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."
Freedom (Score:5, Insightful)
An untraceable method of paying for things has disadvantages, yes, but also serious advantages in limiting the power of government to see and control everything we do...
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Government and corporations. But I repeat myself.
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Banks cannot print money out of thin air and use it to pay off their debt. Only government can do that, because government makes the rules.
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That is a lie, government is in the pockets of a few wealthy elite, the banking cartel foremost. They create injections of cash so they can skim, even though on the books the "money" is paid back.
Re:Freedom (Score:5, Insightful)
MONEY IS DEBT
Don't be fooled by the tokens.
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.
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Tokenization is not the problem.
Fractional Reserve Banking, with compound interest is.
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Real money is created and controlled by the federal government - or: we the people. Fiat money is 'loaned' to the taxpayers through the conduit of the government using interest rates which makes it mathematically impossible to pay back all that is owed even if all that nation-states currency that actually exists were rounded up and sent in all at once. This is what is responsible for our perpetual slavery as well as the seemingly never-ending widening of the gap between the opulent and the rest of us. We
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You say iPhone like it is desirable?
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Money is a durable store of wealth, until recently it was Gold, Silver or Copper coin of the realm. The role of Government was in ensuring the purity and weight of the coin.
Recently people have confused currency and paper with money, and we're seeing the results of it as the economy falls into this Greater Depression.
Eventually people are going to stop trading real goods for fiat debt instruments, it may be decades, or years. The transition period back to real money is going to be shocking to a lot of peop
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.
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By the "banks" he probably meant the government-controlled central banks that nearly every nation-state has, or the fact that the "private" banks are really just satellites of these central banks nowadays.
The U.S. Government prints no money. The Federal Reserve, the U.S.'s central bank, does. I believe this works the same in many other countries with central banks, too.
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and we are not talking about actually printing anything... just a bunch of numbers in the cloud... no actual currency.
Legally required in the USA (Score:2)
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20 years ago it was 10Grand., Not sure if that has changes.
They are legally required to report to the DEA because the IRS doesn't communicate that information to government agencies with two exceptions:
A) Someone has defaulted and they need to seize assets.
B) Another agency request for the information with a warrant for a specific person information.
And contrary to the knee jerk reaction most of the ignorant people on /. will make, the IRS takes it very seriously.
Of course, banks shouldn't be required to
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They are legally required to report to the DEA because the IRS doesn't communicate that information to government agencies with two exceptions:
I am not following your logic here. What legitimate business does the DEA have in knowing who is spending large amounts of money?
OTOH, who carries brief cases of cash with them?
Someone who does not trust banks? That is a right that people have; I think it is silly, but why should the government demand that people participate in the banking system?
For example if you are a travelling street performer, they might talk to you the first time, make a note and then you'll be fine.
Except that it is not anyone's business, except perhaps the IRS, who might want the information to process an income tax payment. As noted above, the information is not being reported to the IRS, which
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It goes to the war on drugs. It started out as an anti-bootleg law and morphed into that. It has further morphed to the report goes to DHS as well because of terrorism funding. This is how they catch large money laundering operations.
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.
Cash is making a comeback (Score:5, Interesting)
Re:Cash is making a comeback (Score:4, Insightful)
Does it pay 1% back yet?
I love taking advantage of credit card companies. Free 28 day loans and 1% back are great. I never buy anything on the card that I could not write a check for anyway, so I don't pay interest. I used to go to a mechanic that offered 2% off if you payed cash, so I did there.
Many people like me are too used to getting either a discount or free short term loans to go back to using only cash.
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until you get that notice in the mail that starting in x months, your card will carry an annual fee of y dollars
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Then I cancel it and move to another.
Credit card companies need some percent of their clients to pay off the loans, to raise the value of the debt they hold and sell. I fill that role.
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Does it pay 1% back yet?
