Unless, of course, physical cash no longer exists, and all you have is some sort of ephemeral digital cash in a financial institution that can be easily subject to a negative interest rate policy. A bank balance can lose nominal value with NIRP, but cash in-hand can't. Hence, the War on Cash.
My parents lived through the hyperinflation in Yugoslavia in the 90's. The stories they tell are ... fun. Ideally you exchanged everything into deutsche marks as soon as you got it.
New denominations were being printed every few weeks because the currency was losing value etc.
Hell, even when we became Slovenia I remember that at first, the highest bill was 1,000. Just ten years later, the highest had to be 10,000 because the thousand one just wasn't cutting it anymore. It was too impractical for the prices.
For a more drastic example: in pre-war Germany it was more common to get mugged for bread than for cash. Wads of cash just weren't worth enough to bother.
Sure, but nominal value is not what you use to buy things. The nominal value in my bank account won't just go down on its own either. But what I can do with it will.
Or is there a mechanism I don't know about that can lower nominal numbers in untouched bank accounts?
> A bank balance can lose nominal value with NIRP, but cash in-hand can't.
If by "nominal value" you mean "printed face value", then perhaps not (though there are plenty of time or environment-sensitive printing technologies that would allow that to change, even if there might be all kinds of good arguments against using them on currency.)
If, instead, by "nominal value" you mean "official exchange/redemption value in the units of account in which the cash is denominated", sure it can; in fact, cash that does that has been suggested and, IIRC, used in some cases -- this is done by making the nominal value (that is, the official value in current units of account) equal to the face value at the time of issue, but decreasing over time based on the duration between the issue date on the cash and the current date, so that cash held longer is worth less, even in nominal terms, as a tool to increase the velocity of money.
This assumes the service has already been rendered. If I own a store and you want to buy a candy bar from me, I can end the transaction when you attempt to pay me with a $100 bill. Since I haven't actually given you ownership of the candybar, there is no debt in place, yet. A restaurant doesn't have the same freedom, since they generally accept payment after the service is completed and you already owe them the debt for the meal.
The tricky question is - how does this work at petrol stations? You already have the fuel in your tank when you go to pay. Surely the service has been rendered at that point?
They usually have signs at the pump saying "No $100" notes.
Edit: At least in Europe you usually pump before paying by card/cash in the store. I guess it differs from the US because of the high crime rate there.
I don't pay cash often, but when I have, I've pre-paid inside the store, and the pump automatically stops when I've gotten the correct amount of gas. It may be regional. This shows people posting a mix of pre- and post-pay anecdotes: http://www.democraticunderground.com/discuss/duboard.php?az=...
In fairness, it hasn't always been like that everywhere. In my hometown, the move to 'prepay when using cash' only happened about 10 years ago. I distinctly remember working at a gas station in high school and dealing with older customer who refused to believe that they couldn't just pump then pay.
Agreed, and I'll go one further saying that it's still not 100% this way everywhere. I'm from a pretty rural area and at several of the stations there you're still free to pump then pay in cash.
I actually didn't realize pay-first for cash transactions had become the standard until recently as I made the swap shortly after 'pay at the pump' became common and never really looked back. How does it work? You just estimate how much you need, and the pump cuts off at that point? If you can't hold that much you go back for a refund?
Yes, if you overpay then you go back in and get the change back. If I give the cashier a twenty, but only pump $10 worth, then I get $10 back from them. Most people are pretty good at estimating it though, so generally the people that pay in cash will just leave the few dozen cents they didn't use.
>A restaurant doesn't have the same freedom, since they generally accept payment after the service is completed and you already owe them the debt for the meal.
They can however place signs visible in their store or write it on their menu that they don't accept $100 bills.
They can add signs saying the sky is green, they still need to accept cash as long they are collecting a debt.*
*Fastfood / food trucks are different as you pay before reviving the food.
PS: Though they can ban you from coming back after this. And the payment needs to be reasonable. 10$ for a 9.50$ meal is reasonable a 100$ bill is not.
But when ordering something, you are entering a contract.
By placing a sign saying "We don't accept cash" they are placing a condition under which they'll enter a contract with you.
By ordering, you are implicitly agreeing to that condition.
Where do you see this? I see authoritative statements saying otherwise.
"Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise"
https://www.treasury.gov/resource-center/faqs/Currency/Pages...
> For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.
These are all examples where payment is being offered before service is rendered. OP is referring to instances where payment is being collected for services already rendered (i.e. debts).
OP is referring to some source of authority but not actually naming it. If OP is referring to the message on the Treasury notes, OP's interpretation is reasonable but OP should read more texts.
> Once services have been rendered, it's illegal for someone to not accept cash as payment.
That's actually incorrect. "Legal tender" has a much more subtle effect; what it means is that an attempt to pay in cash meeting the other legal requirements for a tender of payment has an effect on whether and how much damages may be collected if the creditor later sues the debtor for the debt.
That doesn't mean that it is illegal not to accept cash, it does mean that not accepting cash for a debt already incurred may, under certain circumstances, negatively impact the availability of legal recourse to collect the debt.
As someone who had to carry large amounts of cash regularly, I feel like the author is neglecting many of the costs of cash. Personal security is one of them, and certainly one that local government care a lot more about than controlling drug traffic.
As someone who lived in Northern Sweden, freezing your fingers off is another — albeit negligible.
More seriously, I doubt that rampant inflation was the tool Argentinian government used to force a technologically unimaginable solution on its citizen.
It's not just the alarmist tone or the jittery pacing that makes this listicle unworthy of broad attention, it's the rhetorical errors as well. The author attributes this change to a war on cash rather than a global trend in response to common pressures and doesn't provide any strong evidence that governments themselves are driving these forces.
The selected links contain plenty of anecdotes but few balanced studies or statistics about why these changes are happening.
There's an interesting element of truth here: the world is moving to new systems of payment and cash use is declining, but the author is trying to frame this as dangerous without deriving a strong argument and is not clearly framing the status of cash. 1 stars for an interesting premise and a weak execution.
I think the upvotes are coming from an interest in this particular subject more than the source. I would like better material collected on the subject. Anyone have an alternative choice for research or discussion on this subject?
I found the tone problematic, and the "About" page even more-so. The blog covers, among other things, "important issues from 9/11 Truth and false flag terror".
This guy did an AMA on /r/conspiracy. I unknowingly watched a doc he did on history of "oil-ligarchy" which was actually quite interesting, I then went on to look in about it... So, anyway, just look at the AMA, it's definitely conspiracy theory material, admittedly so.
My stepdad operates a network of privately owned ATMs. You wouldn't believe the hoops he's had to jump through with banks to keep them stocked up with his own money.
At the risk of getting a few downvotes, I'm going to state that I'm all for outlawing cash payments for amounts larger than a few thousand dollar/euro.
Corruption and tax evasion are a big problem in Austria (as presumably in most parts of the world), and cash payments make them so much easier.
I just don't see a legal reason why I'd want to pay for a large purchase in cash. Almost all large purchases require some kind of paper trail anyway, so it's not like giving up cash means giving up your anonymity.
