Recommended by Ricochet Members Created with Sketch. We Are a Mostly Checkless Society – Should We Be Cashless?

 

I think it is nice to have more than one reason for making major changes in life. When I left the private sector and went to work for the federal government in 1971, I had two. I had been working in banking operations for a decade, the last six years developing software and converting and managing automated banking operations on mainframe computers. Now the American economy was slipping into recession and I was working for a small company providing automated services for mostly small banks, too small to operate their own mainframe computers and all the attendant requirements. I had three small children so having a secure and well-paying job was on my list of important things. I also had a vision, developed from the work I had been doing, that computers would enable the eventual elimination of much of the check-based financial operations. I wanted to be part of that show.

I took a computer specialist position with the then Federal Home Loan Bank Board (FHLBB), regulator for the Savings and Loans, at that time mostly existing to take savings deposits and make mortgage loans. Shortly thereafter, savings institutions, including credit unions, began encroaching on what had always been commercial bank territory — demand deposit accounts subject to withdrawals by check.

Friction between all these different types of institutions in the payments arena led to the creation of the National Commission on Electronic Fund Transfers in 1974. My serving as alternate delegate from the FHLBB to this commission gave me experience that led later to my selection as Administrator, Operations Planning, and Research Staff (OPRS) at the US Treasury, a position from which, working closely with the Federal Reserve System, other financial institution regulators, and representatives from the institutions themselves, I was able to fulfill my vision of working to take checks out of the payment process.

We were issuing 40 million checks monthly, most of those were Social Security checks issued all on the third of each month and delivered through the Postal Service. The Social Security application was the first converted to Direct Deposit and delivered through the Federal Reserve System to the financial institutions all across the United States. Once this ‘critical mass’ was achieved, commercial businesses across the country were able to convert their payrolls and other check transactions to Direct Deposit and so eliminate even more check transactions. I later had an opportunity to manage and be responsible operationally for the systems I had helped develop when I was Director of the Kansas City Regional Disbursing Center and later as the Chief Disbursing Officer in Washington overseeing all federal disbursing.

One of the biggest cost-savings effects of this change is the fact that the transactions are now only required to travel in one direction (credit transfers) instead of a check going out in the mail, for example, requiring deposit into a bank account, and finding its way back to the issuer through the check clearing system (debit transfers), with the added burden on the check issuers of reconciliation, determining which checks have cleared and been paid and which are outstanding.

That is the checkless society. What about the cashless society?

The credit and debit cards, many issued through banks, have supplanted many of what were formerly cash transactions. So cash transactions are way down. Recently there has been a coin shortage and some businesses are having to make adjustments to accommodate that.

Over recent decades the composition, nature, and function of our banking institutions has changed. We have the big five, too big to fail, and many Americans don’t think there are banks that serve local community businesses as they should.

What can happen if we go cashless? One thing I always think of on US currency: This note is legal tender for all debts, public and private.

There are various entities (platforms on the internet) that offer automated (cashless) payment service-but some of these are refusing to process payments in certain situations. That won’t do in a cashless society.

And here’s one that is really troubling. With the problems caused by the pandemic and the shutdowns, the Fed has been dumping money into the system. Anyone notice the drop in your deposit interest rates? If we go completely to a cashless society, will the banks implement negative interest rates effectively charging their deposit customers for maintaining liquid balances?

Some of these current trends are giving me pause.

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  1. Randy Webster Member

    Bob Thompson: If we go completely to a cashless society, will the banks implement negative interest rates effectively charging their deposit customers for maintaining liquid balances?

    This is the reason I’m totally against a cashless society. If banks start paying negative interest rates, I want to be able to pull my money out in cash and bury it in a jar in the back yard.

    • #1
    • August 1, 2020, at 4:16 PM PDT
    • 16 likes
  2. PHCheese Member

    One of the consequences of taking checks out of the system is the need to fly checks all around the country. Many rookie pilots earned their hours to become commercial pilots flying checks in small planes.

    • #2
    • August 1, 2020, at 4:17 PM PDT
    • 3 likes
  3. Bob Thompson Member
    Bob Thompson

    PHCheese (View Comment):

    One of the consequences of taking checks out of the system is the need to fly checks all around the country. Many rookie pilots earned their hours to become commercial pilots flying checks in small planes.