I love taking advantage of credit card companies. Free 28 day loans and 1% back are great. I never buy anything on the card that I could not write a check for anyway, so I don't pay interest. I used to go to a mechanic that offered 2% off if you payed cash, so I did there.
Many people like me are too used to getting either a discount or free short term loans to go back to using only cash.
Trust me, the credit card companies aren't giving you that incentive just to be nice. Eventually, most people slip up. They miss a payment and then they're paying the default rate, usually 29.9%, plus late fees, etc., which more than makes up for the 1% they were paying out. Perhaps you're the exception.
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I pay it off each week.
These people are not slipping up, they are spending money they do not have. Even if I maxed out my credit, my savings more than covers it. That is intentional.
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So cancel it and move to another bank and card.
The moment I get charged a fee they will not eat, I am switching cards.
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You're using it wrong, and you're using the wrong one.
I've been late once or twice in the past 10 years. They have always credited back the interest and fees when I called. They give you that 1% because they're getting 2.5-3% from the merchant (which you're paying though markup, but they're not giving cash discounts, so...).
I've decided that a lot of card companies much really suck. Chase, otoh, has been exceptionally accommodating for me. Questionable charge? It's gone in 24 hours and they take it up with
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in CA i have noticed a lot of gas stations will actually give you a discount for using cash or debit Vs credit card. I have started to carry cash once more...
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Does it pay 1% back yet?
I love taking advantage of credit card companies. Free 28 day loans and 1% back are great. I never buy anything on the card that I could not write a check for anyway, so I don't pay interest. I used to go to a mechanic that offered 2% off if you payed cash, so I did there.
Many people like me are too used to getting either a discount or free short term loans to go back to using only cash.
Ah, but are you really getting money back by using credit cards in ANY way? Studies have shown that people spend on average considerably more (15%+) simply by paying with plastic vs. cash. The reason? Cash is actually painful to part with. Try it out on yourself sometime. Pretend all forms of payment are broken for a week and use cash instead. There is a psychological impact there that affects spending, so as much as these "cash back" benefits sound enticing, chances are you're probably still losing i
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Some people are smart enough not to use BoA.
The credit union I use kicks ass.
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I pay far in advance of the due date. I pay it off each week.
So even if they did credit me late they would have to be 3 weeks late. I am not lucky nor naive, just very cautious.
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That is not legal anymore, but did indeed occur in the past.
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What does that have to do with it?
I can either get 1% back and be out 2% or pay cash and be out the whole 3%.
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i am not convinced, try buying a big ticket item with a credit card vs cash...
Oops...forgot the source (Score:2)
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+1
Buying anything online (Score:3)
A lot of people are starting to pay in cash again simply to get out from under the oppressive thumb of the credit card cartel.
But you still need to get under the oppressive thumb of the debit card cartel if you ever want to buy anything online as of the present.
Dave Ramsey
There are a few places where I disagree with his advice. For one thing, he advises never to go into debt on a car but instead to buy a beater car. The trouble with a beater is that it is likely to require so much costly repair that going into debt for a certified pre-owned car becomes worth it. For another, if one never goes into debt, then how is one supposed to afford a p
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How does going into debt make it worth it over a cheap car?
What are the numbers here?
I see good cars with no repair needed right away for $5k. I plan to buy a house in cash eventually, I will rent a tiny place until then. I might just continue to rent the tiny place though, probably cheaper than the taxes on a house anyway.
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I see good cars with no repair needed right away for $5k.
And a lot of people fresh out of school looking for a car because they need it to find a first job would need to go into debt for $5k.
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They could not use whatever previous method of transportation they used until they had $5k?
Previous transportation was a school bus (Score:2)
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Then sounds like they should do what we did.
Two people with the closest shifts share a car. It does mean one person will get there early and be picked up late, but still better than walking.
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Not just the credit card cartels. The more the government wants to spy on people's bank records, electronic transactions, and so on, the more people will move back to physical cash.
