The Importance of Cash Money

[Schmelzer]

I have wondered if any one else has wondered if its actually there...

The German Bundesbank had some doubt and insisted on a transfer of the majority of the gold back to Germany. Out of 1500 they got 300, and that's all they have got. The official claim is that this is fine, all that we wanted because now 51% or so of German gold is in Germany.

 

[billvon]

A cash-less economy has certain overhead costs, similar to the convenience premium one pays for candy at the gas station.

So does a cash-based economy. These include increased security costs, printing and minting costs, increased costs to transport money etc.

 

[Xelasnave.1947]

Out of 1500 they got 300, and that's all they have got.

Hi Schmelzer.
I hope you are well.
Thats a worry couldnt you think.
What reason I wonder...its out the back...the fork lift has broken down.
Anyways there would be a simple way to put minds at ease...an audit...annual.
The lack of an audit seems strange.
Seems reasonable.
Alex

 

[Quantum Quack]

Cash money , coin and paper bills ,1$,2$, 5$, 10$, 20$, 50$ , 100$ , 1000$ etc , in Hand is important .

It means that any transaction that you have done or will do is private .

And That , is a fundamental Freedom given to all Human Beings .

If the Cash System of money is shut down by a Cashless System of money , debit , credit , card System then we can All be tracted , Hence loose our privacy . And identity .

I believe you are quite correct when saying that it is a fundamental freedom, one that should not be given away simply for convenience of digital transactions.
There are other even more insidious issues regarding digitization of currency.

Choose what you buy and choose what you sell - Digital not so...
Hard Cash not only allows you freedom to choose what you buy it also allows you freedom to choose what you sell.
At the moment most digital transactions requires a bank merchant facility to be "granted" to a seller.
At the moment the granting of the merchant facility is minimally conditioned.. terms and conditions etc... meaning that if you read an application for a merchant facility ( which I have done a few times in the past) you will find a list of "reasonable" conditions one must adhere to to be able to use that merchant facility. Thus the sales of goods is determined by those conditions. ( plus fees of up to about 4%+ depending on return risk)

Monopoly on what and who can sell
Now this is all well and good when cash transactions are out there competing with digital transactions BUT and it is a biggy BUT, when cash is no longer in circulation and is no longer competing with digital then the banking system has a monopoly on what can or can not be sold and who can or cannot sell.
If for example you fall foul of the banking system you can be back listed and never be able to sell anything again. Even today merchant facilities can be with held on the grounds of past bankruptcy or the banks considering you to be an undesirable seller for what ever reason. They can with hold merchant facilities more or less at their discretion.

Centralized Control of your money
Now consider if all merchant facilities are managed by a single centralized center.
Is this sort of power and money ( fees can go up too... you know) something you wish to give away simply for convenience?

If one takes a look at what is happening in China and how they are ramping up their systems of "complete surveillance" and the popularity of certain mobile phone apps that allow payments to be made directly via mobile phone Blue tooth and recall that China has significant interests in population control it doesn't take much imagining to realize just how powerful the government is when it can control what you buy and what you sell by the flick of a digital switch.
It wouldn't be surprising if the Chinese Yuan Renminbi (hard currency) is fully digitized with the next few years. Their apparent ( according to media) need to control the population is so strong.
Market manipulation at it's finest would be the outcome and by guess who?

 

[Quantum Quack]

Example: Donating $10 on line via a popular well known donation web site to a charity incurs a whopping 10% fee. You have to pay $11 to donate $10. Now imagine a world that is fully digital...what will happen to those fees is any ones guess.
"If it's digital it can be hacked" is also a major issue especially if one day you wake up and find your entire life savings gone with little ability to prove it being a hack or some clandestine gov intervention.

 

[Janus58]

A copy of the Boy Scout Handbook might be useful too. They never covered looting a grocery store, but I think I can figure that one out.

