Cashless society concept provokes worry

I had an email from someone who found the Numismatic News website, but does not appear to be a coin collector.

The individual has read some doomsday reports about the U.S. dollar and wants me to comment.

It is too long to completely quote here so I will offer the meat of the inquiry.

“I am just wondering about the topics received relating to the change in the currency, namely the dollar, that is happening in a few other countries recently ...

“What if anything, would be considered a replacement for the individual savings if our country would follow suit?

"How does a country do trade in any form/manner without usable currency?”

Taken together this appears to be a inquiry that is primarily focused on the moves toward a cashless society by Sweden and a small number of other countries.

What follows is the response I will send.

Going to a cashless society does not mean that the unit of account – the national currency – is being abolished. What is being abolished is its physical incarnation.

The sums of money in bank accounts would still be there, untouched and unaltered.

To spend them would require debit or credit cards, electronic payment through services like PayPal, or tapping on a mobile phone and even old-fashioned checks and bank wire transfers can be used.

Life would go on without cash.

These methods of payment would be used at the corner grocery store, or for large trade transactions. Large transactions already are electronic.

Those who are concerned about the possibility of a cashless society believe that it is an infringement of their economic rights. Financial privacy would be invaded and perhaps completely disappear.

Without cash, the government can trace every single payment to the individual who made it.

Cashlessness also opens up greater possibilities for financial shenanigans.

Rather than pay interest on accounts, banks could charge fees, called negative interest, thereby making a source of income a source of loss instead.

Without cash, it would be easier for the government through the Federal Reserve to add sums to the money supply electronically. Doing this in an uncontrolled fashion can lead to greater inflation, which is another way of reducing the value of money.

Since 1913 the U.S. dollar has lost about 98 percent of its value in terms of gold.

This occurred even with the existence of cash.

What happens without cash?

Does the process speed up?

Those who believe the process speeds up recommend holding gold and silver as assets that cannot be tampered with in this way.

It was illegal to own gold in the United States 1933-1974. The price of silver was pegged by the U.S. Treasury until 1967.

Both of those metals now trade on world markets.

In the last four decades, these metals have come to be considered a respectable asset class that can comprise up to 10 percent of an individual’s investable funds.

Those who fear the worst believe a higher proportion is called for.

Boiling it down, every individual needs to look out for his or her financial future.

Asking questions like the ones just sent to me is a good first step.

There is much to consider and this is just an outline of the factors involved.

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."

• Like thisblog? Read more by subscribing to Numismatic News.