
The War on Cash - Gigamouse
http://thelongandshort.org/society/war-on-cash
======
StanislavPetrov
Banning cash is such a monumentally bad idea its a miracle of modern
propaganda that a single person is willing to even consider it. From negative
interest rates to ubiquitous tracking of your every move and purchase (by
stores, banks, governments, and whoever else they choose to share the
information with), to the total paralysis society would face from any sort of
blackout or network disruption, to limitless technical vulnerability by
hackers, eliminating cash is truly one of the worst ideas ever conceived. Its
bad enough that the government enforces a legal monopoly on currency.
Extending that monopoly to digital-only currency is a huge step in the wrong
direction for business, commerce, and freedom.

~~~
ffggvv
Isn't tracking a good thing? This way the government can fight tax-evasion and
the black market...

~~~
StanislavPetrov
No tracking is a terrible thing. Freedom is important. Concerns about taxes
and black markets are meaningless if they eliminate freedom.

~~~
ta0967
i like cooking my friends and my family.

syntax is important! ;)

------
johnnyhillbilly
Cash is public, banks are private.

Half of the problem with cash could be solved by ending the war on drugs. The
war on drugs has created a class of people whose main economic function is to
transfer wealth from the public to the worst people in society. This is a
many-headed monster that robs/burglarizes/steals money from average people,
and vacuums it into a global system of money laundering. The cost is mostly
absorbed through higher insurance premiums and more costly welfare schemes.
The physical needs of this class of people are often carried by family and
charity.

No cash could kill this, but so could treating drugs like simple agricultural
and/or chemical products and regulate the distribution.

All costs of the war on drugs are covered by the public. All profit by heavy
criminals.

Sort this first, and then get back to cash and its utility in evading taxes.

~~~
branchless
This is mixing up "cash". Cash is produced by your country's mint (a public
body), and comprises around 3-5% of available on-demand "money".

Private banks produce electronic debt which is fungible with "cash". This is
available "on demand" as cash but only if you wish to withdraw less than the
5% which has a physical representation. The rest is available on demand to
transfer as electronic banker-debt/credit into another part of the banking
system.

The vast majority of the private bank debt is issued via lending against land.

I don't take issue with the use of cash in the drug trade, I'm unconvinced
removing cash would see this fixed, most likely barter would take place
instead.

I just wished to take issue with the fast and loose "cash is public".

~~~
johnnyhillbilly
How currency comes into existence is a different topic.

I agree wholeheartedly that bartering is the logical continuation of the drug
economy in a cash free world. Maybe some pseudo currencies would also arise,
creating black market banks.

Money is power. We, the public, ought to stop propping up cartels and giving
power to drug lords. My suggestion is to try that first, and then see what
problems remain with cash.

~~~
branchless
We know what will happen. They will work around it because the root cause of
the problem isn't "cash helps drugs".

We should look into the root causes like the vast siphoning money issuance
allows which in turn creates poverty which then leads to drugs.

Visa and American Express aren't going into bat for the common good. The
latter in particular is a vile company.

------
sokoloff
I've never heard a credible argument of how a fully cashless society could
operate under conditions of natural (or man-made) disaster. The multi-day
blackout in the Northeast US, flooding, tornado, earthquake recovery, targeted
cyber attack, etc.

The idea that because the electronic payment system is readily available on
all of the "good days" doesn't mean it will be available at a time of strife.

Cash works without electricity, without phones, and without network. That's a
killer feature.

~~~
bitlax
How much cash am I supposed to be keeping on hand in case there's a flood or
tornado?

~~~
pjmorris
It depends. A couple hundred was sufficient for us when Hurricane Wilma
knocked out power across most of South Florida in 2005, but we happened to be
in a pocket that had power, were surrounded by family and friends with food
and other resources, and didn't really have to go anywhere or do anything.
YMMV, but be careful with the idea that you don't need any. The ATM's and card
swipes work until they don't.

------
tomohawk
Once an intermediary feels secure in their position, the temptation to use the
position to further other goals becomes pretty irresistable. Consider Square:

[http://dailysignal.com/2014/09/25/gun-shop-owners-longer-
hip...](http://dailysignal.com/2014/09/25/gun-shop-owners-longer-hip-square/)

They are actively seeking to erode 2nd amendment rights. What other do-gooder
impulses will Square pursue? Perhaps they'll next infringe on our 1st
amendment rights by prohibiting payments to organizations they disagree with.