I'd prefer a set of the Foxfire books (for the long term. For the short term, I already have a copy of the U.S. Armed Forces Survival Manual)

 

[DaveC426913]

If the Cash System of money is shut down by a Cashless System of money , debit , credit , card System then we can All be tracted , Hence loose our privacy . And identity .

While that may be true, it can be over-applied.

When civilization is relatively stable, one will do better to cooperate, and take advantage of group activity. Trying to maintain one's independence in a social world has its own profoundly negative consequences.

There are an uncountable number of things we have built, as part of a modern, social society: mains treated water, electricity, roads, mass produced products such as automobiles, food, trade, medicine, property ownership, knowledge, law, education, aqueducts.

If one spends one's energy trying to protect oneself from a fall of civilization that does not come in their lifetime, they have cheated themselves out of a vast number of opportunities.

The questions one must ask oneself is: is the fall going to come in my lifetime? If not, it would be folly to try to protect oneself from an unlikely threat.

 

[DaveC426913]

...especially if one day you wake up and find your entire life savings gone with little ability to prove it being a hack

You are similarly at-risk of getting mugged (or your house broken into) and having all your money stolen. There is absolutely no record of how much money you had.

The huge advantage of digital transactions is the paper trail. There are records to show what money you had.

One of the big pluses of an electronic network of transactions is that, essentially, the rest of the world's 'got yer back'. They will come to your aid. Dozens of services and hundreds of people (police, credit card companies, the corporations involved in your purchase, etc.) will be on the case to right this wrong, because, when you lose your money to a thief, it's bad for them too.

That's why we have evolved - and are evolving - toward a socially-connected and interdependent world. It's better for law-abiding citizens. Worse for criminals.

 

[Quantum Quack]

You are similarly at-risk of getting mugged (or your house broken into) and having all your money stolen. There is absolutely no record of how much money you had.

except that a mugging ( say a few 100 dollars) is not the same as having your life savings deleted along with every one else's by a hacker.

A short video was shown on national news TV here that showed the cyber response unit for a major bank. Three staff at all times, 24/7 defend their networks in a dedicated cyber warfare control center. On average they fend off a serious cyber attack daily and sometimes two serious attacks per day.
The inconvenience of being with out funds available as Banks sort out their mess can be quite lengthy as demonstrated recently here by a major telco's failure which led to significant outage for every one associated, including businesses, individuals and banks.

The huge advantage of digital transactions is the paper trail. There are records to show what money you had.

What paper? Before you respond as you would remember an actual paper trail is un-hackable where as a digital one, if done properly, is.

One of the big pluses of an electronic network of transactions is that, essentially, the rest of the world's 'got yer back'. They will come to your aid. Dozens of services and hundreds of people (police, credit card companies, the corporations involved in your purchase, etc.) will be on the case to right this wrong, because, when you lose your money to a thief, it's bad for them too.

Unless you are arbitrarily blacklisted or other wise arbitrarily considered "unfit " for their services.
The greatest theft is not the individual thief but the corporate white collar guy who manipulates the "closed" (as opposed to free) market place to serve his/her ends.
Also consider how much you would loose to a mugging compared to the amount you loose in fees and charges annually...

That's why we have evolved - and are evolving - toward a socially-connected and interdependent world. It's better for law-abiding citizens. Worse for criminals.

In an ideal world perhaps, but human nature as it is, suggests that that digital interconnectedness is seriously open to abuse by those who control such interconnectedness.

Privacy? what is that?
Security of transactions? never possible even with the best of intentions someone will take advantage of it...
Security of savings? Sorry but....

The best possible situation will always be a mix of digital and cash as we have it more or less now. Mainly this is because a digital dollar at the moment represents and is supported by a hard dollar (1 for 1). No hard dollar means that the digital dollar is not grounded in the real world and remains exclusively virtual. Thus easily manipulated as suggested by the rest of my post that you chose not to comment on.

