6 ms·

A cashless society would be an attempt to create a society that lacks basic economic freedom, but it would also fail. People will simply return to barter, and t

by M_Grey 10y ago

A cashless society would be an attempt to create a society that lacks basic economic freedom, but it would also fail. People will simply return to barter, and the use of whatever precious metals/stones/etc are hot that year.

jk563 10y ago
I don't see this as a given. I for one would be more than happy to have a cashless society, and I would struggle to believe that I'm unique out of the ~7 billion there are of us.
- M_Grey 10y ago
  Doubtless you're part of a fairly large demographic... that's part of the problem which has no easy solution.
- ghaff 10y ago
  Have an upvote. But also try to understand why many people are uncomfortable with the idea that even modest transactions can be monitored by governmental agencies. In practice, there are always ways to work outside the system of course. But to the degree these become real exceptions they become that much more suspicious as a result.
  - jk563 10y ago
    Error in conciseness! I can empathise completely and do understand the reasoning of the opinion of a large number of people who do not want a third party being privy to every transaction. I was attempting to convey that there are likely many people on both sides of the debate, should have expanded a bit more!
ktRolster 10y ago
As an example of your point, during the Nixon crash, people used postage stamps as a proxy for cash. They also used Canadian coins in America to replace USD coins. People would literally drive over the border to Canada, get a bunch of coins, and bring them back and sell them to stores so they could make change.
- M_Grey 10y ago
  Yep, and now you have all of the people who hoard gold and other fungible assets... it's just not workable. You'd have to wage a new "War on Cash".
afarrell 10y ago
> People will simply return to barter. In what societies have humans used barter? I suspect we would instead use something like tobacco, laundry detergent, or startup t-shirts as cash or we would keep a mental register of who owes whom a favor.
- FullMtlAlcoholc 10y ago
  You're right to question it, there is no evidence of the idea Adam Smith promulgated (that barter societies were natural). Ancient societies used a credit system with debt being the social tie that binds a community together
- dragonwriter 10y ago
  > In what societies have humans used barter? All of them, including (but not limited to, since barter predates money) all the ones that also have a money economy.
  - scott_s 10y ago
    The book "Debt: The First 5,000 Years" (https://www.mhpbooks.com/books/debt/ https://www.mhpbooks.com/books/debt/) makes a compelling case that no societies on record have depended on a barter economy. The author also argues that debt even predates state sponsored currency.
    - dragonwriter 10y ago
      Debt obviously predates states sponsored currency. Heck, money economies (that is, ones in which there is a generally accepted medium of exchange and unit of account for debt) predate state sponsored currency (or even states). I've never even heard of that being an active argument. And the question was about using barter, not depending on barter exclusively; every society has used barter. And, in any case, debt and barter are not opposed; a system that uses debt of arbitrary commodities without a commonly-accepted unit of account is still a barter system (barter systems with debt certainly have existed, whether or not they were ever the dominant basis for any economy.)
r00fus 10y ago
I question the assumption that this would fail outright. It would likely result in a hybrid visible/invisible transactions. Look at how the underground economy of drugs uses commodities like detergent [1]. This would just take that economy to the next level. Clearly to prevent currency from failing outright, going cashless would likely result in the ban (effective or not) of cryptocurrencies and the like. [1] http://nymag.com/news/features/tide-detergent-drugs-2013-1/ http://nymag.com/news/features/tide-detergent-drugs-2013-1/
- anigbrowl 10y ago
  There's an important point here that's often overlooked. Drugs themselves can serve as currency, but just like salt in Rome, such currencies are consumer goods as well as fungible commodities. Their consumability as well as their growth/collection time form a natural barrier against inflation. Of course such currencies are economically inefficient. But I think too much monetary efficiency is bad, because it encourages financialization and excess risk. for generations now we have been borrowing from our descendants to pay for things in the present, seeming to come out ahead on paper but more often than not running up a hideous and poorly-accounted-for environmental bill while establishing a consumption-based economy that promotes waste. I've long wondered if we shouldn't treat oil as a de facto currency rather than only as a commodity.
- pavel_lishin 10y ago
  I thought detergent was used as a standard barter chip because it's easier to steal detergent than it is to steal cash.
  - dredmorbius 10y ago
    It's not, of itself, incriminating. And if you can't sell it, you've still got clean clothes.
    - M_Grey 10y ago
      Plus, everyone with even the smallest amount of money, wants to be clean; it's an incredibly basic need. Alcohol will probably always been a good form of barter too.
colorint 10y ago
There's two things working against this theory. First, such systems only work in the presence of a unit of account, because otherwise it's impossible to coherently price items in a pure unlike-for-unlike barter system. The unit of account would, of course, be money. So what you're talking about isn't a collapse of the money system, but black markets. When you say "people who want to keep their transactions off the books will use black markets," it sounds much less prophetic. Second, the value of state money is maintained by the state's ability to levy taxes, and the state only accepts tax payments in its own money. For people living "on the grid" in a country with a credible government, this means that most of their economic action has to happen in the state's money. Since people have to, at the very least, acquire enough money to pay their taxes, and most people don't want to put up with multiple systems of exchange. Not coincidentally, this is also the biggest hurdle for serious adoption of cryptocurrencies.
- mrb 10y ago
  "Second, the value of state money is maintained by the state's ability to levy taxes [...] Not coincidentally, this is also the biggest hurdle for serious adoption of cryptocurrencies." It is not a hurdle. In fact Bitcoin's growing adoption and increase of value over the last eight years has already demonstrated your worry is a non-problem. Money has value because people demand it. It doesn't matter if demand comes from the government or a merchant. Both can change their mind about what they'll accept tomorrow as money (as history has shown many, many times.) Sure, on a practical level a currency's value will have a more solid foundation if (1) the government that demands taxes is big and stable, or (2) if a large number of merchant accepts it. But again, fundamentally there is no difference between (1) and (2). Multiple cryptocurrencies already have value resting on a more solid foundation than the value of currencies in many smaller countries.