We see the same thing with speech brokers such as Facebook. Want to exercise
your 1st amendment rights? Not on our platform!

~~~
Eerie
>They are actively seeking to erode 2nd amendment rights.

1\. There are countries in the world that are better than USA on multiple
metrics, and they don't have 2nd amendment rights at all. What say you?

2\. Your gun will avail you absolutely nothing when the government comes to
you with a Predator drone. You will not "prevent dictatorship" by your gun.

~~~
nzp
That's a fantasy view of how military engagement works. The whole argument
that the US military has advanced tech, particularly air power, therefore
“your guns” are useless is demonstrably false. If it were true, you wouldn't
have Vietnam, Iraq, Afghanistan, etc. Having millions of people armed with
things like AR-15 or AK-47 is an effective form of dictatorship prevention.

The problem, however, is that you have to have those people actually want to
fight a dictatorship. I don't live in the US, so I might be wrong, but it
seems to me that most people, not all, most, in the so called gun culture
there are more than willing to bend over and be servile to authorities, with
dictatorship prevention being just a noble sounding excuse to have fun
shooting soda bottles in their backyards (nothing wrong with that).

~~~
jakub_h
The government _still_ does have better resources, though. Times have changes
a bit from the 1700s in that the most modern things available to the two
parties are not the same for both sides anymore.

~~~
nzp
Governments _always_ had better resources. Until they didn't. The only way a
government has resources is by people providing the resources by doing work.
Once people collectively deny work, it's game over for the government.

As for the 1700s, all of the wars I mentioned happened in the second half of
20th, and early 21st century, with a gigantic asymmetry in almost every
relevant resource. Yet, in all three examples it took the US a whole decade of
trying to win and then get a graceful exit, if that, against, basically,
people with AK-47s and improvised bombs.

------
aminok
"There's huge interest in cryptocurrencies and what perhaps they can create in
the market place. Now we at MasterCard are not completely comfortable with the
idea of cryptocurrencies largely because they go against the whole principle
that we've established our business on which is really moving to a world
beyond cash and ensuring greater transparency.. If you think about it, cash is
a problem for a number of countries. Cash really facilitates anonymity, it
facilitates illegal activity, it facilitates tax avoidance and a range of
other things that aren't going to drive efficiency in an economy"

-[https://youtu.be/bO4jHXjCXw8?t=2m57s](https://youtu.be/bO4jHXjCXw8?t=2m57s)

"If it's an anonymous transaction, that sounds like a suspicious transaction.
Why does somebody need to be anonymous?"

-[http://youtu.be/bO4jHXjCXw8#t=4m12s](http://youtu.be/bO4jHXjCXw8#t=4m12s)

MasterCard SE Asia President on cryptocurrencies and cash

~~~
tunap
Says the guy who stands to make ~3% of every single transaction that is
deanonymized. For more clarification of how cashless would save us, look into
BofA & Wells Fargo's not so distant past laundering of illegal guns & drug
monies from Mexico, sure they paid fines & _promise_ to be more diligent.
Around the same time was the Wikileaks payments freeze across multi
platforms(Guv mandated). Sounds fair & equitable for all who can _afford_
justice.

~~~
aminok
The destruction of privacy also means that the minority has zero protection
against the majority. If the majority imposes an oppressive law, like
prohibiting financial transactions with people of a certain nationality, or
requiring people to hand over 1/3rd of their income for programs that enrich
the political establishment and their donors, there is no way to circumvent
the law.

~~~
XorNot
This is not possible today. It is very easy as a government (often something
bitcoin people rant about) to bulk transfer wealth from the population to a
preferred group, since you have control of the mint. Which is why the mint
(reserve bank) is, in all functional countries, a standalone entity with
independent decision making power about currency creation.

The idea that digitally tampering with bank accounts would not be noticed or
reacted to, but softer measures like inflation rate meddling, or stealth
measures like doing a currency re-issuance and controlling how hard it is for
people to exchange old money, is absurd.

Not to mention you've managed to ignore the fact that only a tiny fraction of
circulating cash is physical cash anyway.

In terms of protecting rights, this is one of the worst, least effective ways
to do so.

