Posted by: graemebird | February 28, 2007

Cash Is A Waste Of Money

Debit cards would be efficient and cheap.

100% backed metallic debit cards would have far less transaction costs then credit cards. We know this already with e-Gold.

The low transaction costs of 100% backed metallic would be particularly evident for international transfers of money.

But check this out from the current TIME MAGAZINE.

TIME MAGAZINE has a short column every week called NUMBERS.

This is what they say:

30……….Years a US dollar coin can circulate compared with 18-22 months for a dollar bill.

$500 million…… Amount the US would save each year if dollar bills were replaced by coins, like the new, golden George Washington ones released Feb 15.

>>>>>>>>>>>>>>>

So do you get it?

Cash costs a lot of money.

There are alleged costs to 100% backing but we don’t usually add up the vast costs to the alternatives.

Actually just handling coins alone would be very convenient with your Mises.org money belt.

There you’d have your coppers, your silvers and maybe a gold coin or two or even a platinum one.

And people would get superfast at swapping change.

And your wallet would be therefore used for what its good at holding and those are your cards including 100% backed debit cards.

You don’t need ID to get a debit card. You just need to show up with an ingot of gold, silver or platinum…. Get yourself some codes… And you’re away.

Totally private. No ID needed.

Libertarian paradise.

Now look at the inefficiency under the current system within your wallet…………. what a freakin hodgepodge. There are your coins, your notes your cards…. All promiscuously bundled together in this poor wallet.

Such inefficiency.

Cash is a waste of money.

Whereas Gold, silver, platinum and copper will never let you down.

With 100% backing these coins will not allow significant inflation or depression, or for a dictatorial takeover to deprive you of savings.

The countries currency will never tank in value though the government be at war with its citizens or though the barbarian declare war against Australia.

And thats when a currency must perform the best.

Whereas an attack on Australia would have everyone selling AUD and our currency would crash…..

… Try attacking Australia if we have 100% backed metallic money…. If anything the value of our currency would RISE TO THE OCCASION….

….Allowing us the time and the resources for our boys to punish the high government officials of the offending nation(s) and come home.

This is a most significant factor when it comes to middle power security.

And the failure of the currency to perform under those conditions could never be made up in 100 years of the alleged theoretical benefits of the most sophisticated macromancy.

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Responses

  1. >$500 million…… Amount the US would save each year if dollar bills were replaced by >coins, like the new, golden George Washington ones released Feb 15.
    >
    >>>>>>>>>>>>>>>
    >
    >So do you get it?
    >
    >Cash costs a lot of money.

    No, it doesn’t work that way. The US government and your taxes do not go towards paying for currency. Saying that the US would save $500 million if dollar bills were switched to coins is not exactly true.

    Coins are produced by the US Mint. The US Mint is a semi-private organisation. It is not funded by tax dollars. Instead, it makes seignorage on the coins it produces. The coins it produces are bought by the Federal Reserve.

    The Federal Reserve buys the coins at face value. So, if the mint makes a quarter, and it costs 18 cents to produce, they make a profit of 7 cents.

    Where is this ‘savings’ supposed to come from? The FED pays $1 to buy a printed note or $1 to buy a dollar coin. Bills do wear out faster, but who saves money here? Maybe the FED does since they have to replace fewer notes, but you know, the FED is also a semi-private organisation that is not funded by tax dollars. In fact, they are funded by the inflation that they create. The cost of getting some new currency printed is small potatoes to them when the are increasing the money supply by 5% every year and effectively stealing that value from the public.

    So perhaps the FED might save some money, but not us citizens, I’m sure. The people who have the most to gain are the US mint. If they can produce a dollar coin for the cost of 18 cents, and get a check from the FED for $100 for every 100 coins they make, they can rake in some profits.

    Right now the US mint is losing money on pennies and nickels because they cost more to make than their face value, thanks to creeping inflation. If they don’t move to higher denominatins, the mint won’t be raking in all that money. Switching to a dollar coin is really propaganda from the mint.

    That said, I don’t mind dollar coins. I think they make some sense, and I use the Sacajawea ones from time to time. But saying that it will save the “US $500 million a year” is poppycock. Who is the “US” anyway?

