How Feasible is a Cash-Less Society?

vocaljess asks a question that has been on many a mind over the past decade, if not longer: "I just today realized that it has been over a week since I physically handled cash money. Due to the use of checks, debit cards, online shopping, automatic bill pay, direct deposit, etc, my family operates on a cash-less basis in the vast majority of our business transactions. With more and more establishments accepting credit/debit cards, how many others are heading the same way?" Are the advantages of a cash-less society really all that advantageous? One of the largest proposed advantages of a cash-less society is one of limited-theft, well even though money in a cash-less society wouldn't be tangible, it's no less theft-proof...it just takes a theif of a different calibur to pull it off. Do you feel we are heading toward a cash-less society? Do you think if such a thing were to happen we'd be any better off than we are today?

"Think about this: if the cumulative value of everything in the world were expressed in measures of gold, which theoretically backs the majority of world currencies, does enough gold physically exist to back the paper money value, or has the paper money itself become valuable?

And what about this: how is it that the people who depend upon cash are usually in the middle of the financial spectrum, neither the poorest nor the richest? In most extreme poverty situations, transactions are based on barter. For most middle class people and above, transactions involve checks, credit, and electronic fund transfers. For the working poor, most transactions are done in cash. How does all of this add up to the trend toward a cash-less society, where money is nothing more than numbers in a computer transferred from one account to another, to another? How far off is that future?"

Comments

This will mean the end of Steak-n-Shake

[suso]

Those bastards at Steak-n-Shake will never switch to accepting non-cash methods of payment.

I am living in a cash-less society!

[pOs*x]

It's called "post-secondary education". They take all your money for tuition, and you live cash-less for many years. It's not as great as you make it out to be!

Not possible, lower class vices need cash

[typical geek]

When the lower class sorts (you know, Joe Sixpack and friends) amuse themselves, cash often plays a part. You can't stick a dollar bill in a stripper's thong with a debit card, you can't buy marijuana with a credit card, pool games take quarters, and most bars only take cash.

Remember, just becuase you live online and buy porn online doesn't mean Joe Sixpack does.

Re:Not possible, lower class vices need cash

[hexx]

When the lower class sorts (you know, Joe Sixpack and friends) amuse themselves, cash often plays a part. You can't stick a dollar bill in a stripper's thong with a debit card, you can't buy marijuana with a credit card, pool games take quarters, and most bars only take cash.

This is faulty (and plain dumb) reasoning.

1. You can't stick a debit card in a strippers thong, but you can stick something like a Disney Dollar... strip bars can sell "Stripper Dollars" - good only at their establishment - for money.

2. You can't buy Marijuana with a credit card? Why not? Maybe it'll be sold as "spicy oregano". Maybe it'll be sold as a "relaxation service" to hide the trail. Cash-less society does not mean one person can't pay another person. People will just learn to hide what was really bought/sold.

3. Pool games taking quarters and bars taking cash is just silly - I've seen pool tables and vending machines that take credit cards, and bars that take cash only are a relic of days gone by - it's easy (albeit sometimes expensive) for a legitimate business to accept credit cards.

And of course, the "lower class" abstraction is just silly. I'm not lowerclass, and I go to strip clubs!!!

Re:Not possible, lower class vices need cash

[bughunter]

Maybe it'll be sold as a "relaxation service" to hide the trail.

That's just the problem. It's not hiding the trail. It's not hiding who you bought it from, just what you bought. When the DEA or local law enforcement finally busts the "Relaxation Service" all they need to do is subpoena their Visa records and you can be identified.

Privacy is the issue...

[YuppieScum]

The only time I use my debit/ATM card for actual purchases is when buying on-line.

For all other purposes I withdraw cash - from as many random ATM's as I can manage.

I'll continue to do so until I receive an absolute guarantee from my bank that my purchasing habits are completly private.

And, of course, there are some things that plastic just can't buy...

no less theft proof?