Even if I would agree with you, there is an issue with POS where Visa/Mastercard/AMEX control the space, so the government is favoring an oligopoly in the middle of every transaction (with credit cards).
Also, you are playing against privacy because some corrupt people use cash, sounds a similar argument than prohibiting cryptography.
In Slovenia it is illegal to use cash for [business] transactions bigger than 100 or so euro. I moved out soon after that happened for unrelated reasons, but I haven't heard anyone non-shady complain.
I haven't heard of any definitive results in driving down corruption and the grey market either though.
The obvious you're missing: Catching a few bad guys isn't worth putting everyone at risk. It's nobody's business what I spend my money on. And the real bad guys will still find a way.
Yes, because your buying into their FUD. Getting rid of physical cash would make it far easier for central banks to go negative with interest rates. Why would they do this? Because the idea is to force people to spend money to prop up the economy instead of government looking to see it itself is the burden through excess borrowing, taxation, and regulation. Also, with a purely digital system you could not escape negative rates or bad money policy because you don't have it in any real sense.
The real threat however is they could simply ban the sale of any good or service by flip of a bit. Let alone the surveillance possibilities, everything you buy would be logged and could be used against you at a later date and not just by government officials but in any court of law or hacker. They could impose fees or penalties and there would be no escape from it. You could not simply pull your money out of the bank because there is no physical representation to hold.
Cash is freedom. Freedom to associate and support whom you want without trace. That is not a freedom we should ever give up lightly.
>and not just by government officials but in any court of law or hacker.
Or business partner. Advertisement agency see that you have recently bought some personal item and they now show you ads for related items. Show you recently paid for a funeral and show you ads for 'saving their memory'. Shows you recently cream from a personal medical issue and show you ads for all related material... hope a friend isn't looking at the screen.
Your argument is a little extreme, but with good testing you might be able to prove it in most cases.
A few interesting concepts:
Cost of carriage: a fistful of cash is easy to carry, but a truck full of benjamins is not.
Should it be possible to make recordless transactions? What kinds of transactions? Are there exceptions?
Who should profit from containers for cash? (Visa network fees, the cost of a leather wallet, the cost of computation for BitCoin, the bank)
I've run out of time to keep whiteboarding ideas before I catch my bus, but, to summarize, I sympathize with your desire to do good in the world but there are a lot of ways cash is used that you might consider as you work on this idea.
Allowing a 'yes I'm 18' button allows for children to be exposed to obscene material very very easily. And since the government can already track what you visit, what is the big deal with adopting UK's system for allowing access to obscene material where you have to opt in and identify yourself?
Or perhaps the more famous one... a lot of crime that hurts a lot of people is made so much easier by privacy. Since the government can already invade that privacy anyways (either illegally without penalty or legally by getting a court order), I just don't see a legal reason why you'd demand so much privacy from the government. If you haven't done anything wrong, you don't have any reason to hide.
The core problem with all of these is simply put: I do not need to justify why I have a freedom, you need to justify why I should lose it. And 'making crime easier' is not a valid justification.
The big fish have a bunch of "fake" companies, they pay little tax and are still very corrupt. And they system in such countries helps them. Yet for normal people, cash means freedom. No one can control or spy on what you do with your own cash money. People with higher education would never trade cash for convinient and bullshit bingo.
People with higher education, largely left-leaning, make that trade every day. They have a strong desire to bend others to their will in a manner eerily similar to that of religious fundamentalists. They don't mind advocating for tax increases, regulation, or a cashless society so long as they believe it will have a greater negative impact on X undesirables (e.g. the wealthy, multinational corporations, bankers). However as you've mentioned, these same wealthy institutions are the most immune (see: regulatory capture, Double Irish, Dutch Sandwich). They've just advocated for their own downfall in the process and are oblivious to it all.
>I just don't see a legal reason why I'd want to pay for a large purchase in cash.
And that's fine. Don't use cash. But just because you don't see a reason to pay for a large purchase in cash doesn't mean other people don't.
The correct answer to someone who asks "Why should you be allowed to pay for something with cash?" is "Because I want to, and beyond that it's nobody's business."
If the US$100 and US$50 are eliminated, the black market will switch to gold as its reserve currency, and operate as a de facto currency exchange for customers using other forms of payment.
Organized crime hawaladars will back a Bitcoin-like electronic transfer system, because actually moving around the physical gold too often is a pain in the ass, and exposes the shipments to additional risks.
* The typical bribe is, you do something in your role as a government official, and later you legally get a high-paying job, or they pay you $100K-$200K/hour in speaking fees (the low number is Bush Jr's and the high number is Hillary's, AFAIK), etc. Works great with legal electronic payments.
* "Buying votes" usually means, either you promise government money to a group of voters, or you promise a donor to do something when you get elected. Either way, you're buying votes with the government's money so no need for cash. If by buying votes you mean that you're Trump and you're paying for your campaign, again, nothing illegal there, I doubt he travels with stacks of cash.
* "Hookers/strippers"... I dunno, whatever the problem with electronic payments there... I think a politician is in the best position to find a workaround, certainly in a better position than the average customer. In particular, if the workaround involves getting someone else to pay for it electronically, a politician is in a great position to reward that someone.
Are you serious? Every time I've been to Europe (I've lost count of how many times...) I've paid for many things with cash. I actually find it more inconvenient not to have cash there than in the US.
It depends on which country in Europe you are in. The fiscally-conservative Germans love cash and love to pay for things with cash. Cash is a lot more prevalent there. I wonder if that love of cash dates to the early 20th century where money in a German bank frequently disappeared, whether through economic collapse, hyperinflation, or simply being bombed into rubble.
There are other countries (Iceland springs to mind, but I know there are others) where electronic payment methods are so dominant that someone can get along fine without having any cash.
Europe can't always be nicely generalized. There are plenty of differences between individual European countries.
> The fiscally-conservative Germans love cash and love to pay for things with cash.
Yeah, sadly. It seems like a lot of Germans associate card payments with having no spending control and going in debt.
At least credit card acceptance has improved since the fees were cut by the European Union. I'm still voting with my wallet and putting most merchants without card acceptance on my "ban" list.
>that someone can get along fine without having any cash.
UK probably as well, especially with contactless payments.
Norway is certainly one of these. In 2011, only 6% payments were with cash. Norwegians younger than 40-50 often even don't have a wallet with space for cash, but rely on their debit card for everything. It would be quite realistic to make Norway cashless. This is not the case for Europe in general though. In many European countries, cash is still the most dominant way of payment.
hey, european here. we like cashless payments, but walking around without any paper/coins would be asking for trouble at the random counter. countless times of taxi's card reader could not connect, card was not recognized, small payments not supported etc.
Depends very much on the country I guess. The only country I've been to where I saw almost everybody use a card was Norway, although they did accept cash everywhere. Contrarily in the Netherlands (where I live), cash is still quite prevalent, although there is a trend for shops to stop accepting it.
