The Dark Side of the Cashless Society
The Dark Side of the Cashless Society BY ADDISON WIGGIN for Daily Reckoning
Real quick, grab a $100 bill from your wallet.
OK, humor me, any bill will do. What do you see?
I’d tell you what I see, but when I grab my Book Book, which serves as both a phone case and a wallet, there’s no cash in it. There rarely ever is. Please, keep that in mind for today’s foray into inductive reasoning.
I saw this makeshift sign over the weekend:
Seen at the Walgreens three miles from my house.
“At the airport. Very sparse here, ghost town,” reads an email from a colleague’s mom, “No coins.”
One of Agora Financial’s publishers, Doug Hill, had a similar experience flying to San Francisco last week for a meeting with a private equity fund. He couldn’t get accurate change for a pop rag he wanted to read. No coins.
“With the partial closure of the economy,” Federal Reserve Chairman, Jerome Powell says, “the flow of funds through the economy has stopped.”
Economically-speaking, the national coin shortage is a physical reminder of how slowly the nation’s economy has been; ‘velocity of money’ hit roughly zero.
“We are working with the Mint and the Reserve Banks,” Mr. Powell contends. ”As the economy re-opens, we are starting to see money move around again.”
Fair enough. What else is he going to say?
Back to the Benjamin burning a hole in your wallet. On it, you’ll see digits… a serial number for each bill.
As those bills are returned to the Federal Reserve from their journey around the country, the bills that have gotten too wrinkled, torn or worn thin get their serial numbers retired. The paper gets shredded.
Here’s what I was thinking while watching the film on Netflix the other day:
Wouldn’t it just be easier, and less expensive, if the Fed didn’t have to go through all the trouble of reclaiming and decommissioning the paper? Why not just track the serial numbers electronically?
Anyway, while fact checking the coin shortage story, a USA Today reporter included this little nugget: A Facebook post form including “a sign from a Texas-based grocery store chain H-E-B asking shoppers to use a debit card, credit card or correct change, if possible, due to the shortage.
The posts then warn against the potential of the U.S. becoming a ‘cashless society’.”
The Daily Reckoning has been on this “cashless society” story for some time.
Ideally, a cashless society is no big deal. As I mentioned, I rarely hold cash if ever. Over the weekend, I got a haircut and didn’t leave a tip because my Book Book was dry.