~~~
aminok
>The idea that digitally tampering with bank accounts would not be noticed or
reacted to, but softer measures like inflation rate meddling, or stealth
measures like doing a currency re-issuance and controlling how hard it is for
people to exchange old money, is absurd.

Who said anything about "digitally tampering with bank accounts"? The
situation today, where the bulk of transactions are done through large trusted
third parties, which act as deputies for state regulatory organs, means that
there is no expectation of privacy in most financial transactions, which
increases the power of governments (meaning the political majority of
countries) to enforce majority-supported laws that restrict voluntary
exchange.

It's certainly true that physical cash does not protect against inflation, but
the idea this is the only major method by which governments redistribute
wealth is false. Taxation is the main way in which governments raise revenues,
and destroying privacy increases the ability of governments to tax.

>"In terms of protecting rights, this is one of the worst, least effective
ways to do so."

It is the absolute most effective way to protect rights. Furthering financial
privacy increases the protection that the politically disenfranchised have
against those with political power more than anything else. Money is power,
and having privacy in your usage of money means your power is protected.

~~~
XorNot
> Furthering financial privacy increases the protection that the politically
> disenfranchised

 _Wow_. This isn't even supported by any of America's notable civil rights
successes of years gone by, whereas the entire history of political corruption
is enabled by the wealthy's use and access to opaque financial instruments.

~~~
aminok
I guess you don't consider economically inhibiting regulatory prohibitions, in
place in countries all over the world, that funnel economic activity through
politically connected gatekeepers - at massive economic cost to the
politically disenfranchised masses, or trillions of dollars in taxation to
enrich the political class, or sanctions targeting every person of a
particular nationality, or the multitude of market prohibitions, like those on
drugs, or socialist policies put in place in countries like Cuba and Venzuela
- to be forms of oppression inflicted by those with power on those without.

You don't seem to appreciate that it is the ability to transact privately that
enables people to circumvent all of the above-mentioned laws.

------
jcbrand
> He (Kenneth Rogoff) argues that, apart from facilitating crime and tax
> evasion, cash hampers central banks from setting negative interest rates.

I think a lot of the "war on cash" boils down to this. Central Banks want to
impose negative rates on us to try and get us out of the mess of having too
much debt in the system. Cash makes this difficult.

~~~
nhaehnle
Two points: First, the economic logic of negative rates is actually to try to
incentivize the private sector to create _more_ debt.

This isn't completely absurd. Slow economic growth quite often boils down to a
lack of spending. One way to get more spending is by having the private sector
take on more debt.

I think this is a bad idea, considering how the global financial crisis was
caused by too much private debt in the first place. It would be better to
increase _public_ debt, at least in countries with monetarily sovereign
governments, since there is no risk of default and the financial chaos that
goes with it.

Second point: I've been hearing voices against cash since before negative
rates became a thing. So while they're certainly a factor, they're far from
the only one.

------
lisper
I wish I could upvote this ten times. This is the clearest and best written
exposition of what cash really is and why it matters that I have ever seen.
Well worth taking the time to read the whole thing.

------
newscracker
> We are fighting a broader battle to maintain alternatives to the growing
> digital panopticon that is emerging all around us.

This is just one of the aspects that support stronger governments and
corporates that put the interests of themselves and a tiny section of the
population (those who help these get even stronger) above everything else.
While some people discuss about this or mass surveillance or tracking, most of
the populace isn't even aware how liberties are being lost and how "the power
of the people" is becoming more of a carefully constructed mirage. Things seem
to be moving in the direction of a dystopian society where appearances mask
reality and common people are kept complacent with entertainment and other
things to keep them occupied.

I don't see a cashless world happening in the next few decades, because it
will take a lot of work to get people out of poverty first while some entities
focus on removing cash. Even if it were to happen, a cashless society would
still have many different pseudo-currencies and barter systems (like those
that exist in different contexts and systems today). What's worrying though is
that in the future many goods and services may become inaccessible (if one
wants to avoid electronic transactions) unless one resorts to the
black/gray/underground markets.

