Cash today, no cash tomorrow

I have just returned from the local shop with a wad - a small wad - of $20 notes. This was a cashout transaction, I didn't buy anything physical. The shopkeeper was happy enough to help me out, he doesn't like holding too much cash, it makes his banking more time-consuming - and time is money in business.

I still like physical money but I recognise it has become unfashionable and possibly on the way to extinction. The death of handheld currency has been predicted for some time, the concept was a staple of the bad science fiction novels I used to read where the standard unit of exchange was the electronic 'credit' - which is more or less how reality has panned out.

But money hasn't yet completely lost its physical manifestation - I can still get 20s from the shop.

In his blog this week  published on the 'Financial Times' website Williem Buiter makes a cogent case for ditching currency altogether (although he begrudgingly says you can keep printing some $5 notes).

Buiter's main point is that dispensing with cash would allow central banks to use negative interest rates as a tool of monetary policy. Criminals and terrorists would also find life harder without being able to exchange suitcases of banknotes for guns/drugs in expensive/seedy hotel rooms.

The concept of the cashless society, however, does get the conspiracy theorists out in force, and even Buiter acknowledged "that anonymity/invisibility of the citizen vis-a-vis the state is often desirable, given the irrepressible tendency of the state to infringe on our fundamental rights and liberties and given the state's ever-expanding capacity to do so".

For him, however, the benefits of cashelssness outweighed the threat of invasive government. Not for this guy who wrote on the 'Unexplained mysteries' website: "And once all the funds are ones and zeros in a computer, it will be that much easier to turn it off in an accident or act of terrorism, leaving you with no money."

The 'Unexplained mysteries' man offered further proof: Monopoly now has an electronic version that uses "no money". Surprisingly, that turned out to be true.

"Now you can collect rent, buy properties and pay fines - with the touch of a button! It's a new way to play the family classic that's been brought up-to-date with modernized tokens (including a Segway personal transporter, an Altoids tin, space shuttle, flat-screen TV, baseball cap and a dog in handbag!), higher property values..."

And no free parking.

 

David Chaplin

 

 

Photo / Richard Robinson