The most well-known one is Marqt. Others in my neighbourhood in Amsterdam: Vlaamsch Broodhuys, Grapedistrict, De Stadskantine, Tolhuistuin (venue); also the Beauforthuis (venue) in Austerlitz, so it is really not only restricted to the big city. The Landmarkt and Ekoplaza near me have only one checkout lane that accepts cash.
In my most recent trips to Germany, 2013/14, the opposite was the case. Cash seemed to be the most common way of paying for things. At food stores almost everyone was paying with cash though there was some sort of card reader (debit I assume ...?) that I saw people using occasionally. As someone from the US where in my experience electronic transfers are the norm, I was pretty astonished to find that the home of the EU central bank was still running on cash.
>At food stores almost everyone was paying with cash though there was some sort of card reader (debit I assume ...?) that I saw people using occasionally.
There is a popular domestic EFTPOS scheme used in Germany. A lot of small shops (especially restaurants) don't use it though because it leaves a papertrail (ie. you have to pay taxes on it). Often Maestro/VPay will be accepted though.
In terms of card payments in general: A lot of people associate (credit) cards with being poor, in debt and having no control on how you are spending your money.
Cash on the other hand is associated with having control on how much you are spending. I've even seen people apologizing at the register, because they are paying a "small amount" ($5+) with card.
Almost all big stores accept credit cards now though after the European union cut the fees.
High-end escort agencies absolutely accept electronic payments.[0] It looks far more suspicious to withdraw thousands of dollars in cash than it does to make a payment to an innocuous sounding shell corporation.
I would not mind the problem as much if Banks worked like banks of old rather than opinionated service provides. Banks today limit how much cash is withdrawn and for what purpose, and any transaction is added to a permanent record. This record is then turned into precious customer data which can be used for any internal purposes, shared with partners (like insurance providers), and given to several government departments like tax collection, social security, the local police, secret police, national spy agency, foreign police and spy agencies, and so on. The customer has zero control and is barely recognized to be a stake holder at all.
It is possible to create the cashless society without the above problems, but no governments or banks are interested.
I was the customer, it was my money, they were required to have cash on hand, I made money when my money was loaned, there were no fees, like - NO FEES - and so on...
I don't understand the bank hate around here. There are plenty of low/no fee banks. It's a competitive business, and if you're half-way assertive you can get favourable terms on nearly everything they offer. I just received a $100 gift card for sitting down and discussing the potential to be a customer at a major Canadian bank, and I don't do anything but the basics. They want your business.
well to many they need a single, simple enemy they can blame for their failures in life. why not pick banks who rob everybody and steal everything, control whole world and are worse than worst dictators?
simple solutions to simple people (almost no pun intended)
(and lets face it, some sometime behave badly, and their missteps can be costly to their customers. but if any bank behaved like for example apple or microsoft did in past, they would be shut down immediately by regulators).
I like being called simple. It's like the jerkiness of insults. And you're right, if banks ever brought the world to financial ruin like Microsoft and Apple did they would be regulated out of existence. But stupid Microsoft and Apple instead got bailouts by the same regulators and continue to exist with even more power than before they did that thing.
Unless I'm missing the sarcasm, so tell me if I am.
Indeed, at least in the US the massive increase in credit union membership has had a huge impact. Virtually all credit union personal accounts are completely fee-free (and many reimburse ATM fees and other perks), and now the commercial banks need to fight for customers. I keep getting offers from Chase and Discover for checking accounts that are fee-free and have silly perks on top ($300 opening bonus and such), and the suspicious part of me wonders if the frequency of these offers has to do with them knowing from my credit card payments that I mostly use a credit union for checking right now.
Indeed. A lot of big bank behavior is due to their shareholders demanding more profit. When you open an account at a credit union, you literally ARE one of those shareholders. I can't say enough good things about them.
>Indeed. A lot of big bank behavior is due to their shareholders demanding more profit.
That seems a bit silly, don't you think? As if when presented with two options the executives are going to choose the less profitable one unless otherwise pressured?
The reason for getting deposits is so that they can loan 10x or 100x (or whatever your country allows) on the deposit and earn interest/fees.
That doesn't benefit me, only them.
The reason I use a bank is so that I can have "security" and "ease" in transfer/payment. They make a lot more off of me than the utility I describe above.
> The reason for getting deposits is so that they can loan 10x or 100x
They can loan out 90% of your cash, if that's what you mean. (In the US.)
They give you both security and liquidity as well as payment processing options. If you think they're overcharging, you could always buy government/corporate bonds yourself (or through bond funds, maybe.)
The money multiplier is the inverse of the reserve requirement. If the requirement is 10%, the bank loans out 10x the deposit.
This is because from each $1 you deposit, the bank keeps $0.10 in reserve, then loans out $0.90 to a debtor account. Of that, they keep $0.09 as reserves, and lend $0.81 out to another debtor account. Of that, they keep $0.081 as reserves....
Get it now? As long as the same dollar is present in the vault, it qualifies as reserves for $10 in electronic circulation.
Yes, I understood to begin with; I did grow up with a PhD economist in the house and read the textbooks in middle school while bored. This description you've just picked is no longer quite as misleading, except I'm not sure what you mean by "electronic circulation" (making loans off deposits long predates electronic record-keeping). Are you trying to impugn the value of the money in question with the adjective in order to facilitate outrage?
If not, I still don't understand why the existence of a money multiplier is a reason for Bank Hate as indicated before. It's a trivial property of any system which permits lending.
The point where "hate" enters the equation is where the bank uses my deposit to make money and do not adequately reward me.
They then, when not stopped by regulation, lend to those who cannot afford to pay back, predation. You can claim amorality, I don't buy it.
Therefore the 'multiplier' rewards/encourages bad behaviour in an arational world.
We can't get mad at the multiplier, only at those who are rewarded by it. Fair and moral reward is the only option, even if it means less reward in the short term.
> the bank uses my deposit to make money and do not adequately reward me.
So go use your money elsewhere. If you do business with a group like Vanguard and meet some modest minimums, you can buy and sell bond funds from a variety of asset classes for free, and you can see exactly how much of your returns they take - for instance, VGSH, which charges 0.10% on a 0.70% yield, or VCIT, which charges the same on a 2.28% yield. Of course, you lose your 100% guaranteed return and the use of that money with checks and ATMs and debit cards, but there you go, that's the stuff you didn't want to pay for.
> the 'multiplier' rewards/encourages bad behaviour in an [irrational] world.
You're blaming a measurement for bad behavior. That's all the multiplier is, just a measurement of lending activity. If you find fault with banks being predatory then any ability for any group to lend any money at all under any circumstances presents the same incentives. If you're upset with the existence of a multiplier you basically want to ban lending.
The real funny part, though, is that even when you seem to think that most of any bank's business is predatory and deserving of hate, you have the chutzpah to turn around complain that you're not getting a big enough cut. Do you have real principles or do you just hate banks? Decide, now.
> Fair and moral reward is the only option
In practice, whenever this statement gets turned into Politics it's basically a call for elected politicians (Bernie Sanders and friends) to decide who deserves to get money -- a paean to central planning, never mind the economic stupor and corruption it ultimately engenders. The sad thing is, it doesn't help. Even payday lenders, everyone's favorite punching-bag and icons of Predatory Lending, earn pathetic rates of return, typically in the neighborhood of 3%. And central planning gives you things that contribute substantially to crises, like when the government had FMAE and FMAC buy up millions of subprime loans without question as part of a program to extend more credit to minorities. But no one pays attention to history, so we're doomed to repeat it.