What could possibly go wrong? (Score:5, Insightful)
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You forgot the 30% that goes to Apple for all Iphone transactions.
And since there will be no-lower-price payment contracts for firms who want to get the Iphone owner's business, all prices will have to increase by 30%.
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Call me a luddite, but I'm perfectly happy to stick with cash.
You're not a luddite. I try explaining the need for cash to my geek friends, but they're mystified about why anyone would want to keep something in "analog land". But basically, every system has slippage, whether it's a packet-switched network, or landing airplanes on aircraft carriers. Traffic engineers have found that, for example, if 3% of the vehicles on the road break the law by speeding or aggressive driving, it stops standing waves of vehicles forming near egress points, and actually improves the ent
old lady factor (Score:3)
We often forget about the old lady factor...
Cash and checks are not going to go away any time soon. We're going to have to endure the rest of our lives with the old lady filling out the check in front of us. It's probably best to talk about half lives. It will take entire lifetimes for their use to stop and they will still be used. Or the government will phase them out and people will bitch.
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Can we at least all agree that checks should be banned in the express lane? Coupons too.
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Oh I'd agree. Most people on slashdot would agree. But the old lady will bitch and it won't happen.
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wrong, most countries still use currency in addition to electronic money. in fact, most of the places I've been the U.S. dollar is preferred over local currency.
not until taxes go down (Score:2)
almost all people with cash businesses do it for the tax benefits. accepting traceable payments mean they just increased their costs
its happening slowly but only because physical purchases like magazines at news stands are going digital and cash businesses are going out of business for lack of things to sell
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oh noes, I'm so worried for the people operating illegally.
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Paying cash implies an illegal transaction? That is highly presumptuous, and wrong in the majority of cases.
-dZ.
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which is passed on to the consumer.
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So do store clerks.
Handling money has real costs, theft, paying someone to take it to the bank. The extra time it takes to make and handle change. Stocking change to each register.
namecoin & bitcoin. (Score:3)
So it's another article about bitcoin. Well I just wonder how this will turn out. So far it didn't die.
And I wonder if namecoin will come useful after IPv6 will be used widely. Heh, will IPv6 be used? We hope so. How would you DNS such a giant IP space? Maybe namecoin will come more handy that usual means...
"The Road Ahead" is HOW OLD?? (Score:2)
this has been "coming soon" for ages now and is unlikely to succeed.
1 Not EVERYBODY has a SmartPhone
2 Carriers treat this kind of thing as a MUST BE OUR VERSION thing
3 and want to get a cut of every transaction somehow (i would bet by at least making the info into a 8 step 50Kbyte per step process)
4 you need some way of transfering funds to UnKnown (and UnRecorded) persons (yeah i know anti-terror/anti-moneylaundering regs are a good thing but im talking about $50 range stuff and lower)
So what you would nee
Convenient (Score:2)
Or maybe your forehead, so you have a second alternative so you know you're free to choose your personal preferences.
Oh wait.
Funny I just saw it demoed in Bangalore. (Score:2)
Barter System (Score:4, Informative)
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Or the next step up from barter, using precious metals or something else that has intrinsic value, as a medium of exchange. That avoids the classic problem with barter, that you have X and need Y but can't find someone who has Y and needs X, but has most of the advantages: It's still outside their system of surveillance and taxation, and it holds value against inflation unlike cash.
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I dunno where you get your accounting advice but bartering IS taxable. The thing is you are also more likely than ever to have to pay taxes for such things.
http://www.irs.gov/businesses/small/article/0,,id=187920,00.html [irs.gov]
Am I supposed to take this seriously... (Score:2)
.... when they can even create a web page that formats properly on Firefox?
Anyway , people have been predicting this since credit cards came along. Hasn't happened yet - its just a wet dream of various financial organisations so they can get that small fee everytime we use their device to pay and so they can track us. They don't like cash because in normal day to day life its untraceable.
