Cash economy and the high hidden cost of doing credit card business
My oldest grandchild, Pip, has just started school. His family gave him $2 to buy ice cube trays from the cafeteria. He came home excitedly. He handed over the $2 coin at the cafeteria and they gave him the ice cube tray and also more money! One coin in, three coins in return. Also block of ice. What a system.
“If you need money,” he told his parents, “just ask me. I know where to get it.”
Pip’s experience made me nostalgic about money, coins and notes. As we all know, cash is borrowed time. Some stores don’t accept this anyway. This has become rare in places like Sweden. But there is still something magical about this.
First of all, the system has its quirks. Why is a $1 coin larger than a $2 coin? It doesn’t make any sense. Why are the 20-cent coin and the 50-cent coin still larger even though they are less valuable? No wonder Pip decides he’s in a good place. According to this system, if you give them an ice tray in the school canteen, they will give you four ice cubes in return.
Then – adding to the appeal – the designs. The 20-cent coin features a platypus dancing in swirling waters; feathered boa lyrebird on 10 cents; A timid echidna looks up anxiously from inside the protective circle of a 5-cent coin.
But that’s just the beginning of the magic. Is there a sweeter moment than finding a $20 bill inside an old pair of jeans? Money you earned years ago suddenly changes hands. How will you spend it? Coffee and cake? A bottle of wine? Whatever treat is accepted, it is free money; A gift from yesterday’s hardworking you to today’s pleasure seeker. Try this with a credit card.
A world without cash is a world where everything has records.
I understand the convenience of a card that waves to a touch-and-go recipient. I also understand that limiting cash can help curb the underground economy. And if you have all your expenses on one card, you can analyze where your money is going if you really want to know the true price of your coffee addiction.
Still, can we sing the praises of cash before it disappears?
When I first started working, we were all paid in cash; in our case, every two weeks. You lined up in front of a grated slot on the eighth floor of the building. The pay would arrive in a long brown envelope consisting mostly of banknotes, but a few coins would also add to the weight. This real pay packet has given you a useful idea of the value of money. You had only been bothering for two weeks and the result was a handful of money. You could see the sweat inside. You knew it had to last two weeks.
They say cash can burn a hole in your pocket, but I found it quite sticky. When I handed over a $10 bill, I felt like I was handing over two or three hours of work. Whatever I’m buying better be worth the effort of earning it. Also, no one charged you a processing fee as payment for accepting your business.
Now we all get paid via digital transfer. Money comes and goes. It’s harder to see the sweat inside.
There are many theories about Australia’s persistent inflation. Maybe low productivity or too much government spending. The result, according to economists, was an overheating of demand outstripping supply. I would like to add another theory: Lack of cash. I waved my credit card at the buyer and only as I walked away did I realize I had spent $22 on a sandwich and a drink. If I had been forced to stand there and count the money instead, it might have caused me to quickly “reduce the amount of demand in the economy.” Forget drinking, I’ll just have water.
How will new arrivals to Australia (e.g. refugees) cope in a place where you have to open a bank account before buying food or clothes? In a cashless world, how can couples with joint bank accounts or joint credit cards maintain some privacy? Whether it is the purchase of a secret birthday gift for the “other half” or, even worse, a pack of cigarettes occasionally purchased by the person who “quit smoking” many years ago. It will appear on the bank statement under the name “Smokers’ Paradise”. A world without cash is a world where everything has records.
Even when it disappears, cash continues to bring me small moments of happiness. When I empty my pockets at night, I throw the money into a place I call Man Jar. It may only be 30 or 40 cents each day, but it’s adding up. Suddenly, $40 appeared, the world’s easiest savings program.
My final plan is to find all the $2 coins in the Man Jar and deliver them to Pip. He can create a family fortune with the help of the school cafeteria.
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