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Author Topic: 2013-04-26 LAPTOP: 8 Ways the Death of Cash Will Change Your Life  (Read 2023 times)
aigeezer
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May 25, 2013, 06:28:37 PM
 #1

http://blog.laptopmag.com/death-of-cash

Apologies if this has been posted before but I could not find it on a search. I came to post it because I got a big email ad today blathering on about the impending "death of cash". The ad included lots of examples of various entities that now refuse to take cash - all very convincing - funny/scary short YouTube example here: http://www.youtube.com/watch?v=JVk-zyB9bBg

The ad I got came from goldbug/investment guru people and I wasn't interested in their products but it got me thinking about the "death of cash" meme and its effect on BTC-world, so I did some searching and found the cited article with its memorable photo.

Some of the comments to the article are interesting, including the commenter who asserted that the penny is here to stay, apparently unaware that Canada has recently decided that pennies are no longer cash.

Overall, and surprisingly, I get the impression that Big Government and Big Finance may unwittingly(?) be pushing consumers into the arms of BTC. I haven't seen the tinfoil hat types claim it is a conspiracy yet though.


 
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Gabi
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May 25, 2013, 08:23:12 PM
 #2

Quote
The result: As tips disappear, wages will (finally) have to pick up the financial slack that tipping once achieved.
This is a US only thing, here in Europe you don't have to tip the server. In US there are even tickets with "write here the tip", here in Europe that would be absurd.

Also half of the things listed there only apply to credit cards but does not apply to bitcoin.

Quote
Commemorative or collectable coins become an increasingly confusing idea to a generation that has never actually used coins. These products vanish over time
Really? We bitcoiners have a digital currency and despite that we have collectable casascius coins!

aigeezer
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May 25, 2013, 08:54:58 PM
 #3

Quote
The result: As tips disappear, wages will (finally) have to pick up the financial slack that tipping once achieved.
This is a US only thing, here in Europe you don't have to tip the server. In US there are even tickets with "write here the tip", here in Europe that would be absurd.

Also half of the things listed there only apply to credit cards but does not apply to bitcoin.

Quote
Commemorative or collectable coins become an increasingly confusing idea to a generation that has never actually used coins. These products vanish over time
Really? We bitcoiners have a digital currency and despite that we have collectable casascius coins!


Yes, the list in the article seemed a bit lightweight to me also, especially after I had just read an ad that treated the "Death of Cash" theme with great seriousness. I don't want to inadvertently troll on behalf of the advertiser but here are some of their examples:

-- snip

Last year, Madison, WI banned drivers from mailing in cash for any and all payments. If you’re dropping off trash at the dump in Bridgewater, MA, don’t bother bringing cash. As the sign says: “Absolutely NO cash will be accepted!!!!!”

As of Feb. 1, 2012, the Maryland State Comptroller’s Office outlawed all cash payments at branch offices – statewide. Whether you’re paying taxes, traffic tickets, or zoning fines... Your cash is no longer accepted. As the Comptroller announced: “Effective February 1, 2012, the Comptroller's Office will no longer accept cash payments at branch offices.”

Thanks to state bill R.S. 37:1866, you can now be arrested in Louisiana for paying for second-hand items... with cash. As the final version of the bill reads: “A secondhand dealer shall not enter into any cash transactions in payment for the purchase of junk or used or secondhand property.”

Danny Guidry, owner of Pioneer Trading Post in Lafayette, told his local CBS affiliate: “We're gonna lose a lot of business. We don't want this cash transaction to be taken away from us. It's an everyday transaction.”

The civic government of Discovery Bay, CA has also voted to ban cash. As the Contra Costa Times reports: “The Discovery Bay Community Services District board voted this week to ban cash transactions for all services, including water bills and park reservations.”

-- end snip

The ad's theme was that cash, physical cash, is almost finished (they went on to claim it will be over because of some move by the Fed in a few weeks) - and to me that seems to open a big psychological door for BTC even if all the immediate examples favor credit cards, PayPal and so forth.

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May 25, 2013, 11:37:38 PM
 #4

Quote
The result: As tips disappear, wages will (finally) have to pick up the financial slack that tipping once achieved.
This is a US only thing, here in Europe you don't have to tip the server. In US there are even tickets with "write here the tip", here in Europe that would be absurd.

Also half of the things listed there only apply to credit cards but does not apply to bitcoin.

Quote
Commemorative or collectable coins become an increasingly confusing idea to a generation that has never actually used coins. These products vanish over time
Really? We bitcoiners have a digital currency and despite that we have collectable casascius coins!


