An American Looks @ Money pt3

Good morning and welcome to September 14th and another Fantabulous Friday! Today is the final day of our series on the metamorphosis of money in the United States. It took two days of blogging to cover the first 10 years and yet I think I can cover the final 45 years in this single blog. Well, wish me luck, and hang on! Before we jump into this finally, let’s refill our cups and grab a seat. Eric Clapton greets us this morning with his 1974 hit, I Shot The Sheriff.

Gold is up +$0.50 this morning at 1201.40, and is up +$1.50 on the month.

Silver is up +$0.01 at $14.16, and it’s down -$0.41 for the month.

Platinum is up this morning +$2.00 at $803, and is up +$11 for the month.

#sarcasm “nothing to see here, move along folks”.

Over the past two days, we’ve looked at the evolution of the charge card into a credit card and our silver based coin and currency system being replaced with a cupronickel coin and Treasury-backed currency. Finally, in 1971, the U.S. brought an end to the Bretton Woods System and ended dollar convertibility to gold. This final move forever changed the dollar and created a truly fiat currency. The only saving grace to America after this was the 1974 U.S. & Saudi agreement that gave us all the oil that we wanted and created the worldwide need for U.S. Treasuries. With this single handshake the U.S. dollar became the “World Reserve Currency.” If you want to read more about this “secret” pact, here’s a great article from Bloomberg.

During the next two decades, we saw huge changes in automation and technology. One of the biggest was moving payroll out of the backroom and into payroll services companies that could offer direct deposit while automating tax payments. This single automation made the average American comfortable with new technology and reduced the need for cash services. At this point, 40% of Americans were now paying for products and services using personal checks or credit cards.

By the mid 80’s, we began to find ourselves becoming familiar with the next technological advancement – ATM’s. This advancement offered cash from a bank at any hour of any day with simply a bankcard and a PIN (Personal Identification Number). More importantly this plastic card maintained “cash as king,” and allowed Americans to become comfortable using a bankcard that would easily transition to a Debit card by the next millennium.

As we have marched forward with technology through the use of computers, notebooks, iPads, and smartphones, these advancements have made it easier to make deposits, pay bills, transfer funds, and make purchases. So much so that by 2017 less than 30% of us were using cash. Where does this lead? Will we become a cashless society? Our government would like us to believe that in doing so, we would save millions of dollars annually in printing and coin costs.

So what are the pros and cons of a society going cashless? Those in favor of a cashless society will tell you that going exclusively digital there will be less crime (stealing money and illegal transactions like drug and black market), paper trails that will eliminate white collar financial crime and tax evasion; elimination of cash management by retailers, and they tell us about the ease of international transactions. Sounds good to me! After hearing all of the advantages of going cashless, what could possibly be wrong with it?

For me, one of the biggest disadvantages of a cashless society is the loss of privacy. You might have full faith in the organizations that handle your funds and transactions, but your financial information could turn up in unpredictable ways. Cash allows you to spend and receive funds anonymously. Now I don’t do things illegal, but I find Amazon’s Alexa, Facebook, and Google overstepping privacy boundaries. I see today’s huge financial institutions in the same vein. We also have the potential risk of hacking. Even if you’re accounts are protected, you still find significant inconvenience after a breach. And what about technology glitches or outages? We’ve all been inconvenienced by them. And finally, when all our money is electronic, the government will have the opportunity to promote negative interest rates. I know the Fed would have loved to had that tool during the last (Great) recession to stimulate spending, but the reality is money loses purchasing power when this is done.

So, I leave it to you. Remember, you have the power to decide your families fate and the changes we make today will impact our futures. Some improvements and probably even more failures.

Well, I’ll let that be it for today. Go out there and make a difference! See ya later!

*Disclaimer: Precious Metal Musings™ is written for entertainment and news purposes only and should not be used in making purchases and/or sales of precious metals.