The old saying “cash is king” may soon be dealt a major blow. Governments around the world are experimenting with the idea of going 100% “cashless.” While this may sound like a good idea, it perpetuates the trend toward our monetary system becoming increasingly hyper-efficient.
This is not a good thing.
Hyper-Efficient Systems are Prone to Catastrophic Failure
A predatory animal, for example, may prey on several species, or depend on only one for its food supply. The latter will likely have more skill as a hunter when it comes to catching its only prey. However, if its prey adapts a new defense, or the hunter’s skills are compromised in any way, it will likely die. It became too efficient in its skills, and changing just one variable caused its food ecosystem to collapse.
This principle applies to all systems – including monetary systems. If all money is digital:
- What happens when the electrical grid fails? It doesn’t have to be a global or national failure; it can be regional or local.
- What happens if the monetary digits “disappear” due to hacking, failed hardware or poor software engineering? Data loss happens every day on a micro level. Nearly everyone alive today over the age of 20 has lost some data due to a system failure of some kind.
An all-digital cash society is ripe for catastrophic failure – not necessarily because of the design of the money (that is another subject), but because of the design of the delivery system. The United States electrical infrastructure is woefully in need of major upgrades – and we want to place 100% of the lifeblood of the economy on its back?
Not a wise idea.
Related: Are Cryptos Money? Not Yet.
Owning Gold and Silver Is One Way to Protect Yourself
Today, there are too many ways that your digitized money can disappear. This is why you need to have insurance. Physical commodities, including–and especially gold and silver, have, throughout history, been an anchor in every stable monetary system. Regardless of what happens with cryptocurrencies and digital money, this is not going to change, and it is why today, more than ever, it is smart to own some.