- otakucode 10y ago
  It seems that you know a good deal more than me about economics, so allow me to ask a question please. You say this: >Second, the value of state money is maintained by the state's ability to levy taxes Does that also hold when the state allows the vast majority of the transactions within the state to be mediated by banks and payment processors who charge a proportional "processing fee" on every single transaction which becomes essentially indistinguishable from a tax? Does that not put banks in the position of having as much, or at least nearly so, control over the value of the money of that state?
FullMtlAlcoholc 10y ago
We have cryptocurrencies already, no need to return to precious metals
- petre 10y ago
  If the power goes off, you shall return to whatever enables you to buy food, be it gold, arrowheads, detergent, drugs etc.
asldkfjasfd7 10y ago
Lot's of comments below are uptight about the definition of "barter". Which is a very vaguely defined word: trade of goods/services without the use of money. Old school accounting in many parts of the world did not rely on financial transactions. Central authorities preferred "proper" financial instruments, but for the commoner, bartering was a regular activity. Knicks on clay tablets tracked debt, sure, but the repayment may not have been via money. 2 pelts to Bill now for a bushel of grain in return next month type agreements are all over history. It's hard to determine how much activity like this there was, and a lot of the history focused on official financial systems because, well, it's easy to find data on.
- petre 10y ago
  Have you heard of the Real Bills Doctrine? It's essentially the modern equivalent to clay tablet tracked debt. https://en.m.wikipedia.org/wiki/Real_bills_doctrine https://en.m.wikipedia.org/wiki/Real_bills_doctrine
greggman 10y ago
If I understand correctly the Netherlands plan to go cashless. There were already cashless fast food restaurants when I was there in 2013. No cash allowed. http://www.europeanpaymentscouncil.eu/index.cfm/newsletter/article/?articles_uuid=2CEC2C81-5056-B741-DBB1A2100BD65CCA http://www.europeanpaymentscouncil.eu/index.cfm/newsletter/a...
- ghaff 10y ago
  Although that same link also says: "Although selected shops, petrol stations, railway stations and government services, each for their own reasons, have decided not to accept cash any longer, we do not foresee the Netherlands will evolve into a completely cashless society. In fact, the consensus is that the cash infrastructure will remain ubiquitous and that it is up to payers and payees to agree on their payment method." That said, it's not hard to imagine that if you get to 90% or 95% cashless, a lot of retailers aren't going to want to bother with cash any longer.
ycmbntrthrwaway 10y ago
It is unlikely that people will actually return to barter and transfer physical goods such as gold all the time, because it is expensive. However, they can usually promise to transfer value later. Such transactions will mostly cancel out and the amount of actually transferred goods is greatly reduced. What you end up with is informal system of money transfer such as https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala Such a system will emerge as soon as people are prohibited to pay directly to each other. Instead of paying cash to you, I will pay for you in restaurant.
otakucode 10y ago
Can you even conceive of how radically different that would look? In order for barter to be possible, you must be face-to-face with the person you are exchanging goods with. Unless Amazon really stepped up to the plate and hired agents in every neighborhood in the nation, I couldn't see it being anything but a reversion of society to pre-Industrial-Era structures. Shit. You just made me realize something. This would be bliss and perfection and salvation for the current status quo. The Internet has come along and taken distribution, the source of basically every existing accumulation of significant wealth, and made it a worthless problem to solve. It took the primary economic engine, something only huge sophisticated organizations were capable of accomplishing with any effectiveness, and turned it into something any clever 12 year old can do in their spare time for a lark and run circles around those large organizations whose pre-existing distribution chains are now a weight drowning them. They feel that noose tightening and know their days are numbered unless they can stop things from progressing any further. The death of any not-in-person transactions, especially any transactions over the Internet, would give them rebirth. Their distribution networks would once again be the single most valuable structure in the entire economy. They could continue to skim 90% of every transaction between creator and consumer for performing the long-valued task of distribution. Shit.
carapace 10y ago
I think it was Giordano Bruno who first claimed that whatever has the most value and the least cost of storage will become money.
petre 10y ago
People were using rice as cash in Japan back in the 8th century. Or arrowheads. Depends wether you want to eat or wage some war. AK-47 rifles would be the modern equivalent of arrowheads. https://en.m.wikipedia.org/wiki/Japanese_currency https://en.m.wikipedia.org/wiki/Japanese_currency
- skookumchuck 10y ago
  Tobacco leaves served as cash in the colonial American economy.
vkou 10y ago
Unfortunately, the US Government does not accept tax payments in turnips, emeralds, pirate treasure, moonshine, or Eth. Until that changes, you will need to interface with the USD economy. The US government also expects your tax payment on an annual basis.
- petre 10y ago
  Whatever prevents me from using multiple methods of payment.
- M_Grey 10y ago
  You can't pay in Bitcoin or gold either, yet both are incredibly popular.
  - vkou 10y ago
    What is the annual volume of gold transactions, compared to the annual number of USD transactions? Hundreds of thousands, versus trillions? Is there anyplace in the country where I can pay my green-grocer with gold? Describing gold as an incredibly popular currency makes alternative-facts look honest.
    - M_Grey 10y ago
      We're talking about a hypothetical cashless future, and your argument is that right now, this isn't the case. ...
      - vkou 10y ago
        And you're conflating store of value (Which gold is... An OK one) with currency. A currency is a store of value, but a store of value is not necessarily a currency. Gold, as a currency, has terrible properties.
- lucio 10y ago
  But, if you fully trade using any of those examples as money, you're actually invisible to the tax collector...

