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Cash is king for how long?

How long is the road to a cashless society in the United States?

Precious metals oriented articles often declare sinister motives for the concept even being discussed.

What happens to money when it is not even backed by paper? That is fiat money on steroids.

I was catching up on my reading last night and noticed an article in the latest edition of The Economist magazine.

The Swedes and the Danes love the cashless society so much that they now hate even bothering with cash transactions. This has gone to the extreme where they post “No Cash” signs like we post “No $100 Bills” signs.

The Germans and the Italians are still big fans of cash. In each case, there is a logic to supporting cashlessness and the continuing use of cash.

For Scandinavia, it cited the quicker speed of transactions for every person paying by tapping a phone. It also pointed out that the costs of each transaction drops the more of them that are conducted that way. It costs more to handle cash.

There is a self-reinforcing convenience-cost saving loop going on. In such an environment, cashlessness is the popular choice.

For Germans, the pro-cash preference is reinforced by memories of the East German secret police state. Personal privacy is valued more highly than convenience – at least at this stage.

Another reason, for cash is tax evasion. Off-the-books transactions frustrate government efforts to take its share. This aspect animates a negative feedback loop. More intrusive government efforts to get its taxes causes push back by the law abiding who feel oppressed by regulation.

Both the positive and negative feedback loops exist in the United States.

The positive one seems to be winning, but not as rapidly as in Scandinavia.

I know it is much easier to pay a taxi with a credit card nowadays than when I had to fumble with cash.

I was reminded of this at the Anaheim, Calif., American Numismatic Association convention.

The cost of a taxi to and from the Los Angeles airport was well over $100.

It is one thing to use cash to pay $5 and a $1 tip for lunch at Too-Dars in Iola, Wis. It is quite another to have to stuff a wallet with enough of the stuff to pay such a high taxi fare.

When will the tipping point to an all electronic money economy be reached in the United States?

That is the key question. I do not know the answer.

If I did, I would know how much longer the coins and bank notes we all collect will continue to be created and spent.

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

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2 Responses to Cash is king for how long?

  1. mx1025 says:

    What Dave is writing regarding cash in Denmark is correct, even though we still have quite a bit of cash transactions in shops. And certain types of shops selling food and other basic stuff must still take cash. But a different medium of exchange is soon to be a thing of the past, namely checks. From January 1, 2017 no domestic Danish checks can be cashed in any bank in Denmark. International checks will still be cashed until further notice, but our banks advise us the customers to encourage international senders of money to use wire transfer, and within the European Union wire transfer is easy and fairly cheap in fees. Dave asks when the tipping point to an electronic society will come in the US. I think it is quite far away, knowing that for instance checks still enjoy widespread use. I think the US banks, like here in Denmark, will go after the checks first. Whether the use of cash will decrease will to some extend depend on the electronic means of payment, that are offered in its place.

  2. Vachon says:

    But then I think of how I can have thousands of dollars in my bank accounts and credit lines that I can be cut off from without notice if the bank suspects or otherwise accidentally cuts me off because maybe I’m not buying something I typically would or I’m buying something in an area I’m not normally in.

    As of now, I effectively have to ask the bank for permission to use what I’ve been led to think is my money/credit line or else it gets taken from me. No one ever questions my use of cash. As a cashier I’ve witnessed many times people being arbitrarily cut off from their money because they dared to buy groceries in another county.

    Unless cashless will have the same protections as cash which right now I don’t think they do with ever-increasing reports of identity theft online and cashless transactions have the same convenience as cash which I also don’t believe given in the scenarios illustrated above, I can’t foresee us going cashless.

    Not to mention potentially embarrassing purchases or purchases meant to be surprises. Cash has always been quicker. Cashless is good for online and large purchases, but not in person for less than $100.

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