If I really hated the banks, I would make big deposits, wait a couple weeks, then go into a local branch and take it all out as cash. I would do it in a one-party consent state, so that I could record everything. The instant any bank fails to allow immediate cash withdrawal for my demand deposit, I would run to the local TV news, turn over my video, and then run down to the courthouse to file a civil suit as I gleefully await a bank run.
But I don't hate the banks. I just think they're full of amoral profit-maximizers that will consistently place their own welfare above those of their "customers". If you lower your expectations a bit, you can do business with any bank quite comfortably. It's almost like dealing with Comcast, or AT&T. Expect the worst from them at the outset, and you can only be pleasantly surprised if they do better.
Thank G-d for Shari'a Banking.
My money is my money (minus their fees, which is alright to me)
Or you can deposit your money as a lend TO the bank (and get profit of that)
Prior to electronic circulation, it would be ledger-entry circulation. The currency note or coin stays put, and it can be simultaneously spent by multiple people by making the appropriate ledger entries, rather than moving the physical note or coin.
The source of the Bank Hate, as you put it, is that the depositors, the source of the reserves, are offered 0.5% interest rates on the savings account, whereas all the loans, totaling nine times the size of the deposit, are earning 4% or more.
You deposit $100, and get $0.50 in interest. The bank loans out $900 and gets at least $36 in interest. Since this would not be legally possible without the actual deposit, one may wonder why the depositors are not offered greater incentives to increase their deposits. And the answer is often, "F U, that's why. Have another $5 fee just for asking, and now we're going to play games with funds availability on your deposited checks and incoming transfers."
Legal or not, it offends the primate sense of fairness. It is very likely that the sense of fairness would be satisfied simply by making the interest rates on savings accounts equal to the interest rate on 30-year mortgages for lowest-risk borrowers. You get $4 for your $100, and the bank still gets at least $36, minus default risk.
They used to be custodian of money deposited in their care. Ownership was clear, as was the role of the bank. At no point could they refuse a withdraw, as doing so would ruin the precious trust they needed in order to be a bank.
The few times that trust was lost, we have a historical records of a bank crisis where people rushed to the bank to get back their deposited money. A bank today can just declare a maximum withdraw limit and act as if it is normal operation (most banks in Sweden have today a continuously maximum of $1500 limit per week on cash withdraws).
> most banks in Sweden have today a continuously maximum of $1500 limit per week on cash withdraws
Wait, what? Are you seriously saying that if you want to pay cash for a $3,000 notebook computer, you have to make 2 different withdrawals a week apart to do that? How is that workable? What happens when you have an emergency and need more cash than that all at once? I mean, it doesn't come up frequently, but it comes up from time to time. Does writing a large check count? Or only physically withdrawing the money at a teller?
No, it means you go into the bank itself and explain your situation. The limits are to stop someone who steals your bank card from going to an ATM and draining your account.
Its not that easy. You have to physical go to a office that deal with cash. Its not permitted to be done through the phone, and only a small subset of bank offices deal with cash.
You also don't get the cash immediately, but have to wait a minimum of several bank days. Also, as regulation against money laundry require, you must tell the bank as to the purpose of the withdraw and they are permitted to deny it.
Its much more than just "stop someone who steals your bank card".
Even if you go into the bank, they most likely can’t give you the cash because the office doesn’t have any. And I bet you they can’t alter the limits in the ATMs either.
That makes a little more sense (that you can go to the bank to physically get more cash). It is disturbing that others are saying that most banks don't have cash and that they can deny you for basically no reason. That's very odd to me. It's not usually an issue because of credit cards, but it is still strange. Interesting to know.
I challenge you to find a bank office in a normal city in Sweden which actually handles cash. They can be found, but it’s not easy, and not all banks even have such cash-handling branches anymore, even in large cities.
So yes, in Sweden it is seriously not possible to get your hands on large amounts of cash on short notice.
You can reasonably live through your entire life there and never, ever, not even once need to handle $3000 of cash (and of course, not a single paper check ever as well).
Cash is used for small everyday purchases, but everything else is expected to be digital - bank accounts and debit/credit cards - I mean, if you're buying something big, wiring the money is free or almost free and fast, but getting that amount of cash requires significant fees and hassle; exactly the opposite of how it's in USA.
You could withdraw thousands of euros in cash and buy large things that way, but it would look strange because it is strange, as most people in the same situation would not do it and there seems to be no obvious reason why someone would want to do it that way as for (almost) everybody all their income is in the "banking world" and all the large amounts of physical cash exist only in some social niches that "the average person" meets only rarely or not at all.
> Wait, what? Are you seriously saying that if you want to pay cash for a $3,000 notebook computer, you have to make 2 different withdrawals a week apart to do that?
Why would you want to pay for a notebook computer in cash? Sounds like quite an odd scenario.
I guess a used vehicle purchase would be the more likely scenario. At least in the U.S. with person to person sales, you can usually negotiate much more favorable terms with cash.
> I guess a used vehicle purchase would be the more likely scenario. At least in the U.S. with person to person sales, you can usually negotiate much more favorable terms with cash.
Those limits are there so that when someone steals your bank card, they can't drain your account. And in just about every situation, you can personally override that limit if you absolutely need to.
Please tell me with which bank you can override this limit, as I know several people and one company that would love to know. Current solution is to go to the ATM and take out the maximum amount each week, time that the company could find much better use for.
Well if you made a cashless society like that you would just have "digital cash", and then there would be no reason for banning "analog" cash :-) The whole idea about banning cash seems to be to avoid tax avoidance and money laundering, and you can't do that if the goverment & police is not allowed to watch your bank account.
The actors who the government has the most legitimate interest in surveilling (drug cartels, racketeers, corrupt officials, etc.) are the best-equipped to switch from paper currency to alternate currencies (precious metals, gems, etc).
Another angle would be how this could play out with civil forfeiture. Remember, this was originally only used on those people who were suspected of drugs, organized crime, etc but quickly spread to the general population.
- Could they flag certain transactions?
- There's also IRS requirements for banks to report many small transactions which are used to skirt the $10k reporting requirements. How would this work for small businesses that legitimately need to do this?
I'm not seeing an article about a war on cash. Rather, I'm seeing an article about the elimination of instruments that are not Global Reserve Currencies.
The idea that the US would do away with FRNs has so many outcomes/levels associated with it, I can't get my head around it.
I found the bit of this article on the Canadian penny a bit irrelevant, and perhaps misleading. Or, I'm under the impression that it was discontinued due to the fact that one or two cents were a fraction of the average purchase, rather than some sort of initiative to discourage cash usage.
I'm not very interested in using Bitcoin at the moment, but I like how its design could enable me to have some representation of electronic currency that could give some of the decentralized flexibility of cash. Perhaps a cashless society could employ structures such as those.