by M_Grey 10y ago

jk563 10y ago

I don't see this as a given. I for one would be more than happy to have a cashless society, and I would struggle to believe that I'm unique out of the ~7 billion there are of us.

M_Grey 10y ago
Doubtless you're part of a fairly large demographic... that's part of the problem which has no easy solution.
ghaff 10y ago
Have an upvote. But also try to understand why many people are uncomfortable with the idea that even modest transactions can be monitored by governmental agencies. In practice, there are always ways to work outside the system of course. But to the degree these become real exceptions they become that much more suspicious as a result.
- jk563 10y ago
  Error in conciseness! I can empathise completely and do understand the reasoning of the opinion of a large number of people who do not want a third party being privy to every transaction. I was attempting to convey that there are likely many people on both sides of the debate, should have expanded a bit more!

ktRolster 10y ago

As an example of your point, during the Nixon crash, people used postage stamps as a proxy for cash. They also used Canadian coins in America to replace USD coins. People would literally drive over the border to Canada, get a bunch of coins, and bring them back and sell them to stores so they could make change.

M_Grey 10y ago
Yep, and now you have all of the people who hoard gold and other fungible assets... it's just not workable. You'd have to wage a new "War on Cash".

afarrell 10y ago

> People will simply return to barter. In what societies have humans used barter? I suspect we would instead use something like tobacco, laundry detergent, or startup t-shirts as cash or we would keep a mental register of who owes whom a favor.

