David Wolman: "The End of Money: Counterfeiters, Preachers, Dreamers -- and the Coming Cashless Society"
http://thedianerehmshow.org/shows/2012-03-08/david-wolman-end-money-counterfeiters-preachers-dreamers-and-coming-cashless-societ
Cash is on the way out. Americans carry it less and less often due in part to new technology and a growing desire for convenience. We now use cards, computers, and even mobile phones to pay for everything from our morning coffee to the parking meter. Critics of cash say it’s covered in germs and traces of drugs, it penalizes the poor, and it keeps criminals in business. But while the value of cash is coming under fire, many are reluctant to give it up. Some workers still rely on physical money for their income. And using cash rather than virtual money has been proven to keep us out of debt. Diane and her guest discuss the diminishing use of cash and how it's changing the way we do business.
Guests
David Wolman
contributing editor, Wired magazine
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Program Highlights
Last year, Google unveiled Google Wallet. It's an app that allows you to wave your phone at a retailer's terminal instead of using cash or a credit card. IBM had in 2012 financial transactions made via mobile phones that could total $250 billion. In a new book, journalist David Wolman argues why he believes cash is becoming extinct. It's titled "The End of Money."
Costs More To Make Money Than The Money Is Worth
It now costs about 2 and a half cents to make a penny and about 10 cents to make a nickel, according to Wolman. He recently wrote an essay for Wired magazine essentially saying, "So much of our lives is moving to the digital realm, music and movies and books. Why not cash?
Let's kill it already." The negative response he got was overwhelming.
From My Cold, Dead Hands
Wolman said some of the resistance he heard to completely digitizing money had to do with privacy concerns. But there were also a lot of people who read his article and responded by saying they understood and maybe even agreed with his argument on an intellectual level, but emotionally, they said they're more careful when spending cash. Diane pointed out that there are also many people who depend on cash tips for a significant part of their income.
Can't Get Rid Of Cash Without A Substitute
Currently, there's no entirely sufficient substitute for cash to replace it, and that's something we would need before seeing cash become extinct, Wolman said. But he still feels that "cash is getting pushed further and further to the edge," and he sees its eventual disappearance as a matter of when, not if.
"Pain In Spending"
Behavioral economists have long known that it is psychologically harder for people to part with cash than to put a charge on a credit card, Wolman said. In India, people use mobile phones very often for transactions. "They're not quite ahead of us, but people's excitement about using these tools over there is overwhelming in development experts and economists," he said. However, on a recent visit there, he realized he needed cash to do almost anything out of his hotel room - get a taxi, buy water on the streets, pay his translator, and pick up souvenirs.
You can read the full transcript here.
Comments
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How many hoops do consumers have to jump through to go to arbitration over products that fail? For example, can a company mandate that the consumer has to travel to the company's headquarters?
What does Mr. Wolman think about:
1. A national electronic currency based upon the bitcoin model,
2. Where paper money becomes a commodity, and subject to transaction tax when transferred into or out of electronic currency.
My articles and blog:
http://www.financialsense.com/contributors/david-zweig/2011/09/20/can-bi...
http://www.financialsense.com/contributors/david-zweig/paper-currency-in...
http://www.pieeconomics.blogspot.com/
I own an independent bookstore and have just figured out that I could hire 3 people full-time with benefits for what I pay out every year in credit card and debit card fees.
How about wooden nickels? Plastic?
With all of the talk about hacking, I don't see why anyone would use electronic currency to make small change. How am I going to tip the waiter? with my cell phone? Sounds like a pain and then the government would tax him. I'd rather just give him a dollar. I will be clinging to my cash.
It costs more than a nickle to make a nickle, because the money supply is expanding too quickly and causing the value of the dollar to decline.
In 1960 three silver dimes bought a gallon of gas, those same three silver dimes can still buy the same amount of gas. The same goes for homes. The cost isn't going up, rather the value of a dollar is going down.
Yes, too many do too many things without thinking, but that doesn't mean we should be lemmings and hand over all control of our funds to some third party. There's a reason why gold and silver, etc. still remain the wealthiest citizen's hedge. Yes, money is a construct, but I can take that construct home with me instead of handing it over to a third-party to control. And when I purchase with cash, I do not have my every purchase tracked and my privacy tagged.
I have recently gone back to using cash more than debit-- after last months NYTimes Magazine article on Target's customer profiling practices. Sure, it's not too big a deal if someone knows that I'm buying a birthday card, toothpaste, and a baby gift-- but overall, day after day, it's death—or exposure— by a thousand purchases. It's the contrarian in me that just wants to thumb my nose at those who want to profile me. It also gives me a tiny bit of juvenile pleasure to give the wrong zip code when I'm asked.
Very Good discussion. I also wonder about moneatry policy. Will it have an impact on using the tools of moneatry policy?
It isn't CASH unless I can hand it DIRECTLY to you - from my hand to yours without going through a central accounting system. This is POSSIBLE digitally but serves no one's interest but YOURS individually. We MUST create and DEFEND a TRUE CASH system. A system with NO FOOTPRINT. Luckiy, I am 67 years old so its OVER for me but you young people better CONSIDER what this MEANS! It will be the END of local trading of commodities. THINK ABOUT THE IMPLICATIONS.