    Guess how many bank teller positions have been eliminated by not having to cash payroll checks, augmented by ATM’s which means they don’t have to handle a large portion of withdrawals as well.

    • #3
    • August 1, 2020, at 4:22 PM PDT
    • 5 likes
  4. Bob Thompson Member
    Bob Thompson

    PHCheese (View Comment):

    One of the consequences of taking checks out of the system is the need to fly checks all around the country. Many rookie pilots earned their hours to become commercial pilots flying checks in small planes.

    There was another application I worked closely with the Federal Reserve on back then to handle the remaining checks coming through the system called ‘check truncation’ where the fed would capture the data from the check and that ended the physical check processing. This was later adapted into all commercial check processing. This results in personal bank statements having images of checks instead of the physical checks.

    • #4
    • August 1, 2020, at 4:29 PM PDT
    • 3 likes
  5. Hoyacon Member

    Does this tie in at all with gold being at record highs?

    • #5
    • August 1, 2020, at 4:33 PM PDT
    • 2 likes
  6. philo Member

    Bob Thompson: Recently there has been a coin shortage…

    I’ve heard this said many times but not sure I’ve seen any real evidence of it.

    Bob Thompson: One thing I always think of on U.S. currency: This note is legal tender for all debts, public and private.

    I wonder how the standoff at the local Home Depot is going to play out if the store claims they will not / cannot accept cash and I insist on paying with cash. 

    • #6
    • August 1, 2020, at 4:36 PM PDT
    • 2 likes
  7. Bob Thompson Member
    Bob Thompson

    philo (View Comment):

    Bob Thompson: Recently there has been a coin shortage…

    I’ve heard this said many times but not sure I’ve seen any real evidence of it.

    Bob Thompson: One thing I always think of on U.S. currency: This note is legal tender for all debts, public and private.

    I wonder how the standoff at the local Home Depot is going to play out if the store claims they will not / cannot accept cash and I insist on paying with cash.

    I saw a picture of a poster supposedly in a Walgreen’s asking customers to use credit or debit cards, if possible, and if they used cash the store would give them a redeemable credit for any coinage required.

    • #7
    • August 1, 2020, at 4:40 PM PDT
    • 1 like
  8. MISTER BITCOIN Member

    NO to cashless

     

    • #8
    • August 1, 2020, at 4:43 PM PDT
    • 7 likes
  9. Addiction Is A Choice Member

    MISTER BITCOIN (View Comment):
    NO to cashless

    Said Mr. Bitcoin…

    • #9
    • August 1, 2020, at 4:46 PM PDT
    • 14 likes
  10. Mark Camp Member

    After the state virtually completes the process of eliminating physical cash, which will be done fairly soon, here is what you will have:

    • ALL money ownership and ALL money payments will be monitored by the state and thus controlled by the state at its pleasure.
    • The state will gradually make manifest this unlimited discretionary power, which is ultimately the power to decide if a person will survive or not, to maintain and enhance its actual power until that power is absolute.

    That is why I think we Americans were very foolish

    • even to start on this long-term, step-by-step program of the statists to capture control of the financial economy, starting in the time of Hamilton, and
    • to allow any of the steps, all of them unconstitutional, along the way.
      • The two Banks of the US
      • the Federal restraints on free banking in the 1800s and beyond
      • the chartering of the Federal Reserve
      • the US defaults on US currency in 1933 and 1971
      • the confiscation of gold in 1933
      • the forced replacement of the people’s money by government fiat money
      • the expansion of the Federal Reserve’s charter from lender-of-last resort to the task of engineering economic aggregates
      • the weakening, starting in 2009 or so via Quantitative Easing, of the prohibition against the Federal Reserve allocating private credit (mortgage securities) and virtually monetizing Treasury debt by massive expansion of its balance sheet.
      • The further recent erosion of the prohibition against the Fed allocating private credit, in the case of corporate paper.

    Our economic ignorance has done us great harm. Americans, both pro- and anti-liberal, seem to me to be even more completely, self-righteously, and aggressively economically ignorant than ever. But the real problem is spiritual.

