The purpose of today's post is to dispel this ridiculous conspiracy myth that's been floating around social media that says that the current coin shortage is just a planned first step in a totalitarian government's effort to force us into a "cashless society." There are posts floating around that detail a bunch of nonsensical outcomes of this. Some of the posts even attribute this bovine fecal matter to Dave Ramsey.
People. Dave Ramsey did not come up with this drivel. Dave Ramsey is smarter than that. Attributing a farcical conspiracy theory to a real person to lend it credibility among the unwitting is the oldest trick in the (Face)book.
First, let me address the coin shortage. It is real, and it has three causes:
1. For two months, none of us were out shopping, buying stuff with cash (for whoever still does that), and getting change in return. Then using some of that change to pay for other stuff so we don't get more change back. Most people, like me, don't like carrying change, so on the rare occasions that I pay with cash and get coin back, if I can't use it for another purchase for correct change, I take it home and dump it in my change bucket, rather than have it jangling around in my pants. And that leads us to ...
2. For more than two months, bank lobbies were closed, so people like me weren't taking their change to the bank to deposit, or exchange for bills. The combination of these two factors meant less coin in circulation (going from businesses to you, you to the bank, the bank back to businesses ...). Now, to replenish that supply, normally the U.S. Mint is making new coins. However ...
3. Due to the pandemic, the Mint is not operating at full capacity. Bills are more critical in the grand scheme of things than coin, so that's where the Mint is focusing its now-limited resources: printing paper money. Less coin is being minted, so re-supply isn't happening at the pace at which it normally does.
I've seen some ridiculous garbage being posted that "the government is rounding up all the coin to melt it down for the precious metals content, because it's worth more than the face value of the coins and they want to steal that excess value from us."
Who believes this equine excrement? One, that hasn't been true since the '60s, when people hoarded silver coins because of the value of silver. Back then, the people themselves took coins out of circulation as a store of value. In response, a bunch of smart metals engineers (including the father of a friend of mine) developed clad coins, which had less silver content and thus had a lower melt value than the face value of the coins, but had the same electromagnetic signature of silver, so that vending machines would continue to recognize them. (Chapeau to Bart Hall for that info.)
And second - if anyone really believed that the coins were worth more today than their face value, don't you'd think they'd be hoarding them, instead of issuing dire warnings on social media?
It would actually make sense for the government to take some coins out of production, due to commodity inflation. The U.S. Mint has lost money on every penny it has produced since 2006, due to the rising costs of zinc and copper, the metals that go into penny production. In 2016, it cost 1.5 cents to produce each penny, resulting in a loss of over $45 million in the production of more than nine billion pennies. The Mint also loses money on the production of nickels.
(In case this hasn't occurred to you yet, when the Mint loses money, you and I take the hit. Ready to give up those coins now?)
Canada, Australia and other countries have already eliminated their versions of the penny. As a result, retailers are allowed to round transactions either up or down to the nearest five cents. So what would happen if the U.S. did that? Retailers would price everything such that the price would be rounded up, never down. Economists estimate that this effective "rounding tax" could cost consumers $600 million each year. Since the poor tend to use cash more than those higher on the economic ladder, that tax would be regressive. So the lowly penny lives on. (By the way, "See a penny, pick it up ..." and you'll have just earned yourself less than the minimum wage for your six seconds' effort - longer, if you're Nancy Pelosi and have to kneel to grab the penny.)
Okay, enough about coins. Let's move on to this cashless society rubbish.
First, we've been moving toward a cashless society for a long time - the entire lifetime of just about everyone reading this, in fact. Checks are cashless. Moreover, they're an electronic transaction. See that funny-looking font at the bottom of your check? The one in which the routing and transit number and your account number are printed? (The very words "routing and transit number" should tell you something about check processing and clearing.)
It's called the MICR line. Magnetic Ink Character Recognition. The standard was put in place in -
the 1950s -
to enable computers to read the MICR line, thus speeding up check processing and clearing. Without it, when you deposit a check, you'd have to wait days for the checks to be processed manually before you could get your cash.
So let's debunk these asinine, dire warnings about what a cashless society would mean, one by one.
"If you are struggling with your mortgage on (sic) a particular month, you can't do an odd job to get you through."