~~~
cryoshon
here are the alternatives to the new status quo of totalitarian democracy:

1\. leave 2\. revolt

seriously, that's it. we lost the first dozen encounters with totalitarianism,
so now options are limited and undesirable. widespread witholding of labor/
consent to be governed is the next step if we are serious about change.

politically, we're on the downward slope for at least another 8 years...

~~~
mindslight
"Revolt" doesn't work because democracy provides a pressure relief valve that
prevents any significant mass of people from wanting to revolt. Notice how the
"hopeful" prepper culture is based around _passively_ waiting for things to
"inevitably" fall apart rather than actively forming a militia.

"Leave" doesn't work because there's no place to go. The US empire is nearly
everywhere, the best you can do is escape to the different monetary spheres of
Russia/China and buy some time.

IMHO our two options are 1. digital freedom through cryptography, or 2. become
slave cells of a larger organism.

The first is a fucking long shot, but I don't see any other possibility for
individualism.

Then again as I get older, I can't help but shake the feeling we're really
just observing bog-standard societal collapse.

------
300bps
Currently down. Mirror:

[http://webcache.googleusercontent.com/search?site=&source=hp...](http://webcache.googleusercontent.com/search?site=&source=hp&ei=njm4V6TuJorKmwGIsJaoBQ&q=cache%3Ahttp%3A%2F%2Fthelongandshort.org%2Fsociety%2Fwar-
on-cash&oq=cache%3Ahttp%3A%2F%2Fthelongandshort.org%2Fsociety%2Fwar-on-
cash&gs_l=mobile-gws-
hp.3...11998.19363.0.20202.8.8.0.4.4.0.113.755.4j4.8.0....0...1c.1j2.64.mobile-
gws-hp..0.7.373.3..0j41j46j0i131k1j0i46k1j0i3k1.As2uiZpw-U8)

------
anexprogrammer
I was expecting yet another puff piece on the advantages of some app-based
alternative. A good exploration of some of the disadvantages of cashless
society.

Only thing they have missed is the indirection of cashless - the further you
are from actual money, the more you're likely to spend, especially
impulsively. Works for credit cards, game currencies, and undoubtedly for
cashless apps.

~~~
Someone
I agree with you, but in not sure I'm right in that. Chances are that,
centuries ago, people used to say "further you are from actual _gold_ , the
more you're likely to spend, especially impulsively". So, people could/might
become used to currencies that are even less physical.

Also, before banks provided credit, people used to run up bar tabs not only at
bars but also at their grocer. Maybe, the thing to fear is credit, not money
being virtualized?

~~~
anexprogrammer
"Chances are that, centuries ago, people used to say "further you are from
actual gold..."

I've never considered that angle, and you may be right, but centuries ago 9
out of 10 or more spent to survive rather than consumerism. We may become used
to them, but I'm not sure how comparable the two eras can ever be.

I've also seen enough reports on the topic to see that paying via plastic
(both debit and credit) leads to higher overall spending. There's countless
gamasutra type articles explaining the income benefits of tiers of virtual
currencies. Game monetisation seems to have been researched well enough that
most freemium have ended up with a combination of soft and hard currrencies,
with deliberately unusual prices, and a remarkably similar set of price points
for a bucket of gems. They're not all ending up there as customers spend
_less._

------
323454
I hereby resolve to use cash as often as I possibly can, to show in my own
small way that "the market" still demands the cash option.

The small inconvenience of carrying around a few bits of paper and metal is
worth it to protect the rights of those outside the banking system.

~~~
mindslight
_In_ convenience?

I once got into a car accident on a friday afternoon. It was on a highway, so
my car was towed by scumbags who insisted on bringing it all the way back to
their facility rather than anywhere useful. Obviously they wanted to require
me to come back later, store it all weekend, and rake in more ill-gotten
gains.

I demanded my car be released as soon as possible, to which they tried to
dissuade me that it would be a lot of money, they didn't take credit cards,
they were technically closed so if I went to an ATM they wouldn't be there
when I got back, etc. I stood firm since none of this was a problem, bailed my
car out, and successfully avoided being further gouged by their racket.

If you don't see the utility in carrying cash you're basically asking to be
taken advantage of, in both the immediate and long term.

------
branchless
This article fails to touch on who issues the money. In particular in the
example of the Rai stones it fails to ask what if the ledger keeper could
magic up stones all over the island to capture labour by eroding the value of
the current stones.