I don't think this is true. Coins are multi-use. Obviously the government wants to pay as little as possible in production costs, but there isn't any reason that the production cost has to be strictly less than the unit-cost of the money.
In Economic Action Plan 2012, the Government announced it would phase out the penny from Canada's coinage system. The decision to phase out the penny was due to its excessive and rising cost of production relative to face value, the increased accumulation of pennies by Canadians in their households, environmental considerations, and the significant handling costs the penny imposes on retailers, financial institutions and the economy in general.
I heard just this morning over the radio that some bureaucrat was floating the idea of a moratorium on the printing of new US$100 and US$50 Fed notes.
The bit explicitly mentioned that US$1M fits neatly inside one briefcase when using US$100 bills, but it would take three briefcases with US$20 bills.
This may be true, but I'm a little wary of the argument now, as the drug trade, counterfeiting, and money laundering line was used when the US$1000 and CAN$1000 notes were retired, and they are worth less now than they were then. Loss of high denomination banknotes has not impeded the business of the underworld, but loss of cash transactions means that everyone in legit business now has to pay a tax to Visa and Mastercard for acting as an intermediary in payments processing.
A pile of $100 bills is $100/g, or $45400/lb. $50 bills are $50/g, or $22700/lb. A $20 bill is about $20/g, or $9080/lb. Gold is $38.82/g, or $17607.88/lb. Clearly, if you eliminate the US$100, cash movers switch to the US$50. If you eliminate that, they switch to gold, not the US$20.
US$1M in $100 bills is 22 pounds (10 kg) of cash. In US$50 bills, it is 44 pounds (20 kg). In gold, it is 57 pounds (26 kg). In US$20 bills, it is 110 pounds (50 kg).
Someone in the monetary bureaucracy might want to reconsider the unintended consequences of the black market drug trade switching to gold as its preferred currency rather than paper money.
"The Serious Organised Crime Agency claimed that "90% of all €500 notes sold in the UK are in the hands of organised crime", revealed during an eight-month analysis." [1]
€500 weighs 1.12g, but is worth $1.11, so US$1M in €500s is 2kg. A very decent saving.
Of course, the UK doesn't use the Euro, so it would be interesting to see the same analysis done in several different Eurozone countries.
Here in Brazil, we had the "Confisco da Poupança" in the 90s. According to Wikipedia (https://pt.wikipedia.org/wiki/Plano_Collor), 80% of every bank account above some value was frozen for 18 months.
Even nowadays, rumors of a new "confisco" are enough for some people to take all their money out of their bank accounts (even though constitutional amendment 32, written a decade later, contains a clause specifically designed to prevent another "confisco").
That claim makes absolutely no sense. Taxes are revenue the government brings in. It can then use that money to do stuff. Inflation does not bring in revenue, and does not make it possible for the government to do stuff.
you should look up "debt monetization" and investigate how it relates to quantitative easing and money printing.
Cliff's notes is that quantitative easing is really money printing used to finance government spending, and is really just another form of taxation, although it goes through a slightly convoluted process to get there.
Unless the inflation is caused by the government printing money.
If 10 citizens each have $10, then there are $100 in the money supply. Now the government prints $10. If no actual value was created with that $10, then the value of the dollar has to drop. Now all the citizens have $9.1 (real value) and the government has $9.1 (real value). This is the same as a 10% tax on wealth.
Of course inflation brings in revenue. You get inflation when the government prints money (electronically, these days) to "do stuff". It's no different than a tax on any account you hold with that currency.
And inflation allows the government to make money off of any asset you hold, too. Let's say you buy a brick of gold (or equities or real estate - doesn't matter) worth $100. In a non-inflationary environment, you sell you brick for $100 ten years later and... nothing.
In an inflationary environment, you sell your brick ten years later for $1000. From the government's perspective $900 of that is profit for which you'll have to pay income taxes, even though the purchasing power of $1000 is the same as it was when you bought the gold. If your tax rate is 30% that's a $270 tax payment, and the government has managed, through inflation, to take 27% of the value of your gold brick.
I use cash (or check) to avoid the "Visa/MasterCard" tax -a few percent on each transaction. If there was a zero cost way for ordinary US citizens to move smallish sums ($1-500) electronically I'd use that instead.
Having no personal experience with Bitcoin, do the exchanges not take a cut (either directly, or by adjusting exchange rates such that $X -> Y BTC -> $Z where Z < X)?
There are fees for conversion between BTC <-> USD. So long as you stay in BTC, the cost is ~$0.03 (at the moment) per transaction, regardless of size. Eventually, the goal is for a "closed loop" to form between suppliers, manufacturers, and retailers, to avoid the currency conversion costs. When you aren't paying a middleman a cut to convert between currencies, Bitcoin is extremely cost efficient.
Also, on volatility: As market cap rises, the volatility will necessarily decrease. The "wild 10% swings in a day" phase is just a phase, I wouldn't expect BTC to be more volatile in the future than, say, gold, or any national currency like the Yen (which itself has swung 10% in value in the past 2 weeks). This is because as the market cap rises, it takes more and more capital to influence the price significantly. Right now, any random person with $10,000,000 can cause a swing, whereas if the market cap was 10x higher, it would require ~$100,000,000 to have the same effect in terms of percentage.
Right, I understand that if you stay in BTC, things are better, and that long-term, the idea is that everyone accepts it and pays out with it so you don't have to keep converting and your point on volatility is a good one.
But as of today, I don't get paid in BTC, I can't pay for any of my 'standard' expenses (mortgage, utilities, etc.) in BTC, so if I owe my friend $50 and want to cover that electronically, if I use BTC, it's likely he'll end up with something more like $48 (or whatever) if he wants to actually buy something with it, which seems to be approximately the same situation as a "Visa tax", but with less predictability. Your Yen example is a good analog, actually. I also don't pay him in Yen for the same reasons. I don't get paid in it, he can't buy most things with it, and doing so would effectively reduce the amount of money due to conversions.
Frankly, when I'm owed money in the $0-100 range, I generally just ask for an electronic Amazon gift card. It's basically instant, there's no fee or conversion penalty, and we buy enough there that in those sorts of amounts, it's about as liquid an asset as there is. I understand this doesn't further any sort of advance, and perhaps even reverses it, but it's certainly pretty painless. That being said, it's not something I'd want to accept large amounts of with any frequency.
Adoption is a process, not an event. These things take time. Sure, its inconvenient at the moment to do things on the bleeding edge, but things are rapidly improving.
Its 6 hours in and all but one of the subthreads have ignored (or simply don't care?) that this guy and his various sites/media is either straight up crazy or disinfo. This guy literally has an hour long youtube video on "Agenda 21". A sibling comment notes that they "hope these sorts of blogs don't become mainstream on hn". Its kind of important insofar as any sense of community is involved to reiterate that. This is serious garbage, one can find any number of discussions of money, utility and politics ranging from any ana-cap to anti-cap. This is mindless tripe.
Data on the article is quite outdated by a couple of years, at least for Argentina. Most noticeably, tax for purchases outside the country are 35%, not 15%. "Blue dollars" are no longer a thing, since the government has not allowed people to buy dollars legally again.