Who the hell does this, anyway? "Rats, I'm a little short on the mortgage - guess I'll see if I can clean the neighbor's toilets for a little cash." And why can't the person for whom you do the odd job just write you a check? Or send you the money via Venmo or Paypal or Zelle or any one of the other myriad person-to-person (P2P) cash transfer platforms that have popped up? If you have a banking relationship, your financial institution offers P2P transfers. If they don't, find a new financial institution, because chances are, the rest of their technology - including data security - is probably antiquated as well.
"Your child can't go and help the local farmer to earn a bit of summer cash."
Again - whose kid does this? Really? Today's kids? Most of them would get blisters just looking at a hay bale, and they might try to milk a bull. But let's say they did decide to go help the local farmer. When I was in high school (four and a half decades ago), lots of kids would get summer jobs de-tasseling corn, or hiring out on custom wheat harvest crews. (One kid in my high school class actually rolled a combine into the ditch. Needless to say, he got sent home.) And guess what?
They all got paid by check. Even back then, in the Stone Age. Checks aren't cash. They're negotiable instruments that you can exchange for cash. Which you get right away in most cases, because a computer read the MICR line on the check. And recorded the transaction.
"No more cash slipped into the hands of a child as a good luck charm or from their grandparent when going on holidays."
In the first place, kids today are (rightfully) taught to run the other direction when somebody tries to slip them cash as a "good luck charm." And second, even if society went completely cashless - give the kid a gift card. Send some money into their bank account, if they have one, using a P2P transfer. (Cash isn't going away altogether though, at least not in our lifetimes.)
"No more money in birthday cards."
Two words: gift card. Or, put a little thought into your gift, o lazy one, and actually get the recipient something they'll appreciate and remember you for. Plus, again, cash isn't going away. Just go to the ATM, get some, and put it in the card if that's your wont.
"No more piggy banks for your child to collect pocket money and to learn about the value of earning."
Now, this one is truly stupid. How is a kid supposed to learn the value of earning from some loose change sitting in a porcelain pig earning NOTHING??
"No more cash for a rainy day fund or for that something special you have been putting $20 a week away for."
Put it in the bank, then withdraw the funds (with interest) and pay cash. Or write a check. Or use your debit card. If you're that old-fashioned, some places still offer layaway. And some banks still have "Christmas Club" accounts that pay zero interest, but let you save that $20 a week over the year for holiday gifts. Come on, people - it's 2020.
"No more charity collections."
You mean Salvation Army? Again, cash isn't going away. Since you can't go to the bank lobby to cash in your coin right now, save it until the bell-ringers are out, and go dump your whole bucket into theirs. It'll make their day. (Or just go to their website and give electronically.)
"No more selling bits and pieces from your home that you no longer need for a bit of cash in return."
Have a garage sale, and you'll get all the sweaty bills you could want. Or just sell on e-Bay, and get paid via Paypal. I've been doing it for - oh, I don't know, a couple of decades or so?
The fearmongers go on to tell you (again, purportedly citing the gospel according to Dave Ramsey) "what a cashless society does guarantee."
"Banks have full control of every single penny you own."
Balderdash. Banks don't control your cash when you deposit it, you do. Banks are among the most highly-regulated businesses. Your money is yours. Keep reading.
"Every transaction you make is recorded."
So what? It is now, for the most part. You think your checks aren't recorded? Again, there's that MICR that gets scanned. And, recording those transactions is generally a good thing. If I steal that $500 in cash you're carrying around, I'll likely never get caught, and you'll never get it back. If I steal your credit card info and make a fraudulent $500 charge, you can dispute it and get the amount credited back - and there's a good chance that I get caught in the process.
"All your movements and actions are traceable."
This is truly tin foil hat stuff. Do you make transactions everywhere you go? I walked my dogs today and didn't buy a thing, so there are no transactions to trace. However -
My movements and actions were probably traceable, if someone wanted to check and see whether I picked up their poop, or how long we walked. Why? I have a cell phone. You do, too. They have GPS, and the cell signals can be triangulated to pinpoint your location. (This will really freak out the conspiracy theorists - remember, Big Brother is watching you. Only Big Brother is Apple, not some totalitarian shadow government. Of course, some of the nutcases would equate - ah, but I digress.)
"Access to your money can be blocked at the click of a button when/if banks need 'clarification' from you which will take about three weeks, a thousand questions and five thousand passwords."
Bull-hockey. Exaggerate much? A thousand questions? Five thousand passwords? Look, if there's a suspicious transaction on your account (which is typically based on parameters you set up, to protect your identity and financial information), you get notified. Occasionally, like if you're traveling outside the country and haven't set up travel notifications letting the bank/credit card company know where you're traveling (ooh, they're watching your every move!), a transaction might get blocked. (And increasingly, their technology includes algorithms that tell them you're traveling and where, so that you don't even have to notify them.)