FullMtlAlcoholc 10y ago
You're right to question it, there is no evidence of the idea Adam Smith promulgated (that barter societies were natural). Ancient societies used a credit system with debt being the social tie that binds a community together
dragonwriter 10y ago
> In what societies have humans used barter? All of them, including (but not limited to, since barter predates money) all the ones that also have a money economy.
- scott_s 10y ago
  The book "Debt: The First 5,000 Years" (https://www.mhpbooks.com/books/debt/ https://www.mhpbooks.com/books/debt/) makes a compelling case that no societies on record have depended on a barter economy. The author also argues that debt even predates state sponsored currency.
  - dragonwriter 10y ago
    Debt obviously predates states sponsored currency. Heck, money economies (that is, ones in which there is a generally accepted medium of exchange and unit of account for debt) predate state sponsored currency (or even states). I've never even heard of that being an active argument. And the question was about using barter, not depending on barter exclusively; every society has used barter. And, in any case, debt and barter are not opposed; a system that uses debt of arbitrary commodities without a commonly-accepted unit of account is still a barter system (barter systems with debt certainly have existed, whether or not they were ever the dominant basis for any economy.)

r00fus 10y ago

I question the assumption that this would fail outright. It would likely result in a hybrid visible/invisible transactions. Look at how the underground economy of drugs uses commodities like detergent [1]. This would just take that economy to the next level. Clearly to prevent currency from failing outright, going cashless would likely result in the ban (effective or not) of cryptocurrencies and the like. [1] http://nymag.com/news/features/tide-detergent-drugs-2013-1/ http://nymag.com/news/features/tide-detergent-drugs-2013-1/

anigbrowl 10y ago
There's an important point here that's often overlooked. Drugs themselves can serve as currency, but just like salt in Rome, such currencies are consumer goods as well as fungible commodities. Their consumability as well as their growth/collection time form a natural barrier against inflation. Of course such currencies are economically inefficient. But I think too much monetary efficiency is bad, because it encourages financialization and excess risk. for generations now we have been borrowing from our descendants to pay for things in the present, seeming to come out ahead on paper but more often than not running up a hideous and poorly-accounted-for environmental bill while establishing a consumption-based economy that promotes waste. I've long wondered if we shouldn't treat oil as a de facto currency rather than only as a commodity.
pavel_lishin 10y ago
I thought detergent was used as a standard barter chip because it's easier to steal detergent than it is to steal cash.
- dredmorbius 10y ago
  It's not, of itself, incriminating. And if you can't sell it, you've still got clean clothes.
  - M_Grey 10y ago
    Plus, everyone with even the smallest amount of money, wants to be clean; it's an incredibly basic need. Alcohol will probably always been a good form of barter too.

colorint 10y ago

There's two things working against this theory. First, such systems only work in the presence of a unit of account, because otherwise it's impossible to coherently price items in a pure unlike-for-unlike barter system. The unit of account would, of course, be money. So what you're talking about isn't a collapse of the money system, but black markets. When you say "people who want to keep their transactions off the books will use black markets," it sounds much less prophetic. Second, the value of state money is maintained by the state's ability to levy taxes, and the state only accepts tax payments in its own money. For people living "on the grid" in a country with a credible government, this means that most of their economic action has to happen in the state's money. Since people have to, at the very least, acquire enough money to pay their taxes, and most people don't want to put up with multiple systems of exchange. Not coincidentally, this is also the biggest hurdle for serious adoption of cryptocurrencies.

mrb 10y ago
"Second, the value of state money is maintained by the state's ability to levy taxes [...] Not coincidentally, this is also the biggest hurdle for serious adoption of cryptocurrencies." It is not a hurdle. In fact Bitcoin's growing adoption and increase of value over the last eight years has already demonstrated your worry is a non-problem. Money has value because people demand it. It doesn't matter if demand comes from the government or a merchant. Both can change their mind about what they'll accept tomorrow as money (as history has shown many, many times.) Sure, on a practical level a currency's value will have a more solid foundation if (1) the government that demands taxes is big and stable, or (2) if a large number of merchant accepts it. But again, fundamentally there is no difference between (1) and (2). Multiple cryptocurrencies already have value resting on a more solid foundation than the value of currencies in many smaller countries.
otakucode 10y ago
It seems that you know a good deal more than me about economics, so allow me to ask a question please. You say this: >Second, the value of state money is maintained by the state's ability to levy taxes Does that also hold when the state allows the vast majority of the transactions within the state to be mediated by banks and payment processors who charge a proportional "processing fee" on every single transaction which becomes essentially indistinguishable from a tax? Does that not put banks in the position of having as much, or at least nearly so, control over the value of the money of that state?

