Saturday, April 15, 2017

Wall Street Journal - Cash is Dead -- Long Live Cash

The Wall Street Journal runs this article pointing out something we have said here for some time (see added comments section of this old article). Despite the constant barrage of articles about a "cashless society", it does not appear we are anywhere near such a thing any time soon. 

There surely are efforts to head in that direction, but they are not nearly as far along as some people believe. One big reason is because so many low income people have no access to digital forms of money or a bank account. They could not function without cash. That's not likely to change very quickly (absent a major global crisis that forces change quickly). Below are a couple of excerpts.


"As credit card use and digital payment systems like Venmo and Android Pay spread, Americans use less and less cash to buy things. Yet the amount of bills and coins in circulation continues to grow: Hard currency as a percentage of U.S. gross domestic product is now at 8.6%, the highest level since the early 1950s, an era long before the widespread use of plastic and smartphones. Europe, Japan, and Australia have similar trends."

. . . . .

"One reason it’s a non-starter in the U.S.: About 8% of people don’t have a checking or savings account, making it all-but-impossible for them to participate in a cashless economy.

Banning cash “would bring the economy and many people to their knees if enforced,” said Hoover Institution economist John Cochrane."

Click here to read the full article in The Wall Street Journal


Added note: Dr. Judy Shelton refers to this article on her Twitter feed here.

Added note: Got a request from a reader to include his comment below on this article: 

"The disbursement of cash costs nothing for the user, and in terms of time cost for the receiver, it takes more time to process a credit card than to receive and make change for cash. ( have you ever observed this, standing in a supermarket check-out line? )

The use of credit is NOT cost-free to either the customer or the vendor - it’s just hidden.  ( Have you ever noticed, especially at gas stations, a 5 cent or greater DISCOUNT for cash?  No need to wonder why - it’s not their charitable impulse at work ) Too bad they don’t do it at the supermarket."

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