A Farewell to that filthy, messy token of freedom: Cash

The basement news room of the K-Landnews was abuzz this weekend as we unwittingly landed on the print mag teaser page of German white collar dad bot weekly Spiegel Online and found a German econ prof calling on the government to end the use of cash.

We must emphatically state that the scantily clad young lady on this week's Spiegel cover had absolutely nothing to do with this.

It was a Twitter link that took us to the professor's invocation of the digital future of money.

Get me a eulogy on cash, said TheEditor, let's beat the big boys to it. Make it spiffy, not like the sad BitCoin proponents who falsely claimed they had a currency that would stick it to the man. Write about digital money as the wet dream of an authoritarian freak show couched in convenience and safety. Don't forget to push the angle of fecal bacteria on bank notes for that French frisson feeling.

Don't you, dear readers, think we have tough life in the basement with an editor like that? Surprise - many real life editors seem to be just like ours, but we digress.

We wrote about BitCoin, the first digital money which managed to grab the attention of the public at large. We even like the concept, so why would we lament the demise of cash?

Haven't we been using credit an debit cards for decades already? Even checks are not really cash, and they have been around much longer. And most of the money newly created by central banks comes into being as a few keystrokes on a computer keyboard, right?
The great cashless pioneers of Sweden and Denmark are doing just fine, right?

The widely quoted economists who have been calling for an outright ban of cash, the likes of Mr. Rogoff, Mr. Summers, and That German Guy, more or less say the same:

1. Cash needs to be produced, transported, administered
2. No cash means drying out illegal commerce (under the table work, drugs, prostitution, tax evasion)
3. Measures of central banks become much more effective when there are no hoards of stuffed mattresses.

When did you last shop at a place with a big CASH ONLY sign in the window? How did you feel about it - indifferent, oh how quaint, what they don't want my cards?

The other day, we found ourselves standing in front of a shop that said CARDS ONLY. It was an odd feeling given that they sold nothing but rubber ducks. Shelves of all kinds of rubber ducks, no price labels, and a fat CARDS ONLY sign - the kind of useless consumerism flourishing in waves in the big city. Like the long defunct fresh cookies shops, only with fewer calories.

Imagine this: no place whatsoever takes cash, no bank gives you cash.

Don't worry, it is harder than it looks.

Of the basic arguments above, we leave 2 and 3 for you to examine. Argument 1, though, is interesting in that it is both obvious and disingenuous. Even if you have never heard of or been been affected by the strange doings of credit card companies, here is an obvious but unstated factoid.

You can claim transaction fees on cashless buys actually result in money "losing value". Take a 50 dollar bill and spend it. The merchant has 50 USD in the register and can spend 50 USD on new stock.

Spend 50 USD on a credit card purchase. The merchant has somewhere around 48.5 USD in the register, the rest goes to the card processing fee. The merchant can spend 48.5 USD on new stock.
Since a 50 dollar bill has a lifetime of about 8.5 years, you can do some math to figure out how much it costs to keep the bill in circulation.

Of course, if you pay cash, the merchant has to count it and take it to the bank, which costs time and gas, but you simply do not spend the equivalent of 1.5 dollars on counting one 50 dollar bill and on gas to take it to the bank.

Poor people know this. In the US, many states give out "food stamps" as debit cards, making it so that the poor get charged fees and preventing them from spending money on frivolous items like cigarettes or alcohol. Illegal commerce at its finest.

A fully cashless society has all the trappings of a potentially authoritarian nightmare for large groups of people unless you are incredibly optimistic.

But ask yourself: if all the drug users bought their dope with a credit card and society, for the first time ever, would see the unvarnished reality of drug use and find who makes millions and billions off of the trade, would that make us a more just and empathetic society?
Would the absence of cash change large scale tax evasion, which is already cashless, hidden by mazes of companies, today? 

The K-Landnews team decided not to do a farewell to that filthy, messy token of freedom quite yet.

Instead, we are thinking of buying lots of silver bullion and investing into an old fashioned stamping machine to make our own cold, hard cash in the future. Alternatively, maybe collecting candy is a better idea. After all, Italians did just fine in the late 20th century when they had a shortage of coins and merchants would give you small change in the form of candy.

[Update 2/3/2016]
It's getting serious. According to a new report, the German government want to limit cash transactions to 5000 Euros. The reason? Terror financing, of course, and a changed world after the November 2015 Paris attacks.