The Demise of Cash

My biggest concern with this is not necessarily the privacy issue, but rather the control issue.

[snip]Decided not to post the rest because of the gag order on politics...[/snip]

 

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Privacy/Anonymity and control are opposites to each other, anonymity prevents the abuse of power and allows freedom.

 

There are still check cashing places around for a reason. Plenty of people in the USA who have horrible credit.

 

Indeed, but I believe the government could care less about tracking what most people spend their money on. They want control.

Take Individual Retirement Accounts (IRA) as an example. You invest money in a special account for your retirement. You get tax breaks for investing your money in such an account - either up front (traditional IRA), or on the earnings (Roth IRA). Sounds great, and they are. But, they also give a great deal of leverage to the government. There are only a few qualifying reasons to withdraw your money early from an IRA, and if you do, you get hit with some pretty severe penalties. Once you hit retirement age, I believe you can only withdraw your money on an annunity schedule. I don't think you can take a lump sum payment and take all your retirement money to another country. You can invest your IRA money into precious metals, but it still boils down to dollars in - dollars out. So, as an American with an IRA, the continued success of the country, our government, and the dollar is in my best interest.

If things get worse than they already are, as a veteran and a person that values our constitution, I could see myself being one of those people participating in a revolution. But, my first priority in life is the well being of my family. I would have to consider the pros and cons of the situation and the money my wife and I have in our IRAs would weigh heavily on our decision. Basically, life would have to get pretty bad before there would even be a chance of our coming out ahead in any sort of revolution...

 

There are a few things I'm sure the government is interested in to be tracked, tobacco and alcohol are there still on the side of lesser evil and there is no guarantee that the once collected information won't be used for other purposes. Everything you buy tells something about the way you live how you move and some other parties besides the state have interest in such information. What is with the health insurance industry wouldn't they want to create individual cost risk plans? Or think about a person of public interest being totally transparent in all their doings? Aren't there things that are private? However, if everything is accounted for in electronic form with date and id there is no holding back anymore. A system built with anonymity in mind is far more difficult to be misused to control people.

In the past there have been enough scandals with lost or leaked informations, including information of military relevance. Any system that can be misused will be misused.

I've little knowledge about the workings of your Individual Retirement Accounts, what I can read out of your writings is that you're not too thrilled to be dependent on it/or the state for that matter.

 

The US Consitution guarantees that one is to be secure in their papers. I don't know if this applies, but it should. The idea that was promoted in the constitution, the repeat limitations built into it, was that people should be able to shield themselves from the government, so as to prevent it from hostile and repressive activity. This ideal is being lost. As such, the basic ideals of our founding is likewise dieing a slow death.

 

Well, according to David Wolman (link in the initial post) we have about 30 more years until cash is phased out in the US. Plenty of time and that is one country only ... coins and notes may stay around a little longer elsewhere.

By that time, 2040 or so, the means of payment that may be considered modern today - credit cards, plastic tags, cell phones, etc. - could already be obsolete, hehe. But of course handling cash is much more expensive than the cashless alternatives that we have these days. Besides, there is the convenience factor: Most people get cash by going to the bank or ATM and withdrawing money. Nice to have for small purchases, but ... heck, this adds an extra step.

For many businesses cash is hardly relevant anyway. Earlier this year I read that in Sweden, for example, notes and coins represent 3% of the transaction volume. (The corresponding figures are 7% for the US, and 9% in the euro area.) Currently it is still expensive to accept "plastic" for, say, a $1 purchase. But that is changing, and I think many appreciate the idea that they do not have to carry lots of cash.

Yes, cash is "anonymous". Plastic could work similarly; Europeans may know Paysafecard for example. However, governments tend to dislike such means of payment, and have partly outlawed them. And cash? The Spanish government decided earlier this year that cash payments of more than €2,500 are against the law if at least one of the parties involved is a business. Not sure whether that is already enforced though ...

Christian

 

In New York City, cash is king. The only reason why people don't use it more is because the government refuses to product a note greater than $100.00. Anyone who has an experience with a court quickly understands the value of cash.

 

The government’s primary focus on a cashless society is to reduce the size of the multi billion dollar underground economy, which is driven with cash. And yes, the government views the coin collecting industry as a huge underground activity, not only for unreported sales/purchases, but also as a source of PM's to transact other illegal activities.

Ending cash does make it easier to track income, yet, even if paying with cash, your purchases are tracked when you use your discount card at the grocer or your membership card at stores like Costco.

Anyone see the movie, In Time? Just one scenario of what a cashless society may look like.