Really for me this is one turtle down the stack and he needs to ask who
creates credits and what that means.

edit: and right on queue in my twitter feed an article on money creation as
theft:

[http://www.bloomberg.com/news/articles/2016-08-17/meet-
the-m...](http://www.bloomberg.com/news/articles/2016-08-17/meet-the-man-who-
d-revolutionize-money-from-the-inside-out)

edit2: and every single time I submit to a post on money on HN "you're
submitting too fast please slow down"! What a surprise...

------
branchless
Tracking isn't the problem to prevent tax avoidance at the point where
avoidance becomes immoral.

UK last month: Grosvenor dies leaving 9bn GBP in land to his son. We have
inheritance tax in the UK, the son should have received a bill of several
billion which would fund our health service.

They know where all the assets are, but the UK govt has a special loophole for
rich people: trusts. The son inherits the full 9bn GBP.

It's all tracked but the UK is totally corrupt.

Given the above example how will the state act against the rich when all
"money" is tracked because it's electronic? They won't touch them.

~~~
nicky0
Who controls the trusts?

~~~
branchless
The land owners have full effective access to all funds just as if they owned
them. The uk is a total sham.

------
Synaesthesia
This is why Bitcoin is such an exciting concept: digital cash which can
function without any central authority.

~~~
emodendroket
I don't really get the "anonymity" claims of Bitcoin when there is a central,
permanent ledger of every transaction ever made in it.

~~~
Synaesthesia
It's not anonymous. It's pseudonymous, there is a ledger of transactions but
you have to still link an address with a person's ID.

------
raverbashing
I am 100% more concerned about the negative interest rates motive than the
dependence on financial institutions for payment (which is also worrying)

Having said that, yes, cash sucks. Small coins suck even more and I rejoiced
when countries started rounding prices to 5c on cash payments

~~~
throwaway1974
Here is a tip, anytime you a filling up on petrol check your pockets first if
you find some coins as you are bound to have some, then add them up

For example last time if filled up I had a 10euro note in wallet and had about
€5.60 in coin change so I just filled up petrol for €15.60 since its not hard
to fill up down to a cent amount

Most small shops love coins as added bonus

~~~
douche
This works much better in Europe or Canada than in the US... US pocket change
is effectively worthless, since the largest denomination coin in wide
circulation is the quarter. Unless you are carrying around (physical) pounds
of change, using it for anything beyond laundry, vending machines, or parking
meters is impractical.

1 & 2 euro coins, on the other hand, are pretty convenient for small
purchases.

~~~
ghaff
Though that's also somewhat of a feature with respect to US change. I can just
dump it in a bucket at home to get turned into "real money" with a coin
counting machine someday.

Quarters are also sometimes still useful for parking.

------
emodendroket
What stops banks from implementing a negative interest rate today? Practically
nobody keeps a large amount of savings in cash. Such a policy would be really
lousy in a society where retirement planning is largely a private affair,
though.

~~~
bahjoite
It could be that, faced with a -ve rate, account holders can simply withdraw
everything from their account, thus no revenue is generated for the banks and
no guarantee that account holders aren't hoarding their cash instead of
spending it.

~~~
emodendroket
Yeah, but how many people with significant savings are going to do that?

------
josscrowcroft
This might be a naive question, but has there ever been a successful non-
profit bank-like financial institution?

As I was reading this article I thought of iPredator.se, which provides a non-
tracked VPN service. Their USP is "We don't track anything you do". I wonder
whether there could ever be a cashless option that offers a similar service.
This of course would only address the concerns of privacy and profit-driven
interests, and not the other serious concerns raised in the article.

Has there been/could there ever be a bank like that?

~~~
cmrdporcupine
> This might be a naive question, but has there ever been a successful non-
> profit bank-like financial institution?

Credit unions are not-for-profit institutions, member-owned, and are very
successful.

But they don't satisfy the second part of your post. Tracking and auditing
transactions is kind of built into the idea of modern banking.

------
upofadown
Well if someone comes up with, and popularizes a system that can actually
replace cash then we should consider it. I would be thrilled to use something
like bitcoin or taler to pay for my groceries. In the mean time we are stuck
with physical cash. Credit and debit systems are good for some stuff but are
simply not technologically advanced enough to replace cash. In fact, actual
electronic cash would to some extent make credit and debit obsolete, as well
as causing a great many other changes.