 

[Seattle]

except that a mugging ( say a few 100 dollars) is not the same as having your life savings deleted along with every one else's by a hacker.

A short video was shown on national news TV here that showed the cyber response unit for a major bank. Three staff at all times, 24/7 defend their networks in a dedicated cyber warfare control center. On average they fend off a serious cyber attack daily and sometimes two serious attacks per day.
The inconvenience of being with out funds available as Banks sort out their mess can be quite lengthy as demonstrated recently here by a major telco's failure which led to significant outage for every one associated, including businesses, individuals and banks.

What paper? Before you respond as you would remember an actual paper trail is un-hackable where as a digital one, if done properly, is.

Unless you are arbitrarily blacklisted or other wise arbitrarily considered "unfit " for their services.
The greatest theft is not the individual thief but the corporate white collar guy who manipulates the "closed" (as opposed to free) market place to serve his/her ends.
Also consider how much you would loose to a mugging compared to the amount you loose in fees and charges annually...

In an ideal world perhaps, but human nature as it is, suggests that that digital interconnectedness is seriously open to abuse by those who control such interconnectedness.

Privacy? what is that?
Security of transactions? never possible even with the best of intentions someone will take advantage of it...
Security of savings? Sorry but....

The best possible situation will always be a mix of digital and cash as we have it more or less now. Mainly this is because a digital dollar at the moment represents and is supported by a hard dollar (1 for 1). No hard dollar means that the digital dollar is not grounded in the real world and remains exclusively virtual. Thus easily manipulated as suggested by the rest of my post that you chose not to comment on.

One digital dollar backed by a paper dollar is not how the system presently works.

 

[Quantum Quack]

One digital dollar backed by a paper dollar is not how the system presently works.

how so?

 

[Seattle]

how so?

When you put money in the bank, the bank only has to have a fraction of that on hand (reserves). It lends the rest out.

If you own stocks, the brokerage doesn't have equivalent dollars on hand for that, when you have a 401k, pension, etc. there aren't equivalent dollars on hand.

If you own property it is represented by a digital record.

 

[DaveC426913]

except that a mugging ( say a few 100 dollars) is not the same as having your life savings deleted along with every one else's by a hacker.

You're comparing apples to oranges. Assume you have a similar amount of money in the cash world as well as the digital world.
Where will you keep your life-savings of cash? If not in your pocket, then where? Your home? One person could break into that.

Digital transactions provide redundancy. That always works against those who wish to do harm. Digitally, you can have as many checks and balances as you want. A thief has to break each and every one of them without getting caught - it only takes one error. That reduces the chances it will succeed.

A short video was shown on national news TV here that showed the cyber response unit for a major bank. Three staff at all times, 24/7 defend their networks in a dedicated cyber warfare control center. On

Still, apples to oranges. The number of people and effort required to perform a major heist can be matched by the same people hacking.

average they fend off a serious cyber attack daily and sometimes two serious attacks per day.

Yes. Proving it works.

What paper? Before you respond as you would remember an actual paper trail is un-hackable where as a digital one, if done properly, is.

What paper trail? Your money is in your pocket, or your home. Without transactions, no bank is going to be able to help you.

The greatest theft is not the individual thief but the corporate white collar guy who manipulates the "closed" (as opposed to free) market place to serve his/her ends.

Is it? I've had more cash stolen than digital currency?

In an ideal world perhaps, but human nature as it is, suggests that that digital interconnectedness is seriously open to abuse by those who control such interconnectedness.

As pointed out, I think you're comparing apples to oranges. Any system is open to abuse. The big advantage of digital transaction is that each and every person involved can help you.

The best possible situation will always be a mix of digital and cash as we have it more or less now.

I would tend to agree with that.

 

[river]

↑

The best possible situation will always be a mix of digital and cash as we have it more or less now.

I would tend to agree with that.

So would I

 

[Quantum Quack]

When you put money in the bank, the bank only has to have a fraction of that on hand (reserves). It lends the rest out.