Margaret Atwood warned of the possible dangers of entirely plastic finances in The Handmaid's Tale. We should all heed the warning.
Is this the same person who predicted the "paperless workplace"?
can your guest talk about the cashless society in korea?
In English history, we read about the church and crown struggling over contol of the coin, often at sword point. We also read about Henry and his brass Grotes.
But if there is to be a truly cashless society, does that mean I will one day wake up not poor anymore?
The constitution guarentees security inn our papers and affect. If money is no longer a paper or affect, then that guarentee becomes void, don't it? ;)
EXACTLY
"For everyday transactions, going cashless means a lot of supporting infrastructure. You need power. You need data lines open. You need computers. You need readers for credit cards or phones. And most of that infrastructure is out of the merchant’s control. They can’t control the power, or make sure the cell towers are working or ensure that the bank’s computers are operational.
With cash, on the other hand, the only infrastructure you need is for the merchant to have a good you want, you to have cash, and some extra lying around in case you need to make change. That’s it. It’s beautifully simple."
A saver, I seek a form of money that is not continuously inflated to the benefit of the government. Is Google or some other organization considering providing a currency that may be managed to maintain its value. This could be as simple as selling it at a higher and higher cost as the value of government money declines. The demand for such money would, I believe, be enormous. In the past century the U.S. Government has sadly shown no interest in maintaining a stable currency.
What would happen if our technology is not operational? Ie hacked or catastrophic event inhibits the system (natural disaster, tech. Terrorism)
Emergency agencies often recommends a stash of cash for emergency situations. Just wondering?
Long time listener. When I am in the.states.I do not use cash. It has been over ten years since I carried or use cash. Albeit when I travel over seas is the only time I use cashl
How dare anyone assume that their definition of what is enough privacy or anonymity is appropriate for everyone. No one should have the ability to make that decision for another person.
I'm in my mid-twenties, and I have never used cash on a regular basis. From my first checking account which had a debit card when I was 14 to my first credit card when I was 18, I have never paid by cash on a day-to-day basis. When my husband and I decided we want to get out of debt, we tried the envelope system to see if that would help us manage our spending. However, because I have always paid by card for everything I need, cash for me didn't have any psychological "pain" associated with it. When I pay by card, I have to go back and enter that charge into my checkbook when I balance the account at the end of the month, and I have to account for that charge as I plan the next month's budget. Cash, by contrast, seems to slip through my fingers without any consequences except for an empty wallet. For my husband and me, paying by debit card is a much more painful payment method and, as such, a much more effective way to manage our spending.
If this came to pass it might be for the best, but I will miss my ten cents off for cash at the local gas station.
This discussion could be enhanced by a better understanding of economics. I think you are talking about "medium of exchange". These are the characteristics of a medium of exchange that has stable purchasing power:
value common assets
constant utility
low cost of preservation
transportability
divisibility
high market value in relation to volume and weight
recognisability
resistance to counterfeiting
Also, money needs to be backed up by government promise. Maybe this can be done with new technology as long as these characteristics are met. Bit Coin, for example, will crash and burn the second a panic sweeps through social media.
As for the anonymous nature of coins and paper money, people can always go back to exchanging cigarettes for what they want like in WWII
The law says:: Clauses 5 and 6. The Congress shall have Power ... To coin Money, regulate the Value thereof, and of foreign Coin, and ...
It says COIN money and regulate the weight. The founders knew the danger of paper fiat currencies in the hands of government. They knew that if we had an un-backed currency, it eventually wouldn't be worth a continental.
The government doesn't have the authority to print bills as money, but they do it anyway.
With a cash less society, I wonder what will robbers and thugs do? Carry a mobile credit-card swiping machine if you insist you do not have cash?
- Sonny
What would happen if our technology is not operational? Ie hacked or catastrophic event inhibits the system (natural disaster, tech. Terrorism)
Emergency agencies often recommends a stash of cash for emergency situations. Just wondering?
I love that finally someone is talking about this. I have been saying and thinking about this for years. Yes there are some obstacles that need to be figured out but overall the extinction of cash would only benefit our society. Crime would go way down if businesses/banks didn't have cash to steal. Also, people who work "under the table" would no longer be able to escape paying their taxes. Drug dealers- just think if they had to do electronic transactions.
What would the cost of a federal bank that didn't charge fees cost compared to the cost of printing money and the federal reserve?
Is cash is so inconvenient why do gas stations give you a $.10 a gallon discount to use it?
Diane,
First of all, thanks for always fighting the good fight. As long as I keep hearing you on the radio, I know that Washington hasn't totally gone to hell.
Second of all, please ask your guest to address the perils regarding the ever growing threat of cyber warfare and it's effect on the monetary system that most certainly would accompany a cashless society.
Thanks,
Scott Summers
This conversation is missing the point. Whether we're using cash or electronic money is a much less important issue than how money is created. Modern central banking cedes money creation to private banks, under the prevailing "fractional reserve" system. The upshot is that the rest of society provides a gigantic, unearned subsidy to private banks as they collect interest on loan monies they create via accounting entries. My view is not that fiat money is a problem, it's that the government, not private profiteers, should create the people's money.
Mr. Wolman's theory is just that a theory that may work on paper but in the real world will not support itself. I would compar it very closely with the theory of communism, GREAT ON PAPER BUT.....