In Defense of Cash

Around the world, governments are trying to kill paper money. It's a terrible idea.


On the evening of November 2016, Indian Prime Minister Narendra Modi announced that 500-rupee notes (valued at about $8) and 1,000-rupee notes would become "worthless pieces of paper" at midnight, no longer recognized as legal tender. The stated goal of his demonetization plan: to catch criminals. The government offered a brief window in which old notes could be swapped for new ones, with the idea that everyone from human traffickers to tax cheats would have to show up at banks with vast sums of money and confess their sins or lose the value of their cash holdings altogether.

The costs of this scheme were large. At the time of the announcement, demonetized notes accounted for 86 percent of all currency in circulation. As George Mason economist Lawrence H. White has written, "A serious currency shortage immediately arose, with predictable consequences. Honest wage laborers in the huge cash economy went unpaid, honest construction projects came to a standstill, honest shopkeepers saw sales dry up, and honest businesses failed. Honest people wasted billions of hours waiting in queues to exchange old notes for the trickle of new notes."

Growth in the country's gross domestic product fell from an annualized rate of 7.37 percent in the quarter prior to the announcement to an average annualized rate of 6.06 percent in the first three quarters of 2017.

What's more, the program utterly failed to impose a levy on those conducting business in the underground economy. Lawbreakers did not find themselves stuck with worthless notes. Instead, the Reserve Bank of India reports that 98.96 percent of all demonetized notes were turned in during the months following the announcement. That is on par with redemption rates in Italy (99.15 percent) and France (98.77 percent) following the introduction of the euro—and in those cases users were given 10 years to convert their old money.

The Indian experiment was a failure. Yet a group of politicians, academics, and do-gooders continues to dream about a cashless world where black markets would shrink and tax coffers would grow.

Cash Is for Criminals

In his 2016 book The Curse of Cash (Princeton University Press), Harvard economist Kenneth S. Rogoff makes what is arguably the best case for demonetization in America. He estimates that more than a third of all U.S. currency in circulation is used by criminals and tax cheats in the domestic economy and suggests the proportion is even higher for large denomination notes. Rogoff concedes that "crime will continue with or without cash, but for very good reasons, cash is a medium of exchange highly favored by the underground economy, and the underground economy accounts for a significant share of the demand for cash."

Rogoff proposes eliminating $100 and $50 bills immediately. He claims few people use such large denominations in the domestic legal economy. As long as those who do are able to switch to lower denominations at little cost—and he says they would be—such a policy would be minimally disruptive.

But it doesn't stop there: In Rogoff's scheme, most lower denomination notes also must go. This would take place over a much longer period, a decade or more. To promote the transition, the government might subsidize deposit accounts—perhaps through rebates to customers or direct payments to financial institutions—or require all paychecks to come via direct deposits. The smallest denomination notes could be left in circulation or, better still, replaced with coins—which are much heavier and hence less convenient for large transactions—to leave some limited scope for financial privacy.

This proposal promises to deliver significant gains from reducing crime and tax evasion while imposing few costs on those operating in the legal domestic economy. Who wouldn't want that? Indeed, the idea has launched a formidable coalition in the Better Than Cash Alliance, with the United Nations Capital Development Fund, the U.S. Agency for International Development, the Bill and Melinda Gates Foundation, Omidyar Network, Citi, Visa, and Mastercard all reportedly donating $1.5 million or more per year.

The Philosophical Case for Cash

The case for cash presumes that we should be free to go about our lives so long as our actions do not harm others. It maintains that governments are not entitled to the intimate details of people's lives.

Whether they realize it or not, Rogoff and other demonetization advocates hold a progressive view of government. They think that existing laws and regulations have been rationally constructed by enlightened experts or are the product of an enlightened electorate. Adjust the requisite policy levers and one can fine-tune the social system.

Demonetization advocates are not utopian, to be sure. They understand that the world is complicated, that bad rules are occasionally adopted and once-good rules can persist long after their usefulness ends. But that just means a little more adjusting is in order. Eliminating cash, in their view, patches the hole in an otherwise well-designed system.

