IEEE Spectrum Digs Into the Future of Money 292
New submitter ArmageddonLord writes "Small, out-of-pocket cash exchanges are still the stuff of everyday life. In 2010, cash transactions in the United States totaled $1.2 trillion (not including extralegal ones, of course). There will come a day, however, when you'll be able to transfer funds just by holding your cellphone next to someone else's and hitting a few keys — and this is just one of the ways we'll wean ourselves off cash. In 'The Last Days of Cash,' a special report on the future of money, we describe the various ways that technology is transforming how we pay for stuff; how it's boosting security by linking our biometric selves with our accounts; and how it's helping us achieve, at least in theory, an ancient ideal — money that cannot be counterfeited."
Barter System (Score:4, Informative)
Re:Freedom (Score:5, Informative)
yes, the fiat currency we are using instead of money are merely debt-notes designed to allow a few wealthy elite to confiscate and control real wealth. we should start using money again.
Re:Legally required in the USA (Score:4, Informative)
$10k is not a brief case of money. It is a couple small stacks of $100s.
Why do they want to get rid of cash? (Score:5, Informative)
The nature of a bank you see is to make their credit seem as good as cash. Spend it here, spend it there, spend it everywhere.
For example, you go to your bank and deposit $100. (It is legally a loan to the bank.)
The bank takes your $100 and notes in your account $100 of credit....
Did you see what just happened? The money supply increased. There is now $100 of cash which the bank can loan out and $100 worth of credit in your account to spend. The bank just created money out of thin air. Interestingly, not US dollars. This is just bank credit which represents dollars. By using credit to pay for things you are using a completely private money created by your bank.
This is why banks are heavily regulated compared to for example paypal, they manipulate the money supply. It's why they are orders of magnitude more dangerous than paypal no matter how much you may dislike them.
So. There are some regulations, banks have to retain a certain amount of money as reserve in case people ask for their money back. Around 10% in the US. In fact they could only loan out $90. Not what happens in reality mind you. They loan first and find reserves later in reality. You may note that this means they don't have your money in their vaults, they loaned it out. It also means that they can only ever pay back 10% of their depositors, in the event of a bank run 90% are going to lose out. It's why there are bank runs the first place, you have to be at the head of the queue to get any money back.
Now, the more people depend on credit rather than cash, the lower the reserve ratio can be pushed, and the higher the leverage can be pushed. In Europe, the reserve ratios are discretionary and in reality between 30 (3%) and 50:1 (2%). If nobody ever used cash, in theory the reserve could be 0 and the reserve ratio could be infinite... i.e. banks could create as much money as they wanted, they could leverage up as far as the eye can see.
This is the real reason for the constant push for credit cards, debit cards... Always trying to get rid of cash. Cash limits their ability to create money.
You would like to own a money tree? All a banker needs is a book of accounts and a pen. All this talk of counterfeiting is complete rubbish, banks already create far more credit money than there is cash. In fact orders of magnitude more. The UK: 30 times more. EU 50 times more. Only a tiny percentage of our money is cash by now.