And all transactions can be tracked... (Score:4, Insightful)
How cute! I mean, who *doesn't* want their every financial transaction tracked and analyzed by the government and a few thousand corporations trying to sell you something. And of course, technology is so reliable! I'd trust my every dollar to that bastion of security, the cell phone. I mean, who wouldn't!
Excuse me, I have to go mop up some of that sarcasm that's been dripping all over the floor from somewhere.
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You does care? what do you care if some analyzes you purchases? It just means better data on what consumers are buys. When talking about ads, the ads that will be presented to you will be more likely to be relevant.
This has been implemented pretty damn successfully in Japan.
I also not you don't compare you 'disadvantages' to the pros.
someone steal your cash, too bad, so sad. Some steals you phone, you make a call and the phone is no longer able to access your account. And it will be likely that if the do ma
Analogous to voting (Score:2)
"Smart" money = Dumb Idea. (Score:2)
Smart money will undoubtedly become too smart by half. Exploits, hacking, etc. etc.
Cash is king.
ha (Score:2)
"money that cannot be counterfeited."
lulz. Yeah, no one will figure out a way to copy bits, are attack a verification process.
Personally I can't wait to not carry cash. OTOH, this will cause retailer to incur an additional cost. And the default of 'you need to pay a fee to make a transaction' annoys me.
Maybe if you could charge retailers a fee to use the system, and it was controlled by the Federal reserve we would solve that problem.
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Personally I can't wait to not carry cash. OTOH, this will cause retailer to incur an additional cost. And the default of 'you need to pay a fee to make a transaction' annoys me.
Cash costs retailers (and banks) something to process. Having to sort, transport and store bills and coins isn't free. But traditionally, many of these fees are hidden from the customer.
One of the big motivating factors behind cashless transactions has been to minimize these costs. To the bank. Banks want to get customers used to coughing up a few cents per transaction. Fear the day when this changes from banks recovering their transaction costs to a profit center.
just curious about panhandler dilemma (Score:2)
Numbers on a screen. (Score:2)
When all your money is just numbers on a screen you feel some detachent that lessens the distinction that it's actual money being represented by those numbers, especially in the case of debt through credit cards and loans.
Obvious flaw (Score:2)
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
Don't you mean:
"There will come a day, however, when passers-by will be able to transfer funds from you to them just by getting kinda near your cellphone and hitting a few keys."
Another ancient ideal (Score:2)
"... and how it's helping us achieve, at least in theory, an ancient ideal---money that cannot be counterfeited."
And money, and an economy, that is absolutely, 100% controlled by the government.
Theft (Score:2)
In any case, I don't go along with the idea of having all my eggs in one basket. I don't care to be helpless if I lose my cell phone. Not that using a cell phone for financial transactions is an intrinsically bad idea, just that the idea needs a fair bit of refinement. And I don't think the "substitute for cash" idea is a credible starting point. There's a lot to like about cash. For one thing,
Inventing new ways to rip us off (Score:2)
Wean ourselves off cash (Score:2)
Of course the banks want this, especially when they are getting a cut of every single transaction in the form of comissions or service charges - a taxation privilege previously reserved for governments. And of course governments want this because it is much easier to keep track of who is making what and enforce income tax reporting better, not to mention the ease with which funds can be frozen or seized.
However I think the price both in service charges and loss of privacy are far too high. Unfortunately m
Debt: The First 5000 Years (Score:2)
Money, hell -- let's rethink debt.