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[ 3.3 ms ] story [ 208 ms ] threadOnce services have been rendered, it's illegal for someone to not accept cash as payment.
My parents lived through the hyperinflation in Yugoslavia in the 90's. The stories they tell are ... fun. Ideally you exchanged everything into deutsche marks as soon as you got it.
New denominations were being printed every few weeks because the currency was losing value etc.
Hell, even when we became Slovenia I remember that at first, the highest bill was 1,000. Just ten years later, the highest had to be 10,000 because the thousand one just wasn't cutting it anymore. It was too impractical for the prices.
For a more drastic example: in pre-war Germany it was more common to get mugged for bread than for cash. Wads of cash just weren't worth enough to bother.
Or is there a mechanism I don't know about that can lower nominal numbers in untouched bank accounts?
It would with negative interest rates.
If by "nominal value" you mean "printed face value", then perhaps not (though there are plenty of time or environment-sensitive printing technologies that would allow that to change, even if there might be all kinds of good arguments against using them on currency.)
If, instead, by "nominal value" you mean "official exchange/redemption value in the units of account in which the cash is denominated", sure it can; in fact, cash that does that has been suggested and, IIRC, used in some cases -- this is done by making the nominal value (that is, the official value in current units of account) equal to the face value at the time of issue, but decreasing over time based on the duration between the issue date on the cash and the current date, so that cash held longer is worth less, even in nominal terms, as a tool to increase the velocity of money.
http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...
Edit: At least in Europe you usually pump before paying by card/cash in the store. I guess it differs from the US because of the high crime rate there.
I actually didn't realize pay-first for cash transactions had become the standard until recently as I made the swap shortly after 'pay at the pump' became common and never really looked back. How does it work? You just estimate how much you need, and the pump cuts off at that point? If you can't hold that much you go back for a refund?
They can however place signs visible in their store or write it on their menu that they don't accept $100 bills.
*Fastfood / food trucks are different as you pay before reviving the food.
PS: Though they can ban you from coming back after this. And the payment needs to be reasonable. 10$ for a 9.50$ meal is reasonable a 100$ bill is not.
By ordering, you are implicitly agreeing to that condition.
These are all examples where payment is being offered before service is rendered. OP is referring to instances where payment is being collected for services already rendered (i.e. debts).
That's actually incorrect. "Legal tender" has a much more subtle effect; what it means is that an attempt to pay in cash meeting the other legal requirements for a tender of payment has an effect on whether and how much damages may be collected if the creditor later sues the debtor for the debt.
That doesn't mean that it is illegal not to accept cash, it does mean that not accepting cash for a debt already incurred may, under certain circumstances, negatively impact the availability of legal recourse to collect the debt.
As someone who lived in Northern Sweden, freezing your fingers off is another — albeit negligible.
More seriously, I doubt that rampant inflation was the tool Argentinian government used to force a technologically unimaginable solution on its citizen.
The selected links contain plenty of anecdotes but few balanced studies or statistics about why these changes are happening.
There's an interesting element of truth here: the world is moving to new systems of payment and cash use is declining, but the author is trying to frame this as dangerous without deriving a strong argument and is not clearly framing the status of cash. 1 stars for an interesting premise and a weak execution.
There's some interesting discussion to be had in this space, but any source that unironically uses the word "bankster" doesn't belong here.
Edit: admitedelly bit
Corruption and tax evasion are a big problem in Austria (as presumably in most parts of the world), and cash payments make them so much easier.
I just don't see a legal reason why I'd want to pay for a large purchase in cash. Almost all large purchases require some kind of paper trail anyway, so it's not like giving up cash means giving up your anonymity.
Am I missing something obvious?
Also, you are playing against privacy because some corrupt people use cash, sounds a similar argument than prohibiting cryptography.
Larry Summers: "The fact that... in certain circles the 500 euro note is known as the “Bin Laden” confirms the arguments against it."
https://www.washingtonpost.com/news/wonk/wp/2016/02/16/its-t...
I haven't heard of any definitive results in driving down corruption and the grey market either though.
The real threat however is they could simply ban the sale of any good or service by flip of a bit. Let alone the surveillance possibilities, everything you buy would be logged and could be used against you at a later date and not just by government officials but in any court of law or hacker. They could impose fees or penalties and there would be no escape from it. You could not simply pull your money out of the bank because there is no physical representation to hold.
Cash is freedom. Freedom to associate and support whom you want without trace. That is not a freedom we should ever give up lightly.
Because every true banker salivates at the thought of giving you a savings account that earns -1%.
Or business partner. Advertisement agency see that you have recently bought some personal item and they now show you ads for related items. Show you recently paid for a funeral and show you ads for 'saving their memory'. Shows you recently cream from a personal medical issue and show you ads for all related material... hope a friend isn't looking at the screen.
A few interesting concepts: Cost of carriage: a fistful of cash is easy to carry, but a truck full of benjamins is not.
Should it be possible to make recordless transactions? What kinds of transactions? Are there exceptions?
Who should profit from containers for cash? (Visa network fees, the cost of a leather wallet, the cost of computation for BitCoin, the bank)
I've run out of time to keep whiteboarding ideas before I catch my bus, but, to summarize, I sympathize with your desire to do good in the world but there are a lot of ways cash is used that you might consider as you work on this idea.
Freedom
Or perhaps the more famous one... a lot of crime that hurts a lot of people is made so much easier by privacy. Since the government can already invade that privacy anyways (either illegally without penalty or legally by getting a court order), I just don't see a legal reason why you'd demand so much privacy from the government. If you haven't done anything wrong, you don't have any reason to hide.
The core problem with all of these is simply put: I do not need to justify why I have a freedom, you need to justify why I should lose it. And 'making crime easier' is not a valid justification.
If you believe entirely in the wholesomeness of the intermediary, it's great. But becoming dependent upon the intermediary makes you beholden to it.
Tax authorities found myriad ways to catch and prosecute tax-evaders in past, where cash transactions were the rule.
Also, many Amish people don't use banks and pay for heavy farming equipment with stacks of cash.
The big fish have a bunch of "fake" companies, they pay little tax and are still very corrupt. And they system in such countries helps them. Yet for normal people, cash means freedom. No one can control or spy on what you do with your own cash money. People with higher education would never trade cash for convinient and bullshit bingo.
And that's fine. Don't use cash. But just because you don't see a reason to pay for a large purchase in cash doesn't mean other people don't.
The correct answer to someone who asks "Why should you be allowed to pay for something with cash?" is "Because I want to, and beyond that it's nobody's business."
Barter (including exchange of services as well as goods).
Organized crime hawaladars will back a Bitcoin-like electronic transfer system, because actually moving around the physical gold too often is a pain in the ass, and exposes the shipments to additional risks.
You can't (or don't want to) accept bribes, buy votes or hire hookers/strippers with traceable payment methods.
* The typical bribe is, you do something in your role as a government official, and later you legally get a high-paying job, or they pay you $100K-$200K/hour in speaking fees (the low number is Bush Jr's and the high number is Hillary's, AFAIK), etc. Works great with legal electronic payments.