There is, of course, an alternative view of government—one that is skeptical that laws and regulations are so rationally designed. It maintains that they are far more likely to be a hodgepodge passed down and amended over time. Some of these rules do promote just conduct between individuals. But others merely reflect existing power structures: They were constructed to benefit some at the expense of others or to bolster a set of values that are not universally shared.

Classical liberals believe an individual has the right to pursue her own ends up to the point where her actions violate the rights of another. In general, therefore, they think the power of the state should be limited. Sure, governments might be used for good. But both theory and experience show that they will not always make the right choices. It is more important to limit the harm such a powerful institution might cause.

It is easy to see how these two views can lead to opposite conclusions regarding the desirability of cash. Physical currency enables one to disobey the government. If the government is a force for good, efforts to circumvent its orders are generally bad for society. On the other hand, if the government must have a compelling interest before it can justifiably interfere in people's lives, a blanket ban on cash is too broad. Individuals should be more or less free to act privately. And governments should only invade those private spaces if there is sufficient reason to believe someone is being harmed by someone else. Call it a moral presumption of liberty.

The rule of law requires that we accept some limits even in the prevention and detection of indefensible crimes. Banning cash might make it more difficult to fence stolen goods, but it does so by preventing a host of noncriminals from engaging in legitimate transactions as they see fit.

Importantly, this argument for cash is not merely a defense of crime and tax evasion, as some on the other side might have you believe. It is a case for due process and financial privacy—bedrock jurisprudential principles in the West.

Now, you may be thinking, even if cash advocates are not motivated by a desire to promote crime or tax evasion, those outcomes might be side effects of their favored policy. And indeed, such side effects seem inevitable. But we must keep two things in mind.

First, some crimes are defensible. Hiring an undocumented immigrant might be illegal, but it is not morally wrong. The philosophy of liberalism is clear: It is beyond the legitimate scope of government to limit people's freedom to pursue their own ends when such pursuits do not harm others. Insofar as cash allows one to circumvent unjust laws, it is a bulwark of liberalism.

Second, the rule of law requires that we accept some limits even in the prevention and detection of indefensible crimes. Banning cash might thwart the occasional murder-for-hire or make it more difficult to fence stolen goods. But it does so by preventing a host of noncriminals from engaging in legitimate transactions as they see fit.

The Costs of Cashlessness

One need not resort to pie-in-the-sky philosophy talk to oppose demonetization proposals. There is a strong practical case to be made as well. In brief, the costs of banning cash probably outweigh the benefits.

Let's start with the benefits. Since cash enables quasi-anonymous exchange, it seems reasonable to suspect it is used by criminals and tax cheats. Banning cash, as demonetization advocates suggest, would almost certainly eliminate some crime and tax evasion. The question is: How much will that improve the well-being of the average person in society?

There is no doubt that some criminal activities make us worse off. Most of us would like to limit murder, human trafficking, and theft, for example. If eliminating cash reduced the frequency of these crimes, we would have to add that fact to the tally in favor of an anti-cash policy.

But the spillover benefits of eliminating other crimes are less obvious. Consider prostitution. Where exactly is the externality? What costs do those engaging in consensual adult sex work impose on others? One might find such transactions repugnant. However, it is hard to see how society as a whole would be much improved by preventing people from buying and selling some goods and services, especially if the offending transactions take place in private.

It seems reasonable to suspect that the bulk of criminal activities stamped out by the prohibition of cash would be of questionable benefit to society. The online marketplace Silk Road facilitated transactions largely involving illicit goods and services from February 2011 to October 2013. Transactions on the platform used bitcoin, which, like cash, allows for potentially anonymous transactions. Despite a few headline-grabbing accounts of hitmen being hired to protect the site's secrets (no murders were ever found to have taken place), the best available evidence reveals that Silk Road postings almost always involved controlled substances like narcotics. A 2013 paper by Carnegie Mellon researcher Nicolas Christin found that more than 20 percent were for weed or hash—goods that are legal for recreational use in eight states and have been decriminalized in 13 others.

As for tax evasion, it is certainly bad for government revenues. But that tells us little about its effect on society. When considering overall social welfare, one must be wary of mere transfers. The IRS estimates the tax gap—the difference between what taxpayers owe and what they actually pay—at around $458 billion per year before recovery efforts. The result is that government is worse off by $458 billion—but tax cheats are better off by the same amount.

