Cash: An endangered species

ancient_paztriot · June 18, 2004

This cashlless society is really about surveillance and control. Loss of liberty will follow.

..........................

Move to electronic transactions poses personal risks

SAN FRANCISCO (CBS.MW) - Rocket ahead 20 years. You're standing in front of an old bank branch that's now a senior-citizens' fitness center, pointing to the recess where the ATM used to be, and struggling to explain a relic's purpose to your child or grandchild.

"It was a machine that dispensed cash," you say. "It was revolutionary in its time."

"But what did you need cash for, Grandpa?"

The idea may sound far-fetched, but the U.S. is much closer to becoming a cashless society than most of us realize. And while conspiracy theorists warn of Big Brother privacy threats, the disappearance of hard currency poses a far more serious danger to Americans' financial self-discipline. Just consider:

• Credit- and debit-card purchases now make up the bulk of all retail transactions. Card scanners are installed everywhere from soda machines and parking meters, to fast-food counters and unstaffed gas stations. Rarely will consumers see "Minimum $10 purchase required" signs anymore.

• As the middleman in the check-cashing system, the Federal Reserve processed 15.8 billion paper checks last year, the fourth straight annual decline, and down 4.7 percent from 2002. Eager for customers to abandon checks for fee-generating debit cards and online bill-payment, banks are charging ever-stiffer fees for using them.

• Automated Clearing House (ACH) transactions - a nationwide electronic system used by financial institutions to route online bill payments and direct deposit of paychecks, Social Security benefits and tax refunds -- rose 12 percent in the U.S. in 2003. The total reached 10 billion payments valued at $27.4 trillion.

• Federal Reserve officials confess they have no idea how much money moves through the economy as cash vs. other means. Yet the Fed is promoting electronic banking because it stands to save big itself -- it costs the Fed a nickel to process a paper check and a penny for an ACH transaction.

A tangible asset

Money by its nature is abstract. And the less cash that flows through our hands, the more intangible it becomes and the more we lose our sense of its real value.

Forget about the demonized credit card; our own banked assets are now an electronic apparition. Paychecks are direct deposited, debit cards act as a cash surrogate and mortgages, car payments and even our monthly newspaper-delivery costs are automatically withdrawn from checking and credit-card accounts.

These three major economic developments derived in part from consumers losing their spending discipline from holding less cash:

1. Personal bankruptcies soared to new records throughout years of unprecedented prosperity in the late 1990s. Some blamed easy credit, but the increasing disappearance of cash contributed to a "money comes, money goes" attitude.

2. Untold millions of people threw hard-earned cash at the stock-market bubble and hot tech companies whose CEOs couldn't guess what decade their firms would be profitable. We sensed it was funny money, but no one's giddy anymore.

3. The consumer-spending spree that drove economic growth for two decades owed much to soon-to-be antiquated ATMs. They made money widely available around-the-clock starting in the early 1980s and had far more to do with juicing spending than will ever be fully measured.

The long and the short of it: What we've gained in convenience we've lost in accountability. We technically still have "cash flows," but they're now fuzzy numbers on our personal balance sheets, rather than cash-on-hand and debts owed.

Chip and dip

Consider the debit card, for instance. It's much like the chips that casinos give you to render you blind, so you won't see that $50 chip you just dropped hitting 15 in blackjack as real money.

Banks are only too pleased if you similarly exhaust your checking account. In years past, banks sought deposits, but now they want fee income and debit cards bring secure revenue where handling checks costs money and bears greater risk.

Just like casinos ply you with free booze to encourage you to play, the banks offer unfettered access to your money just hoping you'll spend. They make a percentage on each debit-card transaction, much like credit cards, so the more you drop the more they make. It's initially coming out of the merchant's hide, not theirs, but ultimately it's the consumer who pays.

So what's the downside to liberating ourselves from carrying cash? Let's take inventory:

• Where once Americans stood in a teller line to cash their paychecks, the vast majority of us now have the "benefit" of direct deposit. Gone is the sense of reward for our labor and the weekly taking stock of our finances. Now, we spend what we have, pay what we must and save next to nothing.

• The grocery bill rings up an unexpected $142 and we settle the tab with a debit card and a few keystrokes. We'd stopped for bread, milk, yogurt and sliced turkey, but loaded up on frozen food, gourmet coffee and choice cuts of meat. It's food, right? Nothing frivolous there.

• The checking-account statement comes in, and if we bother to square the numbers, they're massively out of whack. We yell at our spouses for not entering debit-card receipts and then remember there's still a week's worth in our own wallet.

• And then comes the monthly credit-card statement. We've got a $210 balance without ever pulling out the plastic that month. Our cable service, Internet access and cell-phone are automatically billed. If we don't pay the balance, no sweat. We run up a little interest on our cost-of-living. These are all non-discretionary items, right?

Mind you, this is no Luddite's call to arms, advocating the stashing of cash under the mattress. Technology is simply making it easy not to count every dollar. And where's that going to lead us?

Before you apply for a new "smart card," consider the tradeoff for convenience. The next time you're making a major purchase, say for a new washing machine, go to the bank, take out $450 and count out that fistful of bills for the sales clerk. You'll have a fuller appreciation of the cost, the satisfaction of exchanging tangible earnings for your betterment -- and a sense of just what we're losing.

theist · June 18, 2004

It's all driven out of a sense to be the controller. The more someone can control the more that someone can fell like god. That is the point of coming into matter to begin with. So we can expect them to run with it as far as they can.

With all transactions being electronic it will all operate so much smoother. They are working on eliminating checks now. So cumbersome.

And all those small time tax cheats will have to come through with their last nickel or their total accounts can just be block at the touch of a button.

let your mind play with the merging of these different ideas. Cloning, test tube babies, various types of genetic modifications and the question pops up "Who needs marriage?"

Having sex and producing children in the old fashioned is really rather bothersome with so many unseen consequences. better let the scientists control that to. The population needs controlling anyway, right? All these damn heterosexuals(breeders) they are just out of control. in fact with new genetic technologies the need for heterosexual relationships may itself even become too old fashioned to keep around. Two fags can place an order for a baby just as easily as a man and a woman, right?

Of course they might need the approval from those that control their electronic accounts before they can place the order.

The Brave new World is just in its infancy.

Pray for a meteor.