* "Buying votes" usually means, either you promise government money to a group of voters, or you promise a donor to do something when you get elected. Either way, you're buying votes with the government's money so no need for cash. If by buying votes you mean that you're Trump and you're paying for your campaign, again, nothing illegal there, I doubt he travels with stacks of cash.
* "Hookers/strippers"... I dunno, whatever the problem with electronic payments there... I think a politician is in the best position to find a workaround, certainly in a better position than the average customer. In particular, if the workaround involves getting someone else to pay for it electronically, a politician is in a great position to reward that someone.
There are other countries (Iceland springs to mind, but I know there are others) where electronic payment methods are so dominant that someone can get along fine without having any cash.
Europe can't always be nicely generalized. There are plenty of differences between individual European countries.
Yeah, sadly. It seems like a lot of Germans associate card payments with having no spending control and going in debt.
At least credit card acceptance has improved since the fees were cut by the European Union. I'm still voting with my wallet and putting most merchants without card acceptance on my "ban" list.
>that someone can get along fine without having any cash.
UK probably as well, especially with contactless payments.
- http://qz.com/262595/why-germans-pay-cash-for-almost-everyth... - http://www.swissinfo.ch/eng/coming-clean_switzerland-tighten...
Even sticking to the richest countries, Germany has 61%, Ireland 69%, Italy 86%.
http://en.finance.sia-partners.com/wpfiles/2012/12/Illustrat...
There is a popular domestic EFTPOS scheme used in Germany. A lot of small shops (especially restaurants) don't use it though because it leaves a papertrail (ie. you have to pay taxes on it). Often Maestro/VPay will be accepted though.
In terms of card payments in general: A lot of people associate (credit) cards with being poor, in debt and having no control on how you are spending your money. Cash on the other hand is associated with having control on how much you are spending. I've even seen people apologizing at the register, because they are paying a "small amount" ($5+) with card.
Almost all big stores accept credit cards now though after the European union cut the fees.
[0]http://www.huffingtonpost.com/2008/03/10/emperors-club-all-a...
It is possible to create the cashless society without the above problems, but no governments or banks are interested.
There were also no services.
I don't understand the bank hate around here. There are plenty of low/no fee banks. It's a competitive business, and if you're half-way assertive you can get favourable terms on nearly everything they offer. I just received a $100 gift card for sitting down and discussing the potential to be a customer at a major Canadian bank, and I don't do anything but the basics. They want your business.
simple solutions to simple people (almost no pun intended)
(and lets face it, some sometime behave badly, and their missteps can be costly to their customers. but if any bank behaved like for example apple or microsoft did in past, they would be shut down immediately by regulators).
Unless I'm missing the sarcasm, so tell me if I am.
That seems a bit silly, don't you think? As if when presented with two options the executives are going to choose the less profitable one unless otherwise pressured?
They limit what you can do with your own money.
The reason for getting deposits is so that they can loan 10x or 100x (or whatever your country allows) on the deposit and earn interest/fees.
That doesn't benefit me, only them.
The reason I use a bank is so that I can have "security" and "ease" in transfer/payment. They make a lot more off of me than the utility I describe above.
They can loan out 90% of your cash, if that's what you mean. (In the US.)
They give you both security and liquidity as well as payment processing options. If you think they're overcharging, you could always buy government/corporate bonds yourself (or through bond funds, maybe.)
This is because from each $1 you deposit, the bank keeps $0.10 in reserve, then loans out $0.90 to a debtor account. Of that, they keep $0.09 as reserves, and lend $0.81 out to another debtor account. Of that, they keep $0.081 as reserves....
Get it now? As long as the same dollar is present in the vault, it qualifies as reserves for $10 in electronic circulation.
If not, I still don't understand why the existence of a money multiplier is a reason for Bank Hate as indicated before. It's a trivial property of any system which permits lending.
They then, when not stopped by regulation, lend to those who cannot afford to pay back, predation. You can claim amorality, I don't buy it.
Therefore the 'multiplier' rewards/encourages bad behaviour in an arational world.
We can't get mad at the multiplier, only at those who are rewarded by it. Fair and moral reward is the only option, even if it means less reward in the short term.
So go use your money elsewhere. If you do business with a group like Vanguard and meet some modest minimums, you can buy and sell bond funds from a variety of asset classes for free, and you can see exactly how much of your returns they take - for instance, VGSH, which charges 0.10% on a 0.70% yield, or VCIT, which charges the same on a 2.28% yield. Of course, you lose your 100% guaranteed return and the use of that money with checks and ATMs and debit cards, but there you go, that's the stuff you didn't want to pay for.
> the 'multiplier' rewards/encourages bad behaviour in an [irrational] world.
You're blaming a measurement for bad behavior. That's all the multiplier is, just a measurement of lending activity. If you find fault with banks being predatory then any ability for any group to lend any money at all under any circumstances presents the same incentives. If you're upset with the existence of a multiplier you basically want to ban lending.
The real funny part, though, is that even when you seem to think that most of any bank's business is predatory and deserving of hate, you have the chutzpah to turn around complain that you're not getting a big enough cut. Do you have real principles or do you just hate banks? Decide, now.
> Fair and moral reward is the only option
In practice, whenever this statement gets turned into Politics it's basically a call for elected politicians (Bernie Sanders and friends) to decide who deserves to get money -- a paean to central planning, never mind the economic stupor and corruption it ultimately engenders. The sad thing is, it doesn't help. Even payday lenders, everyone's favorite punching-bag and icons of Predatory Lending, earn pathetic rates of return, typically in the neighborhood of 3%. And central planning gives you things that contribute substantially to crises, like when the government had FMAE and FMAC buy up millions of subprime loans without question as part of a program to extend more credit to minorities. But no one pays attention to history, so we're doomed to repeat it.
But I don't hate the banks. I just think they're full of amoral profit-maximizers that will consistently place their own welfare above those of their "customers". If you lower your expectations a bit, you can do business with any bank quite comfortably. It's almost like dealing with Comcast, or AT&T. Expect the worst from them at the outset, and you can only be pleasantly surprised if they do better.
The source of the Bank Hate, as you put it, is that the depositors, the source of the reserves, are offered 0.5% interest rates on the savings account, whereas all the loans, totaling nine times the size of the deposit, are earning 4% or more.
You deposit $100, and get $0.50 in interest. The bank loans out $900 and gets at least $36 in interest. Since this would not be legally possible without the actual deposit, one may wonder why the depositors are not offered greater incentives to increase their deposits. And the answer is often, "F U, that's why. Have another $5 fee just for asking, and now we're going to play games with funds availability on your deposited checks and incoming transfers."
Legal or not, it offends the primate sense of fairness. It is very likely that the sense of fairness would be satisfied simply by making the interest rates on savings accounts equal to the interest rate on 30-year mortgages for lowest-risk borrowers. You get $4 for your $100, and the bank still gets at least $36, minus default risk.
Just use a Credit Union.