One might argue that society is harmed as a result of this transfer—if the government would have spent the money better than the tax cheats, for example. But even if that is the case, it's worth noting two things: First, $458 billion is less than 2.5 percent of the United States' annual gross domestic product. And second, it is highly unlikely that society is worse off by the full amount. Surely some economic value needs to be attributed to the extra purchases that tax cheats make, even if one finds their behavior reprehensible.

Economists like Rogoff, who favor demonetization, point to the distortionary effects of tax evasion. If some people avoid paying taxes, the burden falls disproportionately on others. The evaders can offer their goods and services at lower prices than their law-abiding competitors. This results in a misallocation of resources, as some high-value ventures lose out to lower-value ventures that are more competitive simply because they are not paying everything they owe.

No disagreement there—market distortions can be costly. Still, the losses from misallocating resources are surely much smaller than 100 percent of the (already modest) tax gap.

Finally, Rogoff overestimates the extent to which cash is used by criminals and tax cheats. He essentially argues that any cash not declared in surveys must be held for nefarious purposes. But at least some of the observed underreporting is surely to preserve financial privacy or to keep cash holdings secure—think of the proverbial grandma who hides her life savings under the mattress—not because such holdings are being employed to purchase illegal goods and services or get out of paying taxes.

None of this is to deny that there would be some benefits to society from banning cash. My claim is only that those benefits are overwhelmed by the costs.

Many noncriminals use cash, too. Demonetization would inconvenience them right alongside the bad guys. Some transactions will be foregone. Financial privacy will be undermined. Mental accounting methods—like Dave Ramsey's system, where people distribute cash across envelopes marked "rent," "gas," "food," "recreation," etc., and then limit spending in each category to the cash in the relevant envelope—will be eliminated. Moreover, since poorer Americans go "unbanked" in higher numbers than rich Americans and therefore rely more heavily on cash, the costs of such a move would likely fall on many of society's least well-off.

Some demonetization advocates suggest law-abiding citizens would be better off on net if we forced everyone to have a bank account and adopt "superior" electronic payment technologies. That is unlikely. In a 2017 working paper titled "The Curse of the War on Cash," George Mason's White noted that "standard economic reasoning tells us that improving lives means adding attractive options, not removing what people currently consider their most advantageous options."

Mental accounting methods—like Dave Ramsey's system, where people distribute cash across envelopes marked "rent," "gas," "food," "recreation," etc., and then limit spending to the cash in the relevant envelope—would be eliminated.

Plus, there is at least one potential advantage of tax evasion: It may serve as a constraint on the extent to which a government can extract revenue from its citizens. Since levies eliminate some productive exchanges, this could improve social welfare. And since the state requires money to operate, giving citizens a way to rebel against climbing tax rates (and authoritarian behavior more generally) enables them to act as a nonviolent check on government power.

A Cautionary Tale: Venezuela

There's one last argument for forbearance: If an anti-cash policy is implemented in the U.S. or endorsed by respected intellectuals and powerful international organizations, it is likely to be invoked in places where it is wholly inappropriate.

Rogoff has made it very clear that his proposal "is not aimed at developing countries, where the share of people without effective access to banking is just too large." Unfortunately, subtlety is often lacking in the political sphere. Politicians use ideas like a drunk uses a streetlight: for support, rather than illumination.

Demonetization schemes will quite naturally appeal to financially strapped governments in low-income nations, where such efforts might be used as a one-time tax on note holders. By canceling the value of old notes and spending an equivalent value of new notes into circulation, kleptocrats are able to extract wealth from those holding cash without suffering the usual inflationary consequences.

We already saw how such a policy was taken up in India, and that country is not alone. Venezuelan President Nicolás Maduro employed similar rhetoric when announcing in December 2016 that 100-bolivar fuerte notes (valued at around 2 U.S. cents) would be removed from circulation. He claimed the nearly worthless currency was being hoarded by mafias. The exchange window in Venezuela was initially limited to a mere 72 hours but later extended into January.