    Likewise, cash is not a waste of money. Did you know that credit card companies charge all their merchants for the transactions, usually a flat fee of about 30 cents, plus 2-4% of the transaction? Now, that’s a waste of money. The credit card companies are siphoning 3% or so of all commerce conducted by credit cards. How does that compare to the costs of cash? Many stores used to even charge 3% less if you paid by cash instead of a card, until the card companies pressured them to stop.

    Not to mention that cards leave a neat accounting of all the transactions you make, enabling authorities to track, monitor, and tax every little thing you buy.

    No thank you. Give me cash any day. Easy to use, portable, doesn’t leave records, and can’t be turned off like cards.

    Going to gold, silver, and copper coins might be an issue. Paper notes are easily divisible, and easy to carry, which is why paper notes based on gold got started in the first place. If you need to buy something small, a gold coin may be too much, and then you would need change in silver and copper. But what ratio is there between gold, silver, and copper? If you buy something for 1/2 oz gold, and give them 1oz of gold, how much copper and silver do you get back? You can’t fix these ratios, because values of these metals all fluctuate independently. At best, you would need a market where gold trades for silver, silver trades for copper, etc. to establish an exchange rate to go by.

  2. Right.

    What I want you to do John is to go and think it all through again in terms of REAL RESOURCES.

    If I make billions of dollars of seinorage and employ lots of people and go on massive spending sprees for my own conspicuous consumption that is all using REAL RESOURCES.

    So we have to seperate cash from real resources. If there are factor inputs paid for, buildings built, salaries paid, it matters not whether there are no taxes levied.

    Real resources are being consumed.

    But having said that I’m yet to go through your post thouroughly. And I may well see a lot of merit in what you are saying when I finally get round to it.

    But in the meantime try and seperate these things in your mind.

  3. How do you buy your precious metal ingots without cash Graeme?

    If you take cash out of the system the financial/marketing industries will, I argue, ensure that your spending is linked to your identity making it less possible to move around without eyes watching. That’s my objection I like my spending anonymous.

    Catchy title tho’.

  4. “How do you buy your precious metal ingots without cash Graeme?”

    Thats weird.

    Thats like saying… How do you buy your cash without cash Adrien?

    Look suppose the Germans were going to change to our currency.

    And we told them the virtues of the our PARTICULAR paper currency.

    And then we were just about to change over.

    And some little German kid says….. But how would you buy your AUD without Deustch-marks Graeme?

    Well Adrien.

    Lets just hope that that German child would be a very YOUNG German child.

  5. Alright.

    Your argument if I understand it (maybe I don’t and if so apologies) is that cash, physically is an expense that’s unecessary. Yeah? Therefore we should switch to electronic cash. Somehow backed up by precious metals??? This bit’s a bit murky.

    Now you say:

    You don’t need ID to get a debit card. You just need to show up with an ingot of gold, silver or platinum…. Get yourself some codes… And you’re away.

    Totally private. No ID needed.

    Alright. How do you get paid? Does your employer pay you electronically and then you withdraw an anonymous debit card from the ATM? Is that how it works? In which case where do the precious metals come into it?

    Or do you get paid in precious metal? And wouldn’t that, considering the security and logistical issues for starters, be more expensive than just physical cash? Also would the banks be inclined to issue anonymous debit cards considering how contrary that is to their interests and the fact that it will cost more?

  6. No what I suspect is that if it were free enterprise but with fractional reserve outlawed…….. I then suspect that cash would not be competitive and it would be rendered obsolete.

    Under 100% backing the metals in ingot or coind form ARE THE MONEY.

    Now a bank can keep your ingots and issue you with paper money which are reciepts for you Gold or silver.

    The cash WAS-IN-FACT-MORE-CONVENIENT when this was perfected by the Amsterdam bank in the early 1600’s.

    So much so that the cash money traded at a PREMIUM over the actual Gold.

    It traded at a premium because of the convenience and because the bank would take care of reconciling accounts and stuff.

    See cash started off as receipts for gold or silver lodged with the bank.

    Now here is the thing. With metallic-coins and eGold-electronic-debit-cards……. cash itself might be obsolete.

    You might be better off keeping your gold or silver at home and some at the bank for your debit card.

    And then you might have your money belt.

    Cash would probably get in the way in that more modern scenario.

  7. And how you get paid in the real world is…?

  8. If metal-is-the-money you get paid in coins.

    Or alternatively it gets credited to your debit account.

    Which means you have more Gold/Silver/Copper/Platinum… stored for you at the bank.

    Sort out how eGold works and you’ll see.


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