    • #10
    • August 1, 2020, at 4:58 PM PDT
    • 23 likes
    • This comment has been edited.
  11. Housebroken Thatcher

    What happens to my hoard of gold and silver coins I’ve hidden against a future dark day?

    • #11
    • August 1, 2020, at 5:03 PM PDT
    • 4 likes
    • This comment has been edited.
  12. OldPhil Coolidge

    philo (View Comment):

    Bob Thompson: Recently there has been a coin shortage…

    I’ve heard this said many times but not sure I’ve seen any real evidence of it.

    Bob Thompson: One thing I always think of on U.S. currency: This note is legal tender for all debts, public and private.

    I wonder how the standoff at the local Home Depot is going to play out if the store claims they will not / cannot accept cash and I insist on paying with cash.

    Our local grocery restricted the self-checkouts to credit/debit only because of the “coin shortage.” We had $200, mostly quarters, that my wife had been collecting for a couple years for our grandson, so I stopped at the store’s info counter to ask if I could bring them in for two $100 bills. The nice lady said “Oh, we don’t have anywhere to keep them.” I was literally too stunned to say “Don’t you have cash registers?”

    Dropped them off at the bank drive-thru and came away with the $100s and a “thanks a lot” from the teller.

    • #12
    • August 1, 2020, at 5:05 PM PDT
    • 3 likes
  13. Housebroken Thatcher

    Mark Camp (View Comment):

    After the state virtually completes the process of eliminating physical cash, which will be done fairly soon, here is what you will have:

    • ALL money ownership and ALL money payments will be monitored by the state and thus controlled by the state at its pleasure.
    • The state will gradually make manifest this unlimited discretionary power, which is ultimately the power to decide if a person will survive or not, to maintain and enhance its actual power until that power is absolute.

    That is why I think we Americans were very foolish

    • even to start on this long-term, step-by-step program of the statists to capture control of the financial economy, starting in the time of Hamilton, and
    • to allow any of the steps, all of them unconstitutional, along the way.
      • The two Banks of the US
      • the Federal restraints on free banking in the 1800s and beyond
      • the chartering of the Federal Reserve
      • the US defaults on US currency in 1933 and 1971
      • the confiscation of gold in 1933
      • the forced replacement of the people’s money by government fiat money
      • the expansion of the Federal Reserve’s charter from lender-of-last resort to the task of engineering economic aggregates
      • the elimination, via Quantitative Easing, of the prohibition against the Federal Reserve allocating private credit and virtually monetizing Treasury debt by massive expansion of its balance sheet.

    Our economic ignorance has done us great harm. Americans, both pro- and anti-liberal, seem to me to be even more completely, self-righteously, and aggressively economically ignorant than ever. But the real problem is spiritual.

    At least on FB I could ❤️

    • #13
    • August 1, 2020, at 5:05 PM PDT
    • 2 likes
  14. Housebroken Thatcher

    I write a check. Somebody takes a photo of it on their telephone and presto! my bank account is debited. This makes me just a bit nervous.

    • #14
    • August 1, 2020, at 5:09 PM PDT
    • 3 likes
  15. Mark Camp Member

    Housebroken (View Comment):

    I write a check. Somebody takes a photo of it on their telephone and presto! my bank account is debited. This makes me just a bit nervous.

    You shouldn’t be.

    You shouldn’t be just a bit nervous.

    When virtually all your money, except small change, is electronic money monitored by Federal Government artificial intelligence software via the Fed’s unlimited authority over the commercial banks, and all your payments and receipts are permitted or not by the Federal Government via private banking regulations, you are essentially the property of the party in power.

    For a few years, there will be some inertial resistance to the government overtly exercising its authority. But the lure of power will be too great. The right-wingers and the left-wingers will be stumbling over themselves to gain control of the Executive and the Judiciary because elections are bought with money. If you can stop the opponents from collecting and spending money on an election, you can assure yourself of a permanent hold on power.

    You are probably not aware of it, but today it is already, for all practical purposes, a Federal crime to try to obtain significant amounts of physical money, or to carry it out of the country. If you try it, your bank is obligated to report you immediately to the Federal Government for tracking, even if the amount is allowed. If it’s too much money, the bank will refuse to allow you to withdraw it.