FullMtlAlcoholc 10y ago

We have cryptocurrencies already, no need to return to precious metals

petre 10y ago
If the power goes off, you shall return to whatever enables you to buy food, be it gold, arrowheads, detergent, drugs etc.

asldkfjasfd7 10y ago

Lot's of comments below are uptight about the definition of "barter". Which is a very vaguely defined word: trade of goods/services without the use of money. Old school accounting in many parts of the world did not rely on financial transactions. Central authorities preferred "proper" financial instruments, but for the commoner, bartering was a regular activity. Knicks on clay tablets tracked debt, sure, but the repayment may not have been via money. 2 pelts to Bill now for a bushel of grain in return next month type agreements are all over history. It's hard to determine how much activity like this there was, and a lot of the history focused on official financial systems because, well, it's easy to find data on.

petre 10y ago
Have you heard of the Real Bills Doctrine? It's essentially the modern equivalent to clay tablet tracked debt. https://en.m.wikipedia.org/wiki/Real_bills_doctrine https://en.m.wikipedia.org/wiki/Real_bills_doctrine

greggman 10y ago

If I understand correctly the Netherlands plan to go cashless. There were already cashless fast food restaurants when I was there in 2013. No cash allowed. http://www.europeanpaymentscouncil.eu/index.cfm/newsletter/article/?articles_uuid=2CEC2C81-5056-B741-DBB1A2100BD65CCA http://www.europeanpaymentscouncil.eu/index.cfm/newsletter/a...

ghaff 10y ago
Although that same link also says: "Although selected shops, petrol stations, railway stations and government services, each for their own reasons, have decided not to accept cash any longer, we do not foresee the Netherlands will evolve into a completely cashless society. In fact, the consensus is that the cash infrastructure will remain ubiquitous and that it is up to payers and payees to agree on their payment method." That said, it's not hard to imagine that if you get to 90% or 95% cashless, a lot of retailers aren't going to want to bother with cash any longer.

ycmbntrthrwaway 10y ago

It is unlikely that people will actually return to barter and transfer physical goods such as gold all the time, because it is expensive. However, they can usually promise to transfer value later. Such transactions will mostly cancel out and the amount of actually transferred goods is greatly reduced. What you end up with is informal system of money transfer such as https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala Such a system will emerge as soon as people are prohibited to pay directly to each other. Instead of paying cash to you, I will pay for you in restaurant.

otakucode 10y ago

Can you even conceive of how radically different that would look? In order for barter to be possible, you must be face-to-face with the person you are exchanging goods with. Unless Amazon really stepped up to the plate and hired agents in every neighborhood in the nation, I couldn't see it being anything but a reversion of society to pre-Industrial-Era structures. Shit. You just made me realize something. This would be bliss and perfection and salvation for the current status quo. The Internet has come along and taken distribution, the source of basically every existing accumulation of significant wealth, and made it a worthless problem to solve. It took the primary economic engine, something only huge sophisticated organizations were capable of accomplishing with any effectiveness, and turned it into something any clever 12 year old can do in their spare time for a lark and run circles around those large organizations whose pre-existing distribution chains are now a weight drowning them. They feel that noose tightening and know their days are numbered unless they can stop things from progressing any further. The death of any not-in-person transactions, especially any transactions over the Internet, would give them rebirth. Their distribution networks would once again be the single most valuable structure in the entire economy. They could continue to skim 90% of every transaction between creator and consumer for performing the long-valued task of distribution. Shit.

carapace 10y ago

I think it was Giordano Bruno who first claimed that whatever has the most value and the least cost of storage will become money.

petre 10y ago

People were using rice as cash in Japan back in the 8th century. Or arrowheads. Depends wether you want to eat or wage some war. AK-47 rifles would be the modern equivalent of arrowheads. https://en.m.wikipedia.org/wiki/Japanese_currency https://en.m.wikipedia.org/wiki/Japanese_currency

skookumchuck 10y ago
Tobacco leaves served as cash in the colonial American economy.

vkou 10y ago

Unfortunately, the US Government does not accept tax payments in turnips, emeralds, pirate treasure, moonshine, or Eth. Until that changes, you will need to interface with the USD economy. The US government also expects your tax payment on an annual basis.

petre 10y ago
Whatever prevents me from using multiple methods of payment.
M_Grey 10y ago
You can't pay in Bitcoin or gold either, yet both are incredibly popular.
- vkou 10y ago
  What is the annual volume of gold transactions, compared to the annual number of USD transactions? Hundreds of thousands, versus trillions? Is there anyplace in the country where I can pay my green-grocer with gold? Describing gold as an incredibly popular currency makes alternative-facts look honest.
  - M_Grey 10y ago
    We're talking about a hypothetical cashless future, and your argument is that right now, this isn't the case. ...
    - vkou 10y ago
      And you're conflating store of value (Which gold is... An OK one) with currency. A currency is a store of value, but a store of value is not necessarily a currency. Gold, as a currency, has terrible properties.
lucio 10y ago
But, if you fully trade using any of those examples as money, you're actually invisible to the tax collector...