[pussycat]

> it's no less theft-proof...it just takes a theif of a different calibur to pull it off

That's like saying steel is no less melt-proof than butter; it just takes a different temperature to pull it off.

Postmodernism

[zpengo]

This is something that some postmodernist thinkers saw coming a long time ago. It has to do with the continual separation from reality.

"Reality" in financial terms is a 1:1 trade of value. X number of pigs for Y pounds of grain, for example. Barter.

Barter became unwieldy, so there came to be used "valuable" pieces of metal that represented the value of physical objects.

Then valuable metal became scarce, so we came to use pieces of paper that represented metal stored in a fort somewhere.

After a while, the paper was valuable just for the idea, and there was no longer a need to back it with gold.

Then, because the pieces of paper were unwieldy, we came to create bank accounts where we could write one piece of paper (a check) to represent several of the formerly gold-backed pieces of paper.

Then people got tired of carrying around pieces of paper, so they replaced it with single pieces of plastic that could be used multiple times.

But pieces of plastic had to be used in person, so when people wanted to buy something from Amazon.com, all they needed to use was the number.

Our entire financial lives can be reduced to a meaningless string of numbers. That's a far cry from bringing your pigs or cheese or grains or whatever to the market.

Re:Postmodernism

[maraist]

Then valuable metal became scarce, so we came to use pieces of paper that represented metal stored in a fort somewhere.

I'm not sure that this was the case. It wasn't that the valued goods became scarce, so much as it was impossible to wield $100,000 around in your pocket. Within a given country, the government provided security as for the value of coin, and in the worst case, that coin had some value if melted down. Later as coutries trusted this sort of exchange fiat money (or completely worthless) was used.

This required the trust that you could get something valuable back if you wanted (say to trade internationally).

In the US at least, it was eventually determined that the economy need to grow and shring, and that fixing equity on stocked goods was innefficient. If we had inflation, for example, we would have liked to have introduced new cash into society to compensate since the price of gold (the US's former standard) didn't directly vary with the rate of inflation.

Things were still safe because you could regulate the printing/coining of fiat monies. But then checking became very popular. Now you had the concept of float. One bank would honor a check (and allow accumulation of credit/cash) before the debited bank could deduct.

Later we have the concept of equity-based loans. I percieve that your good is valued such that I'll lend you most of the money for it. You take that money and spend it (via checks), but more goods and take loans out on them..

All in all, checkable money develops a velocity (the rate at which the same virtual or physical dollar is spent per year) such that our net assets are multiple times the physical printed fiat dollars total value.

In a booming economy, that multiplier increases. The problem is that that rate of boom has to be maintained or there will be a dramatic credit crunch. A recession after a boom is devistating because trillions of dollars can up and dissapear (after all checks are registered).

This would have happened even with a gold standard due to virtual assets and value.

This is something that some postmodernist thinkers saw coming a long time ago. It has to do with the continual separation from reality.

The issue has always been one of efficiency. Yes we're more at risk now that a single number can render our bank-account empty. But we have a much greater ability to refill that bank-account than we did when someone with TNT could "blow the safe" and bring you back to square one. You can be insured, bring out new mortages so you don't starve, and most importantly be paid a heck of a lot more than days of old due to incredible industry efficiencies.

-Michael

big brother =:-(

[drenehtsral]

The thing i worry about in a cashless society is that once you have the centralized system to deal with clearing the transaction, people are going to extract marketing data. The government is going to look at your purchasing habits and decide that some people have similar purchasing habits too far to one or the other side of the political spectrum, and are too much of a threat to middle class suburban normalcy and should be liquidated.
Also that means that if they _suspect_ you of selling/using drugs, they can freeze your finances completely. It gives _way_ too much control to somebody else, based on politics, purchasing habits, etc... It makes my skin crawl.

P.S.

I don't think many (any?) major economic powers even _pretend_ to back their currency with anything real anymore, let alone gold.

A cash coincidence?