Debt: The First 5000 Years by David Graeber [wikipedia.org]
Wikipedia doesn't go into Graeber's theory about the origin of money (coinage). In short, coins got invented as tokens representing the amount of food a soldier needs to survive for a given period of time. The army enslaves neighboring peoples, using coins to keep track of food requirements; conquered peoples are expected to provide food in return for coins. Enslaved by soldiers, people are kept enslaved by debt.
cash is like amateur radio (Score:2)
Yes, it is disorganized and there is no Cash Central or Head Ham. You cannot determine how much of the cash floating around is in US or in foreign countries, how much people are packing or amount "banked" under Sealy Posturepedic. Although Federal Reserve Notes are sanctioned by the government but they don't "breakdown" like electronic systems. If Wells Fargo, BofA, Paypal, etc. servers go down, everybody goes down. Unlike if someone were to loose a suitcase full of cash, it is not going to impact others (e
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Re:Not the end of cash. (Score:4, Funny)
You're not going to wave your cellphone over a stripper.
You are if you're using four square to me mayor of that stripper ;-) The fun is finder her QR code.
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I NEVER tip a stripper until the panties come off.
Payment processing piercings.
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Precious metals are not the ideal either. If your neighbor finds a huge new mine, your savings can lose half their value over night. No one wants that. If I find a new use for that metal, your savings might double over night. No one in their right mind wants that either, for anyone but themselves.
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Do you have any idea how much has been mined already and that production has pretty much peaked?
Probably not nearly as much as you think.
http://money.howstuffworks.com/question213.htm [howstuffworks.com]
Figuring out the total amount of gold that has been produced by man is a little harder. To get at some kind of estimate, let's figure that the world has been producing gold at 50 million ounces a year for 200 years. That number is probably a little high, but when you figure that the Aztecs and the Egyptians produced a fair amount of gold for a long time, it's probably not too far off. Fifty million ounces * 200 years = 10 billion ounces. Ten billion ounces of gold would fit into a cube roughly 25 meters (about 82 feet) on a side. Consider that the Washington Monument measures 55 feet by 55 feet at its base and is 555 feet tall (17 x 17 x 170 m). That means that if you could somehow gather every scrap of gold that man has ever mined into one place, you could only build about one-third of the Washington Monument.
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Extracting gold from sea-water will most probably become profitable long before gold synthesis will be.
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Metal prices do not require it to be extracted or refined, just new supplies found to have some impact. I was indeed exaggerating, but the point is disconnecting the money supply from the economy is not without any drawbacks.
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It is, but it wouldn't be if currency was tied to it.
There is a reason we left the gilded cage.
Replace 'neighbor' in his example with 'country'.
Scope of circulation (Score:2)
Yes, if overnight they manage to extract and refine an amount of ore equal to all the metal that's currently in circulation.
All metal in circulation globally or just locally?
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The ancient ideal was realized centuries ago when precious metals were used as money. It was difficult to counterfeit.
It was also difficult to scale to a growing population. Which is exactly the reason we stopped relying on weights of metals as a currency.
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and, more importantly, only people approved by the state will be allowed to possess or use money. your ability to buy will be totally under control of the state. moreover, the banking cartel ( will find ways to get a "piece of the action" for every transactions, more ways to parasites to skim.
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so if the world ends like the global warming nuts believe it will what are you going to do with your shiny yellow metal?
can you eat it? NO
can you make weapons out of it? NO
if i have a big pile of food to live on, why would i trade it for your shiny yellow metal?
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Because your food will eventually rot away. The shiny gold metal wont. And anytime there is enough production to have surplus to trade, gold is an ideal medium of trade. If there is a true catastrophe, there may be no surplus, sure enough, but if people survive that situation will be temporary.
What you can use gold for (Score:2)
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"official counterfeiters"
oxymoron. Someone legal appointed to 'print money' is, by definition, not a counterfeiter.
I know you love these stories as a chance to show off how ignorant you are by making nonsense statement about the Federal Reserve. really, it's time for you to grow up.
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The definition of counterfeit is simply false or inauthentic. Here, look it up [wiktionary.org].
But I guess some people are such loyal slaves to their government that they actually believe the government can redefine reality. 2+2 = 5 if the law were to define it as such, right?
Definitions (Score:2)
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And who wants to stick their smart phone in some strippers ass crack?
Okay, don't answer that (I know...rule 34).