In sharp contrast to Rogoff's plan, neither India nor Venezuela permanently removed large notes from circulation. Indeed, both countries ultimately introduced larger denominations—2,000 rupees in India and 100,000 bolivares fuertes in Venezuela. Given that the demonetized notes in both countries (but especially in Venezuela) were of relatively low value and larger denomination notes were later introduced, it is hard to believe rooting out crime was the primary motivation.

Venezuela's move was part of an effort to deal with hyperinflation. (Johns Hopkins University economist Steve Hanke estimates that nation's implied annual rate of inflation for February 2018 at roughly 5,454 percent. As economist Noah Smith put it at Bloomberg in December 2017, the country "has the world's largest oil reserves and should be fabulously wealthy. Instead, children are starving.") Carrying suitcases full of cash around to pay for basic goods is inefficient, but one way to make that problem less severe is to exchange lots of small denomination notes for fewer large denomination notes. Maduro understood that demonetizing old notes would make this transition less expensive for the government, because it pushes people into the new, larger notes without compensating them for the small notes they are unable to redeem before the window closes.

Indian politicians meanwhile probably hoped for a large windfall tax on note holders as a result of some people failing to convert their money within the designated window. Though that did not actually come to pass (since most notes were, in fact, redeemed), note holders nonetheless had to bear the costs of the government's attempt to levy such a tax.

In both countries, few if any of the arguments in favor of eliminating cash apply. Yet both found it politically expedient to invoke the anti-crime rhetoric of more respectable demonetization proposals while imposing enormous costs on their citizens.

Cash Is Still King

The case against cash is often presented as a sensible solution to an obvious problem. But the solution is not sensible and the problem is not obvious. Demonetization advocates show little respect for financial privacy and see nothing wrong with restricting personal liberty. It is unlikely that even the best demonetization proposals would improve matters. At the same time, supporters of those proposals provide intellectual ammunition for others who would introduce far worse schemes.

The misappropriation of demonetization arguments in places like India and Venezuela should, at a minimum, give one pause. It is perfectly reasonable to look forward to a day when cash is no longer king. Forcing such a result by restricting access to some people's preferred payment mechanism is a terrible idea.

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  1. We’ll have to go back to bartering… A hook-up for some hashish or coke, say… Now where did I get THAT idea?!?!

    1. Also very, VERY sadly, the elimination of cold hard CASH may utterly RUIN good jokes like this:

      So there was this farmer, his son, and the only animal on their farm that survived the winter: a duck. One day the farmer is sittin? down paying off last month?s heating bill when he realized that they were broke. He told his son to go into town and sell the duck for as much money that he could get. So the boy started off to town. He came up to a prostitute that was uglier than the ass of the duck he carried in his arms. The hooker looked straight at the boy and said, “The fucking begins at $10, you got $10?” The boy had no money, so he started to walk away, but the hooker stopped him and said that she would accept that duck in his hands instead of $10. The boy gleefully accepted, so they went off and had sex. An hour later, as the boy was leaving, the hooker pleaded that he fuck her again because it was the best fucking of her life. She offered him the duck back, and they went at it again. Another hour passes, and the boy heads home, duck in hand.

      1. On the way, the duck gets spooked and flies from the boy?s hands. It flew directly into the path of an oncoming car, obliterating the duck. The man driving gets out and appologizes for the boy?s duck. The man hands the boy 25 dollars for his trouble and goes on his way. Later, the boy goes home and hands his father 25 dollars. The father notices that his son looks exhausted and asks him, “What happened?” The boy?s reply was this: “I got a fuck for a duck, a duck for a fuck, and 25 bucks for a fucked up duck.”


        1. Best joke in the category of “Casually mentions statutory rape and then moves on like nothing happened”

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          2. When AI figures out why humans think ducks are funny we are in trouble.

            Classic Groucho and Chico routine:

            Chico: That’s the Jewish neighborhood?

            Hammer: (pause) Well, we’ll Passover that…You’re a peach, boy. Now, here is a little peninsula, and, eh, here is a viaduct leading over to the mainland.

            Chico: Why a duck?

            Hammer: I’m alright, how are you? I say, here is a little peninsula, and here is a viaduct leading over to the mainland.

