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.
