, alongside payment processors, to switch off cash purchases. The European Central Bank in 2016, for example, ended production of 500 euro banknotes. Since 2012, the United Nations has also LED Alliance Better Than Cash, sponsored by Visa and Mastercard, and joined by 32 governments.

This taxpayer-funded coalition is pushing to cajole and coerce people into making digital payments, where they can more easily be taxed, monitored, exploited, and subjected to negative interest rates. The coalition says cashless economies will reduce terrorism and tax evasion and promote “women’s economic participation and financial inclusion”.

However, the coalition is not excited about the rise of peer-to-peer cryptocurrencies. Like Lawrence White of George Mason University Remarks, “This is the test to know if they are sincere about electronics [transactions] being the thing they are promoting. No, that’s electronic they or they can trace and tax. The same governments that restrict the use of cash restrict the use of bitcoin. “

Jerry Brito from Coin Center a warned that “a cashless society is a surveillance economy. … [The] the death of money means the birth of perfect financial control. This is the reason why there is a need for private cryptocurrencies, such as monero, which at least mimic the benefits and privacy of money.

Meanwhile, the Swiss National Bank serves its constituents and always frees 1000 francs banknotes, almost worth CA $ 1,400. The fact that the Swiss still use cash as their primary medium of exchange and even as a store of value is a symbol of good governance, including respect for civil liberties, resilience of purchasing power and fiscal maturity.

The Swiss have almost full employment and do not need inflationary quibbles.

Fergus Hodgson is Associate Researcher at the Frontier Center for Public Policy.

Fergus is a Troy Media thought leader. For interview requests, click here.


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