            Chico: Alright, why a duck?

            Hammer: (pause) I’m not playing “Ask Me Another,” I say that’s a viaduct.

            Chico: Alright! Why a duck? Why that…why a duck? Why a no chicken?

            Hammer: Well, I don’t know why a no chicken; I’m a stranger here myself. All I know is that it’s a viaduct. You try to cross over there a chicken and you’ll find out why a duck.

            Chico: When I go someplace I just…

            Hammer: (interrupts) It’s…It’s deep water, that’s why a duck. It’s deep water.

            Chico: That’s why a duck…

            Hammer: Look…look, suppose you were out horseback riding and you came to that stream and you wanted to ford over…You couldn’t make it, it’s too deep!

            Chico: Well, why do you want with a Ford if you gotta horse?

            Hammer: Well, I’m sorry the matter ever came up. All I know is that it’s a viaduct.

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        2. No, no, no. It’s a little boy who wants a puppy. Dad can’t afford a dog, but finally caves in, gives the kid a buck, says go buy a puppy. Pet store owner has no cheap puppies but does have a duck and throws in a free leash. Kid feels stupid walking a duck, but little Susie thinks it’s grands, trades a romp behind the bushes for the duck, likes it so much she trades back. Then a car runs over the duck, driver sees the blubbering kid, gives him 50 cents.

          Dad says what’d he get? “Got a duck for a buck, a fuck for a duck, a duck for a fuck, and a half a buck for a fucked up duck.”

    2. My first thought too — this will merely expand the underground economy as people trade more and more. Suppose, just for the sake of argument, that 90% of the cash society is illicit drugs. Without cash, how will drugs trade hands? Obviously they aren’t going to just disappear. Here are some ideas:

      Legal goods will be traded at a discount. You like that car? TV? The used goods market will expand.

      Legal goods will be handled off the books. It won’t be factories running after hours, much. It will be the local garage servicing cars after hours. The owner will turn a blind eye in exchange for lower wages or a share. Dentists will fill cavities and polish teeth after hours. Doctors will distribute free samples of new prescription medicines. Truckers will transport legal goods off the books.

      Legal goods will be lied about, just the opposite. A factory will claim to have produced more than in reality, they will be lost in shipment, and insurance will pay for them. Or goods will be purposely defective to get an insurance claim.

      Of course, all this will prompt fresh calls for yet more government intervention. It will be illegal to do any dental work without logging it. Dental offices, garages, factories: all will be required to install security systems which report directly to the government, so no one can do off-hours work. Truckers will be subject to ever more intrusive and frequent checks, not just weigh stations.

      1. But just as technology makes intrusive government easier, so it makes it easier to grow your own cash. Bit coin and its ilk will become the new cash, and just as Trump and Bernie decry the loss of manufacturing jobs without realizing that manufacturing dollars are going up up up, so too have statists of all stripes failed to notice that more and more of the economy does not involve physical goods at all. More and more work does not involve making and moving and selling physical goods. Money itself, in the form of bank accounts, brokerage accounts, investments, is not actual money, but just numbers in a computer which can be manipulated in ways statists can’t imagine.

        All the government will accomplish is expanding the underground economy. I suggest games will be a big part of this — people will set up shop in virtual worlds. I don’t mean dentists setting up game dental offices to deal with trusted patients, although that will probably happen. I mean programmers will program in a game, people will create virtual companies inside games, financial advisors will discuss the virtual companies.

        Government is by definition hide-bound and stodgy. That’s how corruption works, and statists use that to enforce the status quo, not to unleash people’s creativity. Creativity and imagination are government’s enemies.

        1. Bit coin is traceable. Some crypto-currencies are hard to trace but bitcoin isn’t one of them.

          1. Yes, that’s why I said “and its ilk”. Truly anonymous digital cash is possible.

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  2. The government should issue $500 and $1000 notes, or even larger denominations.

    The $20 bill that Mom spent at the grocery store and used the change to fill up our station wagon when I was in kindergarten is $150 now.