Yes, the list in the article seemed a bit lightweight to me also, especially after I had just read an ad that treated the "Death of Cash" theme with great seriousness. I don't want to inadvertently troll on behalf of the advertiser but here are some of their examples:

-- snip

Last year, Madison, WI banned drivers from mailing in cash for any and all payments. If you’re dropping off trash at the dump in Bridgewater, MA, don’t bother bringing cash. As the sign says: “Absolutely NO cash will be accepted!!!!!”

As of Feb. 1, 2012, the Maryland State Comptroller’s Office outlawed all cash payments at branch offices – statewide. Whether you’re paying taxes, traffic tickets, or zoning fines... Your cash is no longer accepted. As the Comptroller announced: “Effective February 1, 2012, the Comptroller's Office will no longer accept cash payments at branch offices.”

Thanks to state bill R.S. 37:1866, you can now be arrested in Louisiana for paying for second-hand items... with cash. As the final version of the bill reads: “A secondhand dealer shall not enter into any cash transactions in payment for the purchase of junk or used or secondhand property.”

Danny Guidry, owner of Pioneer Trading Post in Lafayette, told his local CBS affiliate: “We're gonna lose a lot of business. We don't want this cash transaction to be taken away from us. It's an everyday transaction.”

The civic government of Discovery Bay, CA has also voted to ban cash. As the Contra Costa Times reports: “The Discovery Bay Community Services District board voted this week to ban cash transactions for all services, including water bills and park reservations.”

-- end snip

The ad's theme was that cash, physical cash, is almost finished (they went on to claim it will be over because of some move by the Fed in a few weeks) - and to me that seems to open a big psychological door for BTC even if all the immediate examples favor credit cards, PayPal and so forth.



Agreed, however much you detest Bitcoin, what  r u gonna do now that your paper money is not accepted?

https://tlsnotary.org/ Fraud proofing decentralized fiat-Bitcoin trading.
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May 26, 2013, 02:04:10 AM
 #5

Cash will not go away anytime soon. The main reason is the poor. In fact I would not be surprised that the use of cash actually goes up as a result of the the current economic crisis. For example in the United States the rise in home foreclosures leads to poor credit and the substitution of credit / debit card use with cash.

The banking industry and governments have been trying to wipe out cash for over 20 years without success, the only way to eliminate cash is actually to eliminate poverty.  

Concerned that blockchain bloat will lead to centralization? Storing less than 4 GB of data once required the budget of a superpower and a warehouse full of punched cards. https://upload.wikimedia.org/wikipedia/commons/8/87/IBM_card_storage.NARA.jpg https://en.wikipedia.org/wiki/Punched_card
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May 26, 2013, 05:52:19 AM
 #6

System D, or simply non-reported, cash & barter transactions, is actually the 2nd largest economy in the world.

It would be the very largest is the US didn't create the petrodollar.

Bitcoin isn't acclimating to system D yet because it's too technical... But if this squeeze away from cash persists, then we should see a large part of the effected countries' system D folks jump over to bitcoin at some point.

...When everyone has a smartphone, then it's game on.


I better not hear any conspiracy theorist say that the governments are herding us towards bitcoin on purpose to get us using bitcoin for some reason.... That would be so very ignorant considering that as every civilization on this planet ever started to fall, they all used the same capital controls and theft from their own citizenry as we are seeing ours do today.

It's totally to be expected, considering how bad a job the fed and socialism in general has f*cked up this planet over the last 100 years.

Luke Parker
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May 26, 2013, 08:00:39 PM
 #7

Cash will not go away anytime soon. The main reason is the poor.

The media stories I can find seem to acknowledge your issue of "the poor" and at the same time discount it, claiming that physical cash is being eliminated anyway, despite the negative effects on "the poor". For example: http://www.huffingtonpost.com/2012/04/11/cashless-society-week-without-cash_n_1418390.html

"Low-income people stand to lose the most as cash loses currency."

So many questions. Is it happening? If so what does it really mean? If not, is it about to happen?

The main theme I've been reading is that the phenomenon is happening, but that most of us are still imagining a world of printing presses that no longer exists. We are locked into a mental model in which the Fed really prints physical banknotes through a Mint, and that these physical notes travel through the pecking order of banks with various fatcats grabbing crumbs along the way. In the new model, the Fed can "surgically" and instantly insert digital cash into any part of the global system. The mechanisms appear to have changed dramatically and relatively suddenly. Even as recently as the Iraq war, huge cargo planes loaded with greenbacks were the clumsy, slow method of cash distribution. Now, allegedly, a single keypress could do the trick.

What does that kind of change imply for us all? (I have no idea what the answer is, but I suspect it is important).
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May 27, 2013, 03:31:38 AM
 #8

Cash will not go away anytime soon. The main reason is the poor.

