It is now common practice to talk about the disappearance of cash. Are we headed to a cashless society? Let us look at some data.
First the amount of currency in circulation.
In the past decade the currency in circulation has doubled to almost 1.6 trillion dollars. The US population has not doubled. There are many estimates about how much of this currency is held outside the US. Most estimates I have seen indicate 50%. I don’t know if any one knows the true answer to this, but let us say of the 800 billion dollar increase in the past decade only 400 billion dollars was due to US citizens wanting to hold more currency. That is about a million dollar increase per person over the past decade.
Next we look at currency growth.
Since 2001 it has rarely decreased except before a recession. Since the 1980’s money growth of the currency has gone negative only seven times.
From the 2016 diary of consumer payment choice (DCPC) we have the following conclusion:
“The public demand for cash continues to grow…”
The DCPC indicates that 31% of all transactions are cash. Debit and credit made up 27 and 18 percent respectively.
The larger the payment the less likely cash will be used.
The free market has come up with great innovations for paying large sums of money quickly using a credit card or debit card. The public is taking advantage of this system. Very few people like to carry around thousands of dollars in their wallet for obvious reasons.
It is true the government can track all of these electronic transactions. The government also tracks all of our messages and phone calls. How often do they stop terrorist attacks? We don’t know the true answer to that because of top secret classifications. Here is what we do know: The terrorist attacks and attempted terrorist attacks that did occur were fairly obvious. Text messages, phone calls, even formal complaints to government agencies by citizens, before an attack. This points to one thing: Information overload. The government collects so much information it has no idea how to sort through it. The government is a massive bureaucracy. Bureaucrats are not innovative or efficient. They show up to work, push around paper work for eight hours, and than they go home.
In as cashless society, the government could track all of our transactions. More paper work to sort through. The US government is also going to run into a financial wall one day. Less people to sort through the paper work.
There is a book written by George Orwell called “Nineteen Eighty-Four”. It is the story about how an omnipresent government is watching everyone and uses this information to manipulate the public and punish those who part from the party line. It is fiction for a reason.