    Europeans still have the 500 Euro notes. As any progressive will tell you, “they do things better over in Europe”

    1. “In my opinion it is a mistake for the government not to issue the larger denominations ($500, $1,000, $5,000, $10,000) that are authorized by law.” – Milton Friedman.

      But what did he know about economics? Or – especially – monetary policy?

      1. The problem is there’s just no market for it these days. Most countries are moving away from cash because it costs a lot of money to print and maintain and most people buy everything from subway tickets to houses with something other than cash.

        Saving money by getting rid of cash isn’t going to solve any country’s financial problems, but it’s a place that money can be saved, and in societies where it’s not being used widely I wholeheartedly welcome our cashless future. No need to keep another prehistoric government program on life support just because someone, somewhere, might possibly “””need””” it at some point.

        1. I use cash almost all the time, because I value my privacy and anonymity.

        2. It’s true that the cost of running the cash system is borne (at least initially) by the government. But the alternative – moving everything into the banking / credit card system is a clearer picture of the effective tax society pays for the use of money – the 2%-5% that Visa, Mastercard, PayPal and the banking system charge every time somebody pays somebody for something … I’m not sure there’s much to be saved by doing this.

    2. I agree, but the EU discontinued the 500 Euro note, though they haven’t pulled them from circulation. Typical claims about ‘commonly used in drug trafficking’, etc.

    3. Personally, I want to bring back the $500 bill and put Ronald Reagan on it.

  3. It’s all an attempt for government to further erode your privacy. Indians, you should be fighting this attempt to gain more autocracy. You can’t regulate morals you have to teach them to your children. I’m sure lots of Indians are now go reverse the tide on cashless society now, thanks to my comment.

  4. The problem of anonymous transaction encouraging criminal activity is also demonstrated with Monero, the cyrptocurrency.

    Some cryptocurrencies are valuable based on applications to do certain things or solve certain problems (Etherium, Steem, PotCoin, etc.), but Monero is pretty much only useful (and actually used) because it’s anonymous like cash.

    That makes it the currency of choice for people running various scams–especially using malware to mine Monero on your computer for scammers without your knowledge or consent. In fact, if you try to install perhaps the most popular, legit miner for Monero, your antivirus software will probably block you from running it by default. The miner is so prolific within malware, the antivirus companies are flagging the miner itself as a virus.

    One guy is collecting millions of dollars in Monero this way, but no one knows who.…..-for-more/

  5. Over the past four to six months, rank speculation was driving the market, but much of that has been squeezed out as the cryptocurrency market crashed. Beyond the speculators, anonymous currency has a real application in evading China’s and South Korea’s capital controls. It can’t be a mere coincidence that crytocurrencies were taking off as China stopped allowing real estate purchases as a loophole in its capital controls. That loophole fueled huge real estate bubble in Australian and New Zealand). Capital controls also explain why cryptocurrencies trade for a 40% premium on South Korean exchanges. How would you explain that distortion otherwise?

    Point is, crypto can help get your money out of the country.

    Another obvious application that subverts the law is tax evasion. Yeah, the U.S. government wants to know the personal information of all account holders on EU and US exchanges–to fight drug money laundering and terrorism of course. And if that also happens to stop people from using Monero to evade income taxes, well, that was just by accident!

  6. For non-illegal purposes, we haven’t needed to worry about inflation in a long time here in the U.S., but if and when that happens, Americans now have an easy go-to alternative to the U.S. dollar.

    I don’t imagine the Fed wants the competition for the dollar (even if trying to evade inflation is perfectly legal), and Uncle Sam has shut down less disruptive technologies before–see Napster and online poker for examples.

    So, I think there’s an ongoing race on to see whether various currencies can achieve too big to fail status before regulators wise up or their hands are forced by a collapsing dollar and inflation.

    Etherium may have already achieved that status–even if Bitcoin hasn’t.

    Accenture, BNY Mellon, British Petroleum, Cisco, Credit Suisse, Deloitte, Hewlett Packard, ING, Intel, JP Morgan, Mastercard, Microsoft, Pfizer, Samsung, Santander, Shell, Toyota, and UBS . . .

    Short of a crisis, the government may be reluctant to pull the rug out from under all of them . . . not without their permission anyway.