If you own stocks, the brokerage doesn't have equivalent dollars on hand for that, when you have a 401k, pension, etc. there aren't equivalent dollars on hand.

If you own property it is represented by a digital record.

Unless you live perhaps in China, when you call on your banks ATM you can convert your digital money into hard cash. And if the bank has not got the paper to give you then you have to wait until it does.
All digital cash is legally supported by hard currency. Sure the paper may not even be printed yet but legally 1 digital dollar matches 1 hard currency dollar. As to how they supply that conversion is not the point.
If you remove that legal requirement then all you have left is digital currency with out the need to convert to hard currency.
Intrinsic anonymity
The most significant attribute of hard currency is it's intrinsic anonymity. A dollar is only a dollar it has no identity attached other than the sovereign.
It affords total freedom as to what it can buy. The power of the consumer is protected.
If digital and managed by EFTPOS merchant facilities with out any anonymity available the power of the consumer is totally compromised and falls to those who control those merchant facilities ( Banks, State etc)
Power of the consumer
The power of the consumer ( real) to put pressure on the supplier (price and supply) in a free market is lost once cash or even the potential for cash is removed from the system of exchange. The consumer then acts under the delusion of consumer power, that power no longer being real as it is now only granted by those in control of those transactions.

I am unconvinced that deferring my power as a consumer to an overlording Bank or State is really something I would wish to do.

 

[Seattle]

Unless you live perhaps in China, when you call on your banks ATM you can convert your digital money into hard cash. And if the bank has not got the paper to give you then you have to wait until it does.
All digital cash is legally supported by hard currency. Sure the paper may not even be printed yet but legally 1 digital dollar matches 1 hard currency dollar. As to how they supply that conversion is not the point.
If you remove that legal requirement then all you have left is digital currency with out the need to convert to hard currency.
Intrinsic anonymity
The most significant attribute of hard currency is it's intrinsic anonymity. A dollar is only a dollar it has no identity attached other than the sovereign.
It affords total freedom as to what it can buy. The power of the consumer is protected.
If digital and managed by EFTPOS merchant facilities with out any anonymity available the power of the consumer is totally compromised and falls to those who control those merchant facilities ( Banks, State etc)
Power of the consumer
The power of the consumer ( real) to put pressure on the supplier (price and supply) in a free market is lost once cash or even the potential for cash is removed from the system of exchange. The consumer then acts under the delusion of consumer power, that power no longer being real as it is now only granted by those in control of those transactions.

I am unconvinced that deferring my power as a consumer to an overlording Bank or State is really something I would wish to do.

I am not arguing for eliminating cash or not. I'm just saying that it (effectively) isn't any different than our current system. You are, more or less, arguing against your own point. You are already relying on an "overlording" Bank or State.

The only cash you actually have is whatever you have in your pocket. Everything else is digital. You say that all you have to do is to go to the ATM and "wait". As long as that works, the digital system is working as well.

When the digital system doesn't work you are screwed in either case (except for whatever is in your pocket). You are apparently taking comfort in nativity or ignorance of how the system works (as usual).

 

[Quantum Quack]

I am not arguing for eliminating cash or not. I'm just saying that it (effectively) isn't any different than our current system. You are, more or less, arguing against your own point. You are already relying on an "overlording" Bank or State.

The only cash you actually have is whatever you have in your pocket. Everything else is digital. You say that all you have to do is to go to the ATM and "wait". As long as that works, the digital system is working as well.

When the digital system doesn't work you are screwed in either case (except for whatever is in your pocket). .

Not at all....
Of course we rely on banks to maintain accurate digital records and ensure supply of funds, be it in cash or electronic, but having a fall back to cash is incredibly important as I mentioned.

1. The power of the consumer is retained
2. The ability to make transactions in cash if a Telco or bank gets scrambled.
3. The ability to make transactions anonymously ( avoiding data mining and sharing )
4. no doubt others yet to come to mind.

