The demise of Cash and return of gold?

A few pieces I came across in the new lately:

From the Mises blog:

The New York Times reports ,
The number of dollar bills rolling off the great government presses here and in Fort Worth fell to a modern low last year. Production of $5 bills also dropped to the lowest level in 30 years. And for the first time in that period, the Treasury Departmentdid not print any $10 bills. 

Come to think of it, I’ve noticed that $10s seem scarce. 

Most airlines will not take cash for drinks onboard, online purchases require plastic, and even New York cabbies are taking debit and credit cards more than a third of the time, according to the Times piece. 

But part of the reason that less new cash needs to be printed is that the government’s cash is now sturdier than before according to the Times’s Benyamin Applebaum.”Thanks to technological advances, the average dollar bill now circulates for 40 months, up from 18 months two decades ago, according to Federal Reserve estimates.” 

Pictures of Benjamin Franklin are an important export good for America.  Applebaum makes the point that producing $100s for a dime is big business as 2/3rds of the Benjamins are hoarded overseas.  The Fed paid $20 billion in seigniorage to the Treasury last year. 

“Last year Treasury printed more $100 bills than dollar bills for the first time,” writes Applebaum. “There are now more than seven billion pictures of Benjamin Franklin in circulation…”

Cash may not be as convenient  as electronic transactions but the demise of cash means more money for the financial sector.  Visa, Mastercard, Amex and Discover all charge merchants to accept credit cards, to the tune of 1.5%-4% plus a flat fee per transaction.  Debit cards have a fee as well.

It must be nice to make money on just accepting money, it's all a cost of doing business and is ultimately paid by the consumer.

Then you have the banks that if you are not charged a monthly fee for checking you get exorbitant fees all for the service of holding and having access to your money, this series of fees for things like using the wrong ATM is what is called "free checking".

Killing cash gives big finance a small piece of every transaction done electronically.  It is a multi-billion dollar business that we have become so accustom to that we don't even notice or think about the charges levied upon us.

I don't see cash coming back but with strong advocates like Dave Ramsey out there, many people trying to keep a handle on their finances are turning back to cash when they can.  If your wallet is empty of cash maybe you should stop buying, it's simple and helps budgeting.


Meanwhile in Switzerland:

Swiss Parliament to discuss gold franc

Right-wing party seeks way back to gold standard

  By Agnese Smith

Reuters

ZURICH (MarketWatch) — The Swiss Parliament is expected later this year to discuss the creation of a gold franc — a parallel currency to the official Swiss franc, with the fringe initiative likely triggering a broader debate about the role of the precious metal in the Alpine nation.

The initiative is part of “Healthy Currency,” a campaign sponsored by politicians from the right-wing Swiss People’s Party (SVP) — the country’s biggest — that is seeking to capitalize on popular fears about global financial turmoil and inflation to reverse the government’s current policy on gold.

“I can imagine that this will spark some sort of debate about gold and there may be some pressure to accept the parallel currency,” said Dr. Gebhard Kirchgaessner, an economics professor at St. Gallen University. “But it won’t have any real effect on the economy. It seems incredible to imagine that there are people out there willing to buy millions of these things.”

Switzerland, which in 2000 became one of the last countries to decouple its currency from gold, is not the only place to contemplate a change in the precious metal’s role amid controversy over government involvement in the economy. In March, Utah became the first state in the U.S. to legalize gold and silver coins as currency, while similar legislation was considered in Montana, Missouri, Colorado, Idaho and Indiana.

“I want Swiss people to have the freedom to choose a completely different currency,” said Thomas Jacob, the man behind the gold franc concept. ”Today’s monetary system is all backed by debt — all backed by nothing — and I want people to realize this.”

Not that I think that the Swiss need to do this with already one of the strongest currencies in the world.  But when you already own all that gold you might as well do something with it other than let it gather dust in some vault buried in the Alps.