  7. Missing from the article; how were cash donations to politicians affected?

  8. Didn’t Tide detergent become popular to trade a while back?

    1. Only among pod people.

  9. The smallest denomination notes could be left in circulation or, better still, replaced with coins?which are much heavier and hence less convenient for large transactions?

    What about the trillion dollar coin?

    1. That would let us test the old 80s commercial where they sing “I’d like to buy the world a Coke…”

  10. I like the idea of downplaying federal reserve notes in favor of coins. Eliminating cash entirely would be unconstitutional though.

    1. it wouldn’t. having the power to do something does not obligate the government to do it.

  11. “This proposal promises to deliver significant gains from reducing crime and tax evasion while imposing few costs on those operating in the legal domestic economy. ”

    That’s . . . not even close to reality.

    1. What crime will it reduce? Vice ‘crime’. Violent crime is not much facilitated by cash but things deemed illegal because a politically powerful minority deem them onappropriate are. Basically, cash facilitates crimes against the majesty of the state – and I’m all for that.

    2. Are you desperate for a job and willing to work for less than minimum wage? Congtatulations, you are working outside the legal economy. And you just got fired.

    3. ‘imposing few costs’ is not imposing no costs – and I’m not seeing an upside to going cashless.

    4. Taxe evasion is just another tool to reign in an oppressive state. Eliminate that and you’re eliminating yet another sabot that could be thrown into the ratchet to slow it down.

    1. I saw an article from I think Finland that was discussing some advantages to cashless society. One mentioned was that the government would be in a better position in controlling the economy by penalizing, or rewarding you on spending or not spending depending what they wanted you to do. If they wanted you to spend to put money into the economy they would charge you more for the money you keep in the bank. Thus forcing you to spend money or lose money.

  12. Cash = Liberty

    1. Amen to that. My neighbour says he’ll give me $20 to mow his lawn. Cool. I says I’ll sell him my old lawnmower for $20. Cash can go either way and, in either outcome, both of us are happy. Now in a cashless world, we’d have to barter in goods, which is an endless mess of shuffling resources around. I could insist that he transfer 20 Federal E-CREDITS to my government-mandated and surveilled Citizen E-Z-Account from his, but this would add some headaches in the convoluted appeals process to attempt to demonstrate to the authorities that the transaction was not for illicit goods or services, and should be tax-exempt. How’s this dystopian outlook working for you?

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  14. I compensate my au pair with weed, and my landscaper with au pair.

    1. Where’s the duck in all this?

  15. Cash will never be outlawed as long as politicians need to be able to accept bribes and payoff in “bags of money”

  16. cashless society where the government can close your account at a whim and monitor how much ammunition you buy or how much alcohol you purchase in order to tell you to stop for health reason just like helmet laws.

    there are no benifits so it must be opposed

  17. Unfortunately, I don’t believe that any of these people have considered the amount of US currency that is floating around internationally. Presently, it allows the government to print a tremendous amount of currency without having a problem with an unreasonable amount of inflation within the US. What happens if the government gets rid of cash? Will it have to honor all the currency that is floating internationally? How does that affect the US? It could amount to trillions. The government may have to be giving out a lot of pre-paid Visa cards.

    1. And this article doesn’t seem to factor in the costs of eliminating cash to other smaller countries who rely on USD cash as their de facto currencies (Zimbabwe, for example) – granted this might not strictly affect the immediate interests of US citizens, but it is another global result of whether USD cash exists or not – and (as the author mentions) the effect in a smaller, developing economy of withdrawing cash might look rather different.

  18. I can think of two experiments where cash was fully abolished: Lenin’s war communism immediately after the revolution and Pol Pot’s Kampuchea.

    Neither worked out well.

  19. Too bad the founding fathers couldn’t even imagine a world where financial privacy didn’t exist.

  20. Cash will continue to be the budgeting method for many folks, as espoused by Mr. Ramsay and many other Financial Bloggers (including myself).

    Cash is also king for Seniors. Their mistrust of Credit and Debit systems is a function of their generation, and in my opinion well-founded.

    If everyone is moving away from cash, maybe it is time to return to it? Following the flock is safe, but is it always the right direction?

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