    Although the next few years will see the Federal Government openly acting to destroy the freedom to hold and spend physical money, which it can’t monitor and control, the battle is already pretty much over.

    • #15
    • August 1, 2020, at 5:29 PM PDT
    • 8 likes
  16. Randy Webster Member

    philo (View Comment):
    I’ve heard this said many times but not sure I’ve seen any real evidence of it.

    I bought something at the Hobby Lobby a couple of weeks back, and the price was $x.57. They asked me if I had the 57 cents so they wouldn’t have to give me change.

    philo (View Comment):
    I wonder how the standoff at the local Home Depot is going to play out if the store claims they will not / cannot accept cash and I insist on paying with cash. 

    Theoretically, if they refuse cash, you’ve made your tender and can take the goods.

    • #16
    • August 1, 2020, at 5:31 PM PDT
    • 4 likes
  17. Randy Webster Member

    OldPhil (View Comment):
    Dropped them off at the bank drive-thru and came away with the $100s and a “thanks a lot” from the teller.

    I keep all my change in a coffee can. When it gets full, I take it to the bank and let them count it. It’s generally about $120, and takes a little less than a year to gather.

    • #17
    • August 1, 2020, at 5:35 PM PDT
    • 1 like
  18. Mark Camp Member

    Randy Webster (View Comment):

    philo (View Comment):
    I’ve heard this said many times but not sure I’ve seen any real evidence of it.

    I bought something at the Hobby Lobby a couple of weeks back, and the price was $x.57. They asked me if I had the 57 cents so they wouldn’t have to give me change.

    philo (View Comment):
    I wonder how the standoff at the local Home Depot is going to play out if the store claims they will not / cannot accept cash and I insist on paying with cash.

    Theoretically, if they refuse cash, you’ve made your tender and can take the goods.

    That is an almost universal belief, but it is false. No one is legally obligated to take US coins or notes in exchange for his property against his will.

    The US legal tender statute does require a creditor to accept US notes and coins in payment of a liability in US Dollars. You are confusing this with the case of payment for goods.

    If you don’t believe me, I will try to find the Treasury web page where they specifically debunk this myth. I will also try to find the US Statute itself, or perhaps you can just Duck-Duck-Go it yourself. You will see that it only mentions the settlement of obligations. When you have not bought something at Home Depot, you have no liability to Home Depot, so the law can’t force them to accept payment for a liability that does not exist.

    I hope that at least half of the people who read this will stop believing, and stop spreading this honest mistake.

    • #18
    • August 1, 2020, at 5:39 PM PDT
    • 7 likes
    • This comment has been edited.
  19. Randy Webster Member

    Mark Camp (View Comment):
    If you don’t believe me, I will try to find the Treasury web page where they specifically debunk this myth.

    Don’t bother. I’ll take your word for it. But that’s not the definition of tender I learned in law school.

    • #19
    • August 1, 2020, at 5:43 PM PDT
    • Like
  20. Randy Webster Member

    Mark Camp (View Comment):
    You will see that it only mentions the settlement of obligations. When you have not bought something at Home Depot, you have no liability to Home Depot, so the law can’t force them to accept payment for a liability that does not exist.

    Does that mean that if Home Depot extends you credit, you can force them to accept cash?

    • #20
    • August 1, 2020, at 5:53 PM PDT
    • 1 like
  21. Mark Camp Member

    Randy Webster (View Comment):

    Mark Camp (View Comment):
    If you don’t believe me, I will try to find the Treasury web page where they specifically debunk this myth.

    Don’t bother. I’ll take your word for it. But that’s not the definition of tender I learned in law school.

    I am speaking of the meaning of the current “legal tender” statute in the US Code, not the word “tender”.

     

    • #21
    • August 1, 2020, at 5:55 PM PDT
    • Like
  22. Mark Camp Member

    Randy Webster (View Comment):

    Mark Camp (View Comment):
    You will see that it only mentions the settlement of obligations. When you have not bought something at Home Depot, you have no liability to Home Depot, so the law can’t force them to accept payment for a liability that does not exist.

    Does that mean that if Home Depot extends you credit, you can force them to accept cash?

    Yes.

