Why fear a cashless future when we had a cashless past?

One of the more interesting parts of being on the radio, aside from callers constantly attempting to pigeon-hole you with questions loaded with political bias, is that you encounter some ideas truly out of left field. Such was the case this last week when it was put to me that a left-wing policy cabal was attempting to remove cash from circulation and force us all into digital payments. I am not making this up, and if I was, I could do much better. This was so scattered I really was not even sure if I could even look up information online. It is not a short list when you type in anything with conspiracy these days, and it probably gets you on some government lists.

I was not aware that companies like Target, that offer a phone app tied to your credit card, or Amazon, online shopping store du jour, are part of a left wing movement to get rid of cash. I mean, sure, they want to encourage you to make payments in their preferred manner, and sure they want to use less cash for a variety of reasons, but left wing? This is all about profit, pure and simple.

What is more confusing to me is the failure to recognize that cash was not always used in payments. When you read the Journal of Madam Knight, the history research of W.T. Baxter or, heaven help you, any of my research on 18th Century New England payments, you quickly realize cash was not as common as you might think, and prone to shortages similar to the concerns about coins right now. Cash was there, both in paper form and in specie, but so was “bookkeeping barter”, book credit, third party transfers, labor, and a host of other forms. Prices paid depended on factors like whether you paid now or in the future, and how you would settle the payment. This was very much like a gas station with prices listed for cash and a separate price for credit.

This system worked with technology such as pen and paper, and a rudimentary understanding of bookkeeping. One of my fundamental takeaways from studying payments systems is they are constrained only by human ingenuity. They are a human societal construct. What we agree to accept in exchange is fluid and depends on many factors. That many places use paper currently speaks only to perceived advantages now and in the past, not a per se advantage going into the future. At points in history there were many items accepted to facilitate overall exchange. We replaced that now with a fiat currency, but that is not a certainty to last into the future.

There are no guaranteed successors at this point though. Cryptocurrencies have some issues such as perceived volatility and general acceptance. The use of phone apps as a substitute for cash might be a short run solution adopted by many during a pandemic, but will it last and does it create other issues for consumers? There will always likely be a place of cash as well. People crave anonymity right now and many believe paying with cash provides some of this. We can debate the extent to which that is the case but the perceived value is there. I know some that view cash use as a budgeting mechanism. Fine by me if it works for them.

The overall point is businesses are moving away from cash for a variety of reasons, not some policy imposition from somewhere on the political spectrum. They are bringing consumers along with them, willingly or otherwise. This is nothing new and is something seen in America, well since before it was the United States of America.

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