Cash is Still King, Especially while Travelling
I have seen articles discussing “the end of cash” and there is even a book out called The End of Money: Counterfeiters, Preachers, Techies, Dreamers–and the Coming Cashless Society. The author of this book, Wolman “flies to Delhi, where he sees first-hand how cash penalizes the poor more than anyone—and how mobile technologies promise to change that.”
Really? The poor (and not so poor) often use an underground economy with cash that keeps them from having to report income so I’m not sure how mobile technology will be a benefit there. There are many who work under the table for cash, collect food stamps and disability etc. This way, if they go over the limit allowed for income, they keep the cash and their benefits. With mobile technology only, it might be easier to spot this illegal activity. However, while this may be good for society, it doesn’t sound “good” for the poor, if “good” means they have more access to money in general. Once they lose their benefits, they have less. On second thought, maybe this is a benefit of going to a cashless society.
Anyway, I have been thinking about the use of cash while traveling in California for the past few weeks and I realize its benefits more than ever. Twice now, I have been in stores where the credit card machine broke, one for two days, and the owners would only accept cash for purchases. The beach area I am staying now has a sign up, “Cash only” because they either don’t want to deal with credit cards, it’s too expensive or some of their clientele doesn’t have access to a bank account or credit card. While shopping, my credit card wouldn’t work. Why? I am traveling in an unknown area and the card was locked down. When I tried to call on a weekend to get the card re-activated, no one would answer my call. Thank goodness, I have a few bucks on me to get me through until the week starts.
I always go to the ATM and get cash which I then spend as needed. What I spend is God’s business if He is interested, and mine if there is some practical reason to take notice. I have no sympathy for these metrosexuals fiddling around with their manbags cards at the checkout slowing things down. Moms are different (I’m an old sexist curmudgeon) they have purses and credit cards because they are spending money they don’t have. I understand. But there is no excuse to leave a record of how you spent your money for every marketer, cop and government bureaucrat if you can spend cash and leave them in the dark. I too have noticed you can’t buy gas out of area in the US, but you can get cash from the ATM. I feel the bigger question is a cashless society is how we will be able to pay off our cops and Congressmen? I no longer need to buy the latter but I wouldn’t dream of approaching the guys on the local drug squad for my medical marijuana with anything other than cash.
A cashless society is an energy dependent society. Without the electricity, nothing can happen. Without the comm lines, nothing can happen. Yes, it takes energy to produce and handle cash, but it is asynchronous, when the power goes out, the cash still works, commerce still works, society still works. The cashless society requires constant dependable power, communications and back up equipment. In other words, it is high maintenance.
In a cashless society, when the card readers are down for whatever reason (electricity, comms, mechanical), there is no commerce, there is only desperate dependence on the benevolence of the State to provide your sustenance till the lights come back on.
Ah yes, no cash, no electricity and those shining days after the ATM networks go down!
A cashless society is one where the government can monitor everything you do, and tax all activities, a nanny statist’s wet dream . It also means that money has finally become the ultimate funny money, just numbers on a computer and more can be created by changing the numbers in the computers. Inflation will run wild. The bubble and burst problem will get worse.
Monetary discipline, meaning limiting the growth in currency to the long term average growth in the economy (3-4%) is the only path to stable prosperity.
And of course, we all can be sure that when credit/cash cards = life, the banks will keep transaction fees low and fair out of a sense of civic duty and social responsibility.
And as stated above, money does not need electricity to work.
Funny. I’d argue almost the exact opposite, particularly for travel in a region with another currency. Airlines seem to be moving cash-only for any onboard purchases and it seems more or less to make hotel or dinner reservations without a credit.
Dave (@4): Great idea! When I lived in the boonies in China for a year (2005-6), EVERYTHING was done with CASH. Credit cards were largely unheard of, and you got an ATM card to get CASH. ATM cards could not be used as debit cards, and the locals only wanted to deal with all the funny colored slips of paper with Mao’s smiling face.
