The prolonged and repeated lockdowns, business closures and travel bans have caused widespread economic devastation and changed the way all of us live, work and interact with each other. These were the most obvious changes that the covid crisis brought with it, however, a lot more has been unfolding in the background. Governments in most advanced economies have grasped the opportunity of this crisis and all the fear and uncertainty that surrounds it and have taken bold steps to achieve further centralization of power and to expand their control and authority.
A great example of such a shift is the escalation of the war on cash that started almost immediately after the virus began to make headlines. It began with scaremongering campaigns and “expert advice” warning people about the risks of infection through the use of cash. Of course, this was all soon proven to be based on nothing but junk science, but the fear lingered and, combined with the practical realities of the hard lockdowns and quarantine orders, the use of cash declined sharply in 2020. This year, as some economies began to reopen and as citizens everywhere developed fear fatigue, governments stepped up their efforts. This was especially true in the EU: The ECB and the European Commission both made aggressive moves, and justified them by returning to their old narrative, about fighting money laundering and terror financing.
The ECB has been working on its “digital euro” project, riding the crypto wave, and hoping to achieve a bloc-wide switch to digital money. Of course, the concerns surrounding this shift are serious and very well founded. Digitization would hand over total and absolute control over the currency to the central bankers, allowing them to enact their policy decisions directly and seamlessly. Instead of relying on top-down “nudges” and disincentives, like using negative interest rates to discourage saving, the digital euro would provide the ECB with a perfect mechanism for direct policy transmission. Another glaring problem with this proposal is its privacy implications. Unlike an actual crypto currency, the digital euro would give total access to extremely sensitive consumer data to central planners, regulators and governments, and it would allow them to track and monitor citizens at a scale we’ve never seen before. As usual, “security” arguments were used to counter these fears, however, given the scale of the project, they failed to quash them.
Fully realizing how unsettling this prospect might be to the public, Fabio Panetta, the European central banker in charge of the digital euro initiative, recently went on a PR offensive to defend his project and offer stern assurances regarding all privacy concerns. As he put it in an interview with the Financial Times, “If the central bank gets involved in digital payments, privacy is going to be better protected because we are not like private companies. We have no commercial interest in storing, managing or monetizing the data of users”. Of course, those of us who understand the history of state abuses of power can immediately see that the lack of “commercial interest” in collecting and leveraging consumer data is not a convincing argument. Political interest is a far more serious threat, as is the idea of a group of unelected bureaucrats and technocrats having unimpeded and exclusive access to the financial data of all European citizens.
The European Commission has also been busy with its own campaign against cash, individual financial sovereignty and whatever is left of the concept of banking secrecy. Only a few days ago, it revealed its grand designs to create a new anti-money laundering authority (“AMLA”), that will regulate, coordinate and enforce its rules on a bloc-wide level. As might have been expected, the justification for the establishment of this new agency was once again linked to “security”. As the Commission’s proposal stated: “Money laundering, terrorist financing, and organized crime remain significant problems which should be addressed at Union level”. Equally unsurprisingly, the new body’s authority will extend to crypto assets too, with the Commission highlighting the need for EU member states to adopt new and uniform rules forcing the disclosure of the identities of crypto holders.
Although developments like these have been in the pipeline for some time, and they are far from unique to Europe, they serve as a timely reminder of the importance of securing one’s financial freedom and planning ahead. As the banking system becomes ever more hostile to savers and as central banks and governments intrude ever more aggressively into their citizens’ private financial lives and seek to limit, or even eradicate, their options and choices, it is becoming increasingly clear that this is a trend that will not be reversed anytime soon.
While it is true that regulatory efforts to restrict financial liberties have been largely successful, especially over the last couple of decades, gold and silver still offer a reliable and time-tested safe haven for investors who wish to protect their wealth in a compliant way. Holding part of one’s assets in physical precious metals, outside the banking system and in a predictable and safe jurisdiction has become a necessary component of any long-term financial plan and a core element of any serious and sustainable investment strategy.
Claudio Grass is a Mises Ambassador and an independent precious metals advisor based out of Switzerland. His Austrian approach helps his clients find tailor-made solutions to store their physical precious metals under Swiss and Liechtenstein law. He is the founder of www.claudiograss.ch and recognized as an expert on monetary history, economics, and precious metals. A financial and economic speaker and publicist. He writes about global markets, international finance, geopolitics, history and economics. Claudio is a passionate advocate of free-market thinking and libertarian philosophy. Following the teachings of the Austrian School of Economics, he is convinced that sound money and human freedom are inextricably linked to each other.