 

You domicile your 401k/IRA at Schwab, Fido, etc. they control your assets and may loan or borrow stock, mf shares, etc. from your account as needed. Most don't realize that's 'wealth' (e-zeros) held by someone else. In a very real sense, it's not even yours - you just get a contract with lots of fine print terms per redemption in some equivalence ; all fine & good now, but what happens in a bank holiday? And I'll spare you the studies of now-diminishing returns on stocks - the Little Guy just can't win for trying.

Most importantly, PM bullion/coin in your possession is a hedge against that loss of control, in addition to paper-risk. That is the only rational justification for allocation to PMs, I think. As Gold, Silver, etc. aren't "investments" in the classical sense (no dividend, income, yield ; 'monetary alternatives' have no presumed capital appreciation, etc.) and the negative carry-cost is well known too, desertgem's point that collections' value will fall over time for demographic reasons is yet another negative against presumed coin-worth and low-end numismatic "investing."

Mass produced collectibles are still tanking. Maybe without precedent in recorded history, the book-collecting market has largely collapsed; people were collecting books for hundreds or years before stamps or comics. Used bookstores have shuttered in record numbers and won't 'reopen with the next generation' as long as a falling literacy trend continues. This isn't just another recession for US collectibles: this is a sea-change or paradigm shift in the American consumerist society. I'm certain junk hoarders won't be rewarded by ignoring the current demographic trend, the Beanie Baby 'investors' taught us that.

Globally, the next generation of collectors won't overvalue most of the (USA) 'junk Silver' and 'junk Gold' that a certain demograpic is actively bidding up now. For that, the 'race-to-Scrap' (for most US coinage) should continue; and collapsing soft-values will punish sentimental hoarders paying higher premiums now. As with all bottoms, the US coin market will trough when the greatest number of US coin collections get liquidated en masse. When? Assume there's no catastrophic economic event in our near future, 'Happy Times Collecting' with relatively falling prices ....for several decades. The bottom will be when the now Age 60 (2012) cohort born ~1952-4 gets packed off to the old folks' home (at Age 80?) or when most grandpas' junk finally gets liquidated... shouldn't that occur circa 2034?

Today's site demographics: older white men.
http://www.quantcast.com/www.cointalk.com

This presupposes a supercycle collapse of 'US junk coin' prices from Late 2008 reported peak values. In fact, the Key Dates & Rarities Index peaked four years ago, down -12% since then, essentially flat/tepid since October 2009. It would be informative to see a price index of the middle market (exclud. coins over $ 250 in 2012 USD) - guess most US coin "collectibles" have fallen even more (net any Ag gain.)

Fun to collect, sure. A good investment? Not so much. Three decades is a loooooong time to wait for a comeback in relative value.

 

This is the long term affect of the cult of Lincoln. Undoubtedly, Abraham Lincoln is the predominate figure in US history, but many of the things he did was to use the civil war to strengthen the grip of the federal government on the public.

Lincoln said:

" Let reverence for the laws, be breathed by every American mother, to the lisping babe, that prattles on her lap--let it be taught in schools, in seminaries, and in colleges; let it be written in Primers, spelling books, and in Almanacs;--let it be preached from the pulpit, proclaimed in legislative halls, and enforced in courts of justice. And, in short, let it become the political religion of the nation; and let the old and the young, the rich and the poor, the grave and the gay, of all sexes and tongues, and colors and conditions, sacrifice unceasingly upon its altars."

In line with this perspective he created green backs with the National Banking Act of 1863 , singed Revenue Act of 1861 which instituted income tax, suspending Habeas Corpus twice, etc. Consider this as opposed to Thomas Jefferson who said a little revolution now and then is good.

One can argue that Lincoln provided what he needed to save the union in 1861, and Madison, Jefferson and Adams did in their time. We've obviously swung way to far since 1861. While justice such as the use of the military to enforce civil rights in the 1960's was a justified use of federal force, the increasing implication of government on the day to day civil matters of the population is far too overreaching IMO. to the point, a demise of cash would be a terrible implication of government authority within the private affairs of the individual.

 

You blame the increasing surveillance by the government and the private sector on Abe Lincoln?

At one time anyone could walk simply into the Met. Now, everyone is screened, making its massive entryway an artifact of another time.

 

I think that a cash society is doomed mainly because the reasons you mentioned and more. The question I have regarding this website is will collecting bill notes become either obsolute for the knowledge of such and with that interest will die out in the future generations or would upgrades in technology with copying as well as aging paper prematurally and at an advance level destory the market with the production of reproductions. I for one hope not for I love the old stock market shares, individual bank issues and old national currency.

 

The whole purpose of investing is to do "better" than inflation, or predicted inflation, consistent with the investors' relative appetite for risk.

Certainly hyperinflation will make clear that your cash is nothin' but trash.