When I tried to change traveller’s checks at the bank (associated with HSBC) the woman handling the transaction probably would have kicked me in the groin if my translator was not there. When I showed the TC, it was like I was propositioning her to perform a sex act in the bank lobby. The transaction took 4 HOURS (while they checked and double checked the serial numbers with AMEX, and after I had to show the original receipt for the TC).
So when people have little trust in the government, Cash is King.
I would point out another benefit when traveling overseas: set budgets. If I have €500 cash (spending money on a trip in 2006), then I have to carefully budget my expenses. As it turned out, I left the trip with about €3, but having paid for meals, gifts, and activities. It frees the mind from worry about exchange rates, at least for me, because I stop thinking in dollars.
We do a cash Christmas to help stay in budget. So we are stashing Christmas cash!
Trey
OT but I assume your book addresses this phenomenon:
http://dalrock.wordpress.com/2012/10/15/how-the-destruction-of-marriage-is-strangling-the-feminist-welfare-state/
Very interesting read Zorro… it’s what we call a downward spiral.
heh, cash hurts the poor people? And how would the government turning off their agency hurt them? ‘Oh you poor dear, we don’t have you on file. NEXT!”
The ability to control money flow is the ability to control you… that means we go from more or less free, to police state in one swoop.
Ever tried to pay anything cash over $9999? The bank has to report that cash to the govt… and probably would EVEN IF they weren’t required to, because the assumption is that no-one would pay cash for large things any more.
The only option is to slowly accumulate moeny at home, and then worry over it’s safety…
“While shopping, my credit card wouldn’t work. Why? I am traveling in an unknown area and the card was locked down.”
You were red-flagged as a security measure. That’s happened to us, too – you try to buy gas in a state where you’ve literally never been before; the credit-card people wonder if the card’s been stolen.
Last spring my husband and I went to Hawaii for the first time; I called the cc people ahead of time, told them where we were going and what dates we would be there. Had no trouble at all.
As for cash … I find myself returning to it more and more, because I’m the one who balances the checkbook, and it’s less work to enter one withdrawal than a dozen fiddly little debit-card purchases.
The writer’s argument is complete hogwash. Cash is the preferred instrument of the poor, for a multitude of reasons – one of which is that many of the poor have no access to banking systems.
I work in the banking technology industry. It comes as quite a surprise to outsiders to learn that, even in the US, some 30% of the population is ‘unbanked’ – they have no banking relationship at all. No bank account, to credit card, no debit card, no ATM card, nothing. For them, it is cash or low-cost money orders.
Some of these people are excluded from these products, but many more eschew them by choice. Especially with interest rates at historic lows, their approach actually makes a lot of sense.
When I started in this industry, back in the days of gas light and small dinosaurs, my work was in designing ATMs. I was told I was a fool to choose this direction – everybody knew that the whole world would be cashless in just a few years, and then where would I be? Well, here I am. Several companies in this industry quit the ATM business in the 80s or 90s – there’s no future in it! – and have now had to scramble their way back in as ATMs just continue to expand exponentially.
I know document-security expert Frank Abagnale personally – you know, Leonardo diCaprio, “Catch Me If You Can”, that guy. He’s been saying the same thing about this for 25 years – we’ll see a cashless society, at the same time we see a paperless toilet.
Every time I see the TV commercial for the ‘Square’ credit-card reader that plugs into your smartphone, and they say that they ‘only’ charge a 2.75% handling fee, I think to myself ‘great! There’s another merchant that will give me 2% off for cash!’.
llater,
llamas
Interesting information. I live in Australia where the poor do have bank accounts because the government that pays all pensions from unemployment to age pensions including single parent,disability and student will only pay it into a bank account. The control reasons are obvious, but I rember in the 80 when they used checks, every time I moved I would get previous occupants checks – sometimes under several different names. Fraud was rampant with lots of double dipping. I notice there are ever increasing numbers of ATMs despite people using their cards in the stores. I don’t think cash is going away soon. But I hear the Swedish government is going to force it on their populace.