The few times that trust was lost, we have a historical records of a bank crisis where people rushed to the bank to get back their deposited money. A bank today can just declare a maximum withdraw limit and act as if it is normal operation (most banks in Sweden have today a continuously maximum of $1500 limit per week on cash withdraws).
https://en.wikipedia.org/wiki/List_of_banking_crises
https://en.wikipedia.org/wiki/List_of_banking_crises
Wait, what? Are you seriously saying that if you want to pay cash for a $3,000 notebook computer, you have to make 2 different withdrawals a week apart to do that? How is that workable? What happens when you have an emergency and need more cash than that all at once? I mean, it doesn't come up frequently, but it comes up from time to time. Does writing a large check count? Or only physically withdrawing the money at a teller?
You also don't get the cash immediately, but have to wait a minimum of several bank days. Also, as regulation against money laundry require, you must tell the bank as to the purpose of the withdraw and they are permitted to deny it.
Its much more than just "stop someone who steals your bank card".
So yes, in Sweden it is seriously not possible to get your hands on large amounts of cash on short notice.
Cash is used for small everyday purchases, but everything else is expected to be digital - bank accounts and debit/credit cards - I mean, if you're buying something big, wiring the money is free or almost free and fast, but getting that amount of cash requires significant fees and hassle; exactly the opposite of how it's in USA.
You could withdraw thousands of euros in cash and buy large things that way, but it would look strange because it is strange, as most people in the same situation would not do it and there seems to be no obvious reason why someone would want to do it that way as for (almost) everybody all their income is in the "banking world" and all the large amounts of physical cash exist only in some social niches that "the average person" meets only rarely or not at all.
Why would you want to pay for a notebook computer in cash? Sounds like quite an odd scenario.
Why is that? Tax evasion?
- Could they flag certain transactions? - There's also IRS requirements for banks to report many small transactions which are used to skirt the $10k reporting requirements. How would this work for small businesses that legitimately need to do this?
The idea that the US would do away with FRNs has so many outcomes/levels associated with it, I can't get my head around it.
I'm not very interested in using Bitcoin at the moment, but I like how its design could enable me to have some representation of electronic currency that could give some of the decentralized flexibility of cash. Perhaps a cashless society could employ structures such as those.
In Economic Action Plan 2012, the Government announced it would phase out the penny from Canada's coinage system. The decision to phase out the penny was due to its excessive and rising cost of production relative to face value, the increased accumulation of pennies by Canadians in their households, environmental considerations, and the significant handling costs the penny imposes on retailers, financial institutions and the economy in general.
(Source - http://www.mint.ca/store/mint/about-the-mint/phasing-out-the...)
Thanks for the link!
The bit explicitly mentioned that US$1M fits neatly inside one briefcase when using US$100 bills, but it would take three briefcases with US$20 bills.
This may be true, but I'm a little wary of the argument now, as the drug trade, counterfeiting, and money laundering line was used when the US$1000 and CAN$1000 notes were retired, and they are worth less now than they were then. Loss of high denomination banknotes has not impeded the business of the underworld, but loss of cash transactions means that everyone in legit business now has to pay a tax to Visa and Mastercard for acting as an intermediary in payments processing.
A pile of $100 bills is $100/g, or $45400/lb. $50 bills are $50/g, or $22700/lb. A $20 bill is about $20/g, or $9080/lb. Gold is $38.82/g, or $17607.88/lb. Clearly, if you eliminate the US$100, cash movers switch to the US$50. If you eliminate that, they switch to gold, not the US$20.
US$1M in $100 bills is 22 pounds (10 kg) of cash. In US$50 bills, it is 44 pounds (20 kg). In gold, it is 57 pounds (26 kg). In US$20 bills, it is 110 pounds (50 kg).
Someone in the monetary bureaucracy might want to reconsider the unintended consequences of the black market drug trade switching to gold as its preferred currency rather than paper money.
"The Serious Organised Crime Agency claimed that "90% of all €500 notes sold in the UK are in the hands of organised crime", revealed during an eight-month analysis." [1]
€500 weighs 1.12g, but is worth $1.11, so US$1M in €500s is 2kg. A very decent saving.
Of course, the UK doesn't use the Euro, so it would be interesting to see the same analysis done in several different Eurozone countries.
[1] http://news.bbc.co.uk/2/hi/uk_news/8678886.stm
No cash means no anonymity No cash allows banks to charge negative interest rates
Even nowadays, rumors of a new "confisco" are enough for some people to take all their money out of their bank accounts (even though constitutional amendment 32, written a decade later, contains a clause specifically designed to prevent another "confisco").
Cliff's notes is that quantitative easing is really money printing used to finance government spending, and is really just another form of taxation, although it goes through a slightly convoluted process to get there.
If 10 citizens each have $10, then there are $100 in the money supply. Now the government prints $10. If no actual value was created with that $10, then the value of the dollar has to drop. Now all the citizens have $9.1 (real value) and the government has $9.1 (real value). This is the same as a 10% tax on wealth.
And inflation allows the government to make money off of any asset you hold, too. Let's say you buy a brick of gold (or equities or real estate - doesn't matter) worth $100. In a non-inflationary environment, you sell you brick for $100 ten years later and... nothing.
In an inflationary environment, you sell your brick ten years later for $1000. From the government's perspective $900 of that is profit for which you'll have to pay income taxes, even though the purchasing power of $1000 is the same as it was when you bought the gold. If your tax rate is 30% that's a $270 tax payment, and the government has managed, through inflation, to take 27% of the value of your gold brick.
Inflation is a wealth tax. Always.
Also, on volatility: As market cap rises, the volatility will necessarily decrease. The "wild 10% swings in a day" phase is just a phase, I wouldn't expect BTC to be more volatile in the future than, say, gold, or any national currency like the Yen (which itself has swung 10% in value in the past 2 weeks). This is because as the market cap rises, it takes more and more capital to influence the price significantly. Right now, any random person with $10,000,000 can cause a swing, whereas if the market cap was 10x higher, it would require ~$100,000,000 to have the same effect in terms of percentage.
But as of today, I don't get paid in BTC, I can't pay for any of my 'standard' expenses (mortgage, utilities, etc.) in BTC, so if I owe my friend $50 and want to cover that electronically, if I use BTC, it's likely he'll end up with something more like $48 (or whatever) if he wants to actually buy something with it, which seems to be approximately the same situation as a "Visa tax", but with less predictability. Your Yen example is a good analog, actually. I also don't pay him in Yen for the same reasons. I don't get paid in it, he can't buy most things with it, and doing so would effectively reduce the amount of money due to conversions.
Frankly, when I'm owed money in the $0-100 range, I generally just ask for an electronic Amazon gift card. It's basically instant, there's no fee or conversion penalty, and we buy enough there that in those sorts of amounts, it's about as liquid an asset as there is. I understand this doesn't further any sort of advance, and perhaps even reverses it, but it's certainly pretty painless. That being said, it's not something I'd want to accept large amounts of with any frequency.
Are you talking about paying merchants or individuals? Have you checked out Dwolla?
The crime talk is just a distraction.
http://www.marketwatch.com/story/why-larry-summers-wants-to-...