The media stories I can find seem to acknowledge your issue of "the poor" and at the same time discount it, claiming that physical cash is being eliminated anyway, despite the negative effects on "the poor". For example: http://www.huffingtonpost.com/2012/04/11/cashless-society-week-without-cash_n_1418390.html

"Low-income people stand to lose the most as cash loses currency."

So many questions. Is it happening? If so what does it really mean? If not, is it about to happen?

The main theme I've been reading is that the phenomenon is happening, but that most of us are still imagining a world of printing presses that no longer exists. We are locked into a mental model in which the Fed really prints physical banknotes through a Mint, and that these physical notes travel through the pecking order of banks with various fatcats grabbing crumbs along the way. In the new model, the Fed can "surgically" and instantly insert digital cash into any part of the global system. The mechanisms appear to have changed dramatically and relatively suddenly. Even as recently as the Iraq war, huge cargo planes loaded with greenbacks were the clumsy, slow method of cash distribution. Now, allegedly, a single keypress could do the trick.

What does that kind of change imply for us all? (I have no idea what the answer is, but I suspect it is important).


Yes I have found the same thing in the media they mostly dismiss the question of the poor, largely I must say this is because the media pundits involved have not experienced poverty or had the opportunity to interact with large numbers of poor people. I have seen a lot of the same even within the Bitcoin community for the very same reason. I would also say say that the poor will be one of the largest driving forces behind the adoption of Bitcoin, for online transactions for the very simple reason that it makes economic sense for them while the other options for online payments simply do not.

Take a look at where Bitcoin has had the biggest growth. It is for online transactions. Why? Because it opens ecommerce to those who could not participate in a cost effective basis because for example they cannot get a credit card. These are the same people who use cash for in person transactions. I have said it before and will say it now. The low hanging fruit for Bitcoin adoption has a FICO score well below 600, more in the 350 range or has no FICO score at all.

Now for the other example. For any kind of commerce in a war zone cash is king, which is why the US would ship plane loads full of cash to Iraq during the Iraq war. Other options are gold, or some other valuable commodity. Interestingly Bitcoin could work in that kind of environment, but I doubt very much VISA, MasterCard or American Express would get you very far on the ground in a war zone. Neither will PayPal for that matter.

Concerned that blockchain bloat will lead to centralization? Storing less than 4 GB of data once required the budget of a superpower and a warehouse full of punched cards. https://upload.wikimedia.org/wikipedia/commons/8/87/IBM_card_storage.NARA.jpg https://en.wikipedia.org/wiki/Punched_card
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May 27, 2013, 01:43:42 PM
 #9

For any kind of commerce in a war zone cash is king, which is why the US would ship plane loads full of cash to Iraq during the Iraq war. Other options are gold, or some other valuable commodity. Interestingly Bitcoin could work in that kind of environment, but I doubt very much VISA, MasterCard or American Express would get you very far on the ground in a war zone. Neither will PayPal for that matter.

Interesting stuff. I'm nibbling away at one of the points, lots of other goodies to think about too.

Short version: In war zones yet to come, if cash is king as usual... what is cash?

Long rambling version:

I'm interested in the psychology of "cash" in the contexts you describe. Presumably in the Iraq war example the necessary people bought into the notion that "green paper" was valuable because of what it represented. I imagine melodramatic transactions along the lines of "if you do such and such for me I'll give you this briefcase full of green paper". You're suggesting that a transaction along the lines of "if you do such and such I'll give you this small piece of plastic" (prepaid debit/credit card) would not work - that the plastic would not be perceived as "cash", and of course you could well be right. Some upthread posts focus on the new notion that the transaction will take a form closer to "if you do such and such, look in your local (Swiss? offshore? whatever) bank account tomorrow and you'll see that the balance has gone up by a million somethings".

So we know historically that gold and other durable goods were psychologically valuable even in war zones, and we know as recently as the Iraq war that green paper was psychologically valuable, we're skeptical that plastic will be perceived as valuable in this war zone context, we're in unknown territory as to whether the electronic "magic squirt" of cash-as-a-digital-marker-on-a-bank-balance-display will be psychologically valuable (I don't know how best to describe this new entity). We don't know whether BTC would be perceived as cash in this war zone context, "if you do such and such, look in your BTC wallet tomorrow and you'll see that the balance has gone up by a million somethings".