[Laplace]

Over the last six months I have made an effort to pay for as much as a can with cash. For groceries, gas, books, and gear, I whip out my wallet and throw down as many twenties as I need. Its has a few nice benefits.

1) I stay in my budget. I take out cash when I get paid, and know exactly how much I have to spend until my next pay check.

2) I get less junk mail. No more grocery store fliers, no more technical junk, jut good ol' mail. Coincidence? I think not.

3) People who provide services for me (yoga, karate, acupuncture, housing, servers, etc) get instant payment, and can do what they want with it, including not reporting taxes. This makes them happy.

I only use credit cards when I absolutely need to, and am much happier for it.

transaction charge

[SirSlud]

Considering that most cashless transactions impose some sort of transaction charge, I patently refuse to accept a cash-only society until these sorts of electronic money services are free. Otherwise, you'd be paying some sort of X% tax on every 'cashless' transaction you make. I prefer cash, if only for this reason alone. (Nevermind that the tangible quality of real cash is an important part of appreciating your hard earned money.)

Living in a cash economy

[Old Man Kensey]

The simple fact of life is, things tend to heterogenize. We'll always have people who live in the rarefied strata of the super-rich and never handle their own money (cash or otherwise). We'll always have the working poor who deal (and often get paid) entirely in cash day-to-day.

We're at about the midpoint of the transition, I'd say. There are about as many places that won't take your Visa card as won't take the $20 in your wallet (or at least will give you grief over it, like a friend got the other day at Best Buy). But there's still the impetus of "legal tender" to keep cash around.

I lived in a pure-cash economy for about 3 years. I was moving and changing jobs, and closed my bank account. Then as I was about to open a new one, the bank I was moving to got swallowed up by Wachovia, so I held off. By the time I got around to it again, I didn't feel like going through the bother. (I finally had to when the company I was working for got bought by EA and my paychecks started being drawn on Wells Fargo.)

My co-workers who have always had credit cards, checks and ATMs don't understand how one can live in the "cash economy" without sacrificing quality of life, but it can (mostly) be done.

The biggest hurdle is things that require a reservation. If you travel you're going to have to resign yourself to paying up-front for your airline ticket and playing Hotel-Motel Lotto when you arrive (unless you're staying with friends or family). Renting a car will also be off-limits to you unless you have a couple of thousand dollars to spare for the duration as a deposit.

Apart from that, you really don't notice much. Sending money through the mail (to pay bills, for example) will involve getting a money order from the post office, which is in the neighborhood of a dollar per MO -- and USPS money orders have the advantage that a receipt is presentable in court as prima facie proof of payment. Getting a loan can be a little trickier if you have no previous loan history, but you can use landlords as references. Also, your utility history will most likely show up on your credit history, especially if you have a cell phone. And speaking of utilities, you may have to give them deposits before they will start service, but these are usually payable in installments.

You won't be able to buy things instantly online, but most places will be happy to bill you or ship after receiving payment.

If you can forego instant gratification and avoid things like needing to rent a car, there's nothing preventing most Americans from living a pure cash lifestyle.

Not Necessarily

[jd]

"Smart Cards", such as the one Mondo make, have the cash digitally stored on the card. You then directly transfer data from the card to the recipient, without the need of any third-party.

This has been tested in Swansea, UK, and I believe it proved reasonably successful, at least with the vendors that used it.

As I see it, credit/debit cards will die off, over time. You can't keep spending ahead of yourself, and expect to make ends meet. The recession of the Thatcher/Reagan era was largely a product of free-spending on credit. The amount spent vastly exceeded the amount available, and the economic system was not able to cope.

Further, credit/debit cards DO need a third-party, which is inherently more expensive than having the electronics do all the transacting on-site. It's therefore much cheaper for banks to churn out a bunch of "smart cards", with suffcient processing power to handle decent public-key encryption, than to maintain a clearing-house for credit cards.

Since cheaper usually wins, in the end, a system involving distributed handling of transactions will always be preferable to a centralized one.