------
abpavel
"Much fintech 'disruption'..." revolves around eliminating slack and
incompetence of the low grade employees. Once you've tried services of an
average investment banker, and paid 1% entry fee,1% exit fee, and 1% annual
maintenance fee, you'd see fintech needs in a different light.

------
gerbilly
I love being able to throw some cash at a taxi driver, or to use cash at a
grocery store and just get out of there.

As it is lineups at stores are really really slow since every single person
has to fiddle with a card and a PIN to pay for their coke and chips.

~~~
nicky0
This is temporary. Contactless payments will change that so that electronic
payment becomes faster than cash for small transactions (as is already
happening in many places).

~~~
gerbilly
Even if that is the case, then I don't like the privacy implications.

I don't feel great about the Eye of Sauron seeing every single thing I do with
my money.

------
ape4
I like cash too. I'd like to see a smart start up do for cash what Square did
for credit card payment. A super simple way for a small store to manage it.

------
transfire
So what are you going to do when they freeze your bank account because you
won't submit to a Zika vaccination?

We are so fucking doomed.

------
clarkmoody
More symptoms of Terminal-Stage Keynesianism.

------
Symbiote
The cashless society is hugely convenient though. Wouldn't it be better to
accept that it's inevitable, and solve the privacy issues?

For the year 2016, and excluding rent, 3.1% of my expenditure has been cash.
I've used an ATM five times. [More-or-less; foreign spending isn't on this
statement. In Germany I use more cash, in Norway I didn't use cash at all.]

~~~
190181931
The convenience argument is complete nonsense. Personally I hate dealing with
physical things like writing a letter, buy an envelope (well, buy 20 when I
need one) and a stamp and mail it, but cash is really the _single most easy_
physical thing to deal with that I know of.

~~~
nhaehnle
It depends on the cash. I suspect that a lot of the cash-hate is supported by
experiences in countries with badly designed cash. Compare e.g. the US$ and
the Euro - the latter one is well designed, the former isn't.

Other cultural factors come into play, again the US comes to mind as negative
example due to the way prices are usually displayed without sales tax, which
makes it hard to have the correct change in hand quickly.

~~~
k__
What makes the Dollar worse than the Euro?

~~~
lorenzhs
I'm European and recently visited the US, so I'll describe what bugged me
about dollars. All bills are the same size and color, making them Very hard to
distinguish at a glance. The coins are mostly useless, as the largest commonly
used denomination is the quarter. The five cent coins is also ridiculously
large (but nothing compared to the British 2p coin...)

In contrast, Euro bills' size increases with value (easy access in the wallet
if you keep them in sorted order) and they are easily distinguished by colour.
The largest commonly used coin is 2€ ($2.25), which is actually worth
something and doesn't jut clog pockets/wallets. I do wish we'd get rid of the
1c and 2c coins, though.

~~~
pravda
>All bills are the same size and color, making them Very hard to distinguish
at a glance

Well, they do have different numbers on them. Different pictures too. I find
them easy to distinguish at a glance.

~~~
Symbiote
Compare American banknotes to other countries.

Take British banknotes for example:
[http://www.atsnotes.com/catalog/banknotes-pictures/great-
bri...](http://www.atsnotes.com/catalog/banknotes-pictures/great-
britain/great-britain-389.JPG)

These have clearly been designed to be distinguished. They're different sizes
and different colours. One side has a bold number and a bold shape
(circle/diamond/square). The other has a monochrome (but not black!) portrait,
plus a picture with reasonable contrast.

The Danish notes have the same features, but with brighter colours and a less
ornate design: [http://www.atsnotes.com/catalog/banknotes-
pictures/denmark/d...](http://www.atsnotes.com/catalog/banknotes-
pictures/denmark/denmark-65.JPG)

By comparison, the American notes all look very similar. A black-and-white
portrait of a man, centred, with a black circle to the left and a green circle
to the right, with dark borders to the top and bottom. Numbers are in a
traditional, unclear font. Slight colouring exists on some values, but only in
the background, and the colours aren't far from a green-brown.
[https://upload.wikimedia.org/wikipedia/commons/6/64/USDnotes...](https://upload.wikimedia.org/wikipedia/commons/6/64/USDnotes.png)

Pick random countries from here:
[http://www.atsnotes.com/catalog/catalog.html](http://www.atsnotes.com/catalog/catalog.html)