By keeping a small amount of cash on hand allows you the ability to in the event of a Bank or Telco failure:

• take a cab home
• buy basic needs like food, baby formula, etc
• Make sales ( if you are a shop owner)

etc...

By not having a small amount of cash in hand you risk getting caught out badly...
Certainly the Bank or Telco are not going to make payments if your account is temporarily inaccessible. (for what ever reasons they may offer)

In a cashless society, which is in part, the topic of this thread, you would be entirely dependent on the Bank for every transaction no matter how small and probably most importantly entirely dependent on a Bank as to what you can buy and what you can sell.

I am not arguing for a cash only society as the convenience of electronic fund transactions is way to attractive. I am arguing for a mix of both cash and electronic, much the same as we have now. The dependency factor is mitigated by the availability of cash.
As to your argument that the relationship of hard currency to digital is not a foundation of our financial systems I suggest you explore what having a "Run on the Banks" means.

You are apparently taking comfort in nativity or ignorance of how the system works (as usual)

funny I was going to claim the same about you but was too polite and respectful to do so.... hmmmm.....

Do you remember the cash of 87?

 

[Seattle]

...
As to your argument that the relationship of hard currency to digital is not a foundation of our financial systems I suggest you explore what having a "Run on the Banks" means.

funny I was going to claim the same about you but was too polite and respectful to do so.... hmmmm.....

Do you remember the cash of 87?

I don't need to explore what having a "run on the banks" means. I have an MBA, I understand banking.

Regarding the "cash of 87"... I assume you mean the "crash of 87". I remember it. I was working in international banking at the time.

It didn't have a big effect on me personally however even though I did have some stocks that went down over the short-term.

None of this has much to do with the "importance of cash-money".

I don't see that anyone is going to take your cash away from you so you have nothing to worry about. Anything that isn't in your pocket is digital now. You have to trust in the institutions, government, banking, insurance.

The alternative is to keep your money under your bed and trust that you don't get robbed as there will be no paper trail.

All that is actually happening is just that people actually use cash now less and less. It's like a newspaper. They are still around, it's just that very few people are interested in getting their news that way these days.

 

[iceaura]

All that is actually happening is just that people actually use cash now less and less. It's like a newspaper. They are still around, it's just that very few people are interested in getting their news that way these days.

And so fewer people are getting news.

Also, most people who are getting news, still, but on line or wherever, are still getting their news from newspaper journalism (or related print publication) - just filtered, curtailed, incomplete, ephemeral, and second or third hand.

The digital and online news realm is still largely parasitic. And a parasite that kills its host has an uncertain future. Some of that aspect of things applies to digital money in a modern industrial economy.

So does a cash-based economy. These include increased security costs, printing and minting costs, increased costs to transport money etc.

They are lower, in the US, and fall on different people.
The credit card companies actually got a law passed allowing them to refuse service to anyone who discount priced for cash - a four or five percent discount was still an extra profit, in many businesses. You see minimum purchase requirements for credit card pay. The retail interface of the entire economy is now running with a couple of points overhead to support credit card payment - before interest.

 

[sculptor]

The credit card companies actually got a law passed allowing them to refuse service to anyone who discount priced for cash - a four or five percent discount was still an extra profit, in many businesses. You see minimum purchase requirements for credit card pay. The retail interface of the entire economy is now running with a couple of points overhead to support credit card payment - before interest.

Long ago, I was used to getting a 10% discount for cash. One day, my hardware/tool supplier told me that a new law forbade a cash discount---------we found a work around---he paid me a 10% commission/rebate on cash sales---$100.00 in receipts = $10.00 rebate.

When companies can get laws passed that favor their business model, we're all potentially screwed.

Whenever you use a credit card, debit card, apple pay, etc that sale is stored and sold to anyone who will pay for that information.
For privacy: Some things, I buy only with cash.