To me it is obvious that the green paper phenomenon is highly situational. It would not have worked at all before the Fed, say about 100 years ago, for example, and (strangely) it seems green paper is no longer acceptable for many routine transactions in America today - but of course those are not war zone situations. Gold presumably would have worked at almost any time and place, despite obvious inconvenience, although I'm guessing it wouldn't work in the examples upthread where cash won't work, such as the dump in Bridgewater, MA. Neither the green paper nor the gold have any immediate value in an actual battlefield context other than contrived examples like throwing nuggets at the enemy or using green toilet paper. Both represent transactional power, probably off the battlefield, although you might imagine "spare me and I'll give you this green paper or gold" (followed by a bang and a search through pockets).

So what?... I think the essence of this is the psychology of what some mass of people or some key individuals will perceive to be "cash" at any given moment. Does green paper work in most places today? Will it work forever? Will plastic ever work if it does not work today? Will BTC work today? Tomorrow?... and of course, will this new "electronic squirt" technology work indefinitely? Reminder: I'm talking about the Fed's new power to make "fiat++" out of thin air, instantly, in any amount, anywhere in the world, by sending a Fedwire bit string that says in effect "put a million dollars here" - a million dollars that did not exist until that moment.

Before Nixon, green paper was a surrogate for gold. More recently, green paper became a surrogate for "the full faith and credit" of a powerful government, but that government is now arguably bankrupt or might be soon. The new development seems to be that Fedwire transactions are a surrogate for the green paper.

So in war zones yet to come, if cash is king as usual... what is cash, and what should we as individuals do about "cash", war zone or not? Clearly green paper worked well (psychologically) as cash in most situations and places from, say, 1945 to the present - although apparently with increasing exceptions. It seems that the "manufacturers" of green paper are nevertheless themselves determined to replace it. It would certainly be fascinating if green paper became valuable only in an underground economy, with "the authorities" trying to stamp it out because the green paper fiat that we all love to hate is not "fiat" enough for them to create and transport instantly world-wide. People keep focusing on "Bernanke's printing press" - but he's doing very different things than printing green paper.



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May 27, 2013, 07:42:21 PM
 #10

aigeezer - nice writing, still digesting it all.

Your comments about cash being digital also prompted me to think about the removal of any real inconvenience for the policy makers to fabricate new wealth. This is evinced by the slap-dash nature of the $85 Billion a MONTH flow the Federal Reserve is engaged in.

I still can't type that number without thinking - "What the hell are they doing... BILLION? Does anyone know how large that really is?" - it still boggles my mind that everyone is just walking around out there like it isn't a big deal.

Oh well, I guess we'll find out when the markets open Tuesday - seems the "flash injection" of cash the Bank of Japan had to do for their financial system is going to have some nasty consequences.

fortitudinem multis - catenum regit omnia
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May 27, 2013, 10:06:11 PM
 #11

Thanks, TraderTimm. I share your astonishment at the scale of the Fed interventions. Media tend to lull us all into number numbness by using "million", "billion" and "trillion" as though they were all roughly equivalent. I find I have to work out various equivalencies to understand the scale of things. For example, if the Fed handed out its $85 billion a month, not to the top of the banking industry pyramid but instead to random strangers it could create 85,000 new millionaires each month or over a million new millionaires per year! After that kind of calculation, I grab a calculator, imagining I must be off by several orders of magnitude - but no, it's real.

Since that money is just wished into existence, the effect of it is to dilute existing money. If such dilution were spread equally over every American man, woman and child - about 314 million people - then each of those people  would lose about $3250 per year as the Fed tries to "help" them by giving new money to its close associates. There are of course many ways to look at these numbers, but somehow I can never find any that make the Fed's interventions look benign. There are many that make the interventions look astonishingly massive though.

Wiki has only a stub on "Fedwire" where they matter-of-factly say "2009 figures show a value of 631 trillion dollars in transfers originated in Fedwire." http://en.wikipedia.org/wiki/Fedwire

My eyes glaze over at that number so I try to bring it back to reality by comparing it to the GWP, the combined gross national product of all the countries in the world. According to Wiki "In 2012, the GWP totaled approximately US$83.12 trillion in terms of purchasing power parity". This would mean that Fedwire - one little-known tool of one central bank - handled an amount of money in one year roughly 75 times greater than the entire Gross World Product for a year. Is this really money when it is flying around at that scale? I think this is a glimpse into what "the death of cash" entails, but it's early days yet.

Whatever is going on with these kinds of non-"green paper" transactions, the scale is unprecedented, unremarked and unnoticed for the most part. I don't think most people ever pause to remember that a trillion of something is a million times greater than a million of something.

Bernanke, Wall Street Journal: "The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It’s much more akin to printing money than it is to borrowing" http://blogs.wsj.com/economics/2010/12/22/is-the-fed-printing-money/

I become a bigger fan of BTC every time I read something like that.


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