When that happens, you call the bank/credit card company and tell them where you are and how long you'll be there. Or do it through their app, or their website. You might have to answer as many as three identity verification questions, or supply a one-time passcode that they text to you. This is called multi-factor authentication, and it's there to protect you. Without it, the bad guy could just say, "Why sure, I'm Bob Johnson!" But he's not likely to know that your high school mascot was the Beet Diggers, or that your bestie in grade school was Billy McGillicuddy, or that your first car was an AMC Pacer. Three questions. That's it. It takes minutes. Folks, I've done it.
Let me tell you a story about something that happened to me recently. In January, my lovely wife and I took a cruise (remember those?) with a port stop in Belize. We ate lunch and bought souvenirs at one shop. In both instances, I used a VISA card that I wouldn't have otherwise used, because neither establishment accepted AmEx.
As we were preparing for our flight home, I checked the VISA app on my phone, and saw that I had a charge a couple of days earlier from Expedia, the travel consolidator. I have not purchased travel through Expedia for years. The charge was nearly $500. I called the number on the back of the card and initiated a dispute (this process is strictly governed by Regulation E, and the penalties for banks that don't comply timely are severe - like six figures, civil liability, jail time severe, meaning the regulators are serious about YOU having control over your money, not the banks).
Here's what happened. First, they closed the card and reissued a new one. So I couldn't use that card until the new one arrived by mail. But neither could the jack-wagon who made the fraudulent charge. Second, they issued a "provisional credit" to my account. In other words, they err on the side of your dispute being legit. Third, they initiated an investigation of the matter. (So did I, and I found that some hecker in Belize used my stolen card info to book a hotel room in my name at some swanky lodge in Belize. I called the lodge and canceled the reservation. Sorry, Jose, no hot weekend with your lady friend on my dime.) Fourth, they sent my new card by FedEx, so I had it in hand and authenticated the first business day after we got back. (I did have to suffer the inconvenience of changing a few automated payments I had set up on that card. First-world problem.) Finally, within the time frame prescribed by Reg E, they closed their investigation and made the provisional credit permanent.
This stuff protects you from bad guys who would steal your credit card information and bleed you out. It does nothing for the banks but add operating expense from having to comply with the regs, and make the Compliance Officer nervous as hell that she's going to jail if Patsy in Card Services screws up.
"You will have no choice but to declare and be taxed on every dollar in your possession."
Oh, so we're advocating for tax fraud now? Seriously, this is also beyond stupid. You're taxed on what you earn, not on the dollars you possess. And you can still sell stuff on e-Bay and get paid electronically via Paypal, and never declare a dime of the proceeds as income on your tax return. Happens all the time. If it were that easy to track, the IRS would be tracking it. It would cost them more to track it down than it would produce in tax revenue, so they let it go.
Now, if you're still not convinced, let's look at what life would be like with an all-cash society:
- No bill-pay service through your bank's app or website. And no writing and mailing checks. You go to the bank, withdraw cash, then either take the risk of mailing it or drive to all the utilities, the AT&T store, the bank that holds your mortgage and car loan, and every other entity to which you owe money, and you pay them in cold, hard cash.
- Let's back off and allow checks, but without the MICR line. You get one from someone? Okay, no remote deposit capture using your phone. (Phones are computers, and they can read the MICR line.) No deposit-taking ATMs. (ATMs are computers, too.) No, you go to the branch, walk in the lobby, deposit your check, and wait a week for it to clear.
- No using a credit card. You pay in cash. So if you get robbed, you're SOL. No disputes, no recoveries. And no credit card rewards. My lovely wife and I have flown to Cabo twice, and stayed in an oceanfront suite, all on travel points, most of which came through credit card spend. Didn't cost us a dime in airfare or lodging expense. No cash back from Discover, or 5% off for using your Target card.
- No transaction history. You don't want "them" to be able to track your every transaction, right? So neither can you. No finding a statement online from two years ago to remind you of that plumber who fixed your leaky faucet, since you need a new sump pump now. No copies of checks you wrote in the past. No way to know whether your money has been used by someone else. No way to find out what your spouse has been up to.
- Finally the neighbor kid mows your lawn, and you're out of cash, and it's Sunday? Sorry, you can't write a check. I guess you'll have to go to his house and clean the toilets.
No comments:
Post a Comment