QUESTION: Mr. Armstrong; What happens to paper money when the government moves electronic? Is it just cancelled? Does cash then become worthless?
Thanks
RD
ANSWER: It appears that electronic currency will arrive first in Europe. The cash will be demonetized so yes, it becomes worthless. However, they will most likely give you a window in time to redeem cash for electronic money. Keep in mind this will produce a windfall for government. They are most likely going to tax anyone who cannot prove why they have the cash.
This is typical. It is also not a modern invention. The Roman Emperor Trajan (98-117AD) saw the treasury being depleted with the cost of his Dacian War. The brilliant idea was to DEMONETIZE all older coinage prior to Nero’s reform 64AD. What they were doing was declaring the old coinage to be invalid for paying taxes. As a result, you had to turn it in under the pretense it was worn. In truth, he reissued coins with 10% less silver content. So he was taking in the old, melting it down, and thereby increased the money supply by 10%. This was the Great Restitution Issue of Trajan. Politics never changes. The same responses can be cataloged into a book – perhaps I will do that in my next life since I already have a lot on my plate for this one.