    • #22
    • August 1, 2020, at 5:59 PM PDT
    • 1 like
  23. RushBabe49 Thatcher

    I pay the majority of my recurring bills with checks that I write and mail through the Postal Service. In spite of the constant drumbeat from credit card companies, utilities, department stores, etc. to go “paperless”. I even reload my Starbucks card with cash instead of a card. Even our county treasurer is now offering paperless property tax payment. No, thanks. I will continue to write out my rather large check two times a year.

    • #23
    • August 1, 2020, at 6:03 PM PDT
    • 5 likes
    • This comment has been edited.
  24. Bob Thompson Member
    Bob Thompson

    Mark Camp (View Comment):

    • ALL money ownership and ALL money payments will be monitored by the state and thus controlled by the state at its pleasure.
    • The state will gradually make manifest this unlimited discretionary power, which is ultimately the power to decide if a person will survive or not, to maintain and enhance its actual power until that power is absolute.

    What can be done to prevent this?

    • #24
    • August 1, 2020, at 6:24 PM PDT
    • Like
  25. Bob Thompson Member
    Bob Thompson

    Hoyacon (View Comment):

    Does this tie in at all with gold being at record highs?

    I think it does.

    • #25
    • August 1, 2020, at 6:25 PM PDT
    • 3 likes
  26. Unsk Member

    Mark:

    • ALL money ownership and ALL money payments will be monitored by the state and thus controlled by the state at its pleasure.
    • The state will gradually make manifest this unlimited discretionary power, which is ultimately the power to decide if a person will survive or not, to maintain and enhance its actual power until that power is absolute.

    I don’t always agree with Mark, but on this is issue he 100% on the money. Couldn’t have said it better.

    And no, Bob, once you go Cashless, there will be nothing you can do to stop them controlling your money. And yep, interest rates will go negative in short order so you will have to pay the banks bigly to keep track of your money or you will lose it. It will be the beginning of the end of the Republic and beginning of a dictatorship.

    The response without any question should be HELL NO! to cashless.

    • #26
    • August 1, 2020, at 6:37 PM PDT
    • 6 likes
    • This comment has been edited.
  27. Bob Thompson Member
    Bob Thompson

    Today we are experiencing a new situation in America where there has been widespread abandonment of law and order by Democrats in many states and cities related to protests and riots over the alleged widespread police brutality highlighted by the George Floyd death in police custody and the shutdowns of normal activity resulting from the Covid-19 pandemic.

    I have two adult offspring who should be supporting themselves but don’t have the means because of the events I just covered. Having cash available is a way of getting through just such an emergency period. Having such an emergency now tells me we will likely have more in the future. I don’t like the idea of government essentially having the absolute power to prevent me from being prepared for emergency situations.

    • #27
    • August 1, 2020, at 6:45 PM PDT
    • 6 likes
  28. Mark Camp Member

    Unsk (View Comment):
    I don’t always agree with Mark

    I agree.

    Unsk, that makes TWO things we agree on!

    • #28
    • August 1, 2020, at 7:08 PM PDT
    • 1 like
  29. Mark Camp Member

    RushBabe49 (View Comment):

    I pay the majority of my recurring bills with checks that I write and mail through the Postal Service. In spite of the constant drumbeat from credit card companies, utilities, department stores, etc. to go “paperless”. I even reload my Starbucks card with cash instead of a card. Even our county treasurer is now offering paperless property tax payment. No, thanks. I will continue to write out my rather large check two times a year.

    RushBabe,

    Unfortunately, checks are electronic money, not physical money. In fact, ever since the Fed took over the previously private clearinghouse function, they are actually cleared directly by the Fed. So they are no substitute for the privacy and individual freedom of holding, transporting, and paying provided by physical Federal Reserve notes and US Treasury coins. (Let alone silver and gold!)

    • #29
    • August 1, 2020, at 7:14 PM PDT
    • Like
  30. Housebroken Thatcher

    Bob Thompson (View Comment):

    Hoyacon (View Comment):

    Does this tie in at all with gold being at record highs?

    I think it does.

    So yall are suggesting now is a good time to sell my gold coins for Federal Reserve Notes?

    • #30
    • August 1, 2020, at 7:21 PM PDT
    • Like