Over the next 10 – 15 years, I believe the US government at least, and probably others, will eliminate cash in the form of paper and metal monies. Why?
There is an amazing amount of cash out there. Over 1.4 trillion dollars in paper bills and coins. About 5% is in bank vaults, just sitting there as reserves. Less than a tenth of that amount is held by ordinary humans. https://www.newyorker.com/business/currency/why-digital-money-hasnt-killed-cash There is the rub. Where is the rest?
It is in the form of larger notes, mostly $100 bills. Some of this is undoubtedly held by people afraid of the government and the future of America, but the US $100 bill is the currency of illegal activities around the world. These include big illegal activities, like drug deals and stealing US payments meant for others, and otherwise legal activities on which the players don’t want to pay taxes, or want to keep from the authorities, and are, at the very least, shady.
Of course, there are tens of millions of cash dollars traded in smaller bills by regular people, such as wait staff, day laborers, etc, to avoid taxes, debts, ex-spouses or whatever. Other cash is used to complete small illegal purchases or simple tax avoidance.
Most of us, most of the time, use electronic money, whether in the form of a credit or debit card, a paper check or a Paypal, Venmo or other similar transaction. Increasingly, people are having paychecks electronically deposited or provided on a card. Federal benefits are provided electronically and are much harder to convert to cash. Millennials and the generations before and after them, use cash at a dramatically lower rate than those of us in the Baby Boom and Great Generations.
Us Boomers are getting with it though. We have to. It’s almost the only way to pay anyone anymore. The government and many other institutions are forcing us toward electronic money, whether we like it or not. It is happening so slowly that we probably haven’t noticed, but all of a sudden, I have both a Paypal and a Venmo account, my “checks” are direct deposited and I seldom have cash. Heck, I even buy Starbucks with my phone.
As electronic apps and systems make it even easier for ordinary, law-abiding folks to use electronic money, safely stored in their banks as a number in an electronic ledger, more and more of the world’s cash will be used exclusively for illegal purposes.
Will the US, and other major economic countries, decide to eliminate cash to take the $100 bill away from the criminals of the world? Some pretty rich and powerful folks like their secret stash of $100 bills. How will the American politicians who have to vote on this get their money from lobbyists or buy their prostitutes?
How much money would the US make in taxes, penalties and interest, if it told the world that, if not cashed in for electronic currency by a certain date, all $100 bills, $50 bills and higher would no longer have any value whatsoever? I’m sure the big players would figure something out. Maybe crypto-currency.
Coins cost more to make than they are worth. Their impact if eliminated would be small, but that would force more ordinary people to use electronic money exclusively. If a $4.34 cup of coffee cost $5.00 in cash, people would pay with their card. If the government eventually eliminates the rest of the bills used by regular folks, in 10 – 15 years we would become a true, cashless society.
From a real estate perspective, the need for brick & mortar bank branches would go down and eventually be eliminated. ATMs would become less useful and eventually useless. If you can’t get cash, what would an ATM be good for? Checks would still exist, at least for a while. They are electronic money, after all, but they can be deposited with a picture from a phone.
I could operate without cash, and often do and I’m old. I’m sitting in Starbucks and as I look around, I bet we couldn’t scrounge $50 in actual cash from the 15 young people here, unless, of course, some of them are criminals.