Cash is Dead

^ Yeah. I've been places where plastic & checks were not accepted. Cash only. Typically small businesses that cannot afford to process plastic and don't trust strangers' checks. Foreign countries more often than in the states, but occasionally here also.

 

Common around here, with the seasonal tourist business. Many of the small shops can't afford plastic.

Tom

 

It appalls me to even consider the possibility that cash is going the way of the dinosaur.

If money is reduced to mere numbers on a computer screen (as it largely has by now), then it's even easier for a government to debase its currency.

History has shown us that every single fiat (Latin for "let it be done") currency in history has failed because the government could not resist the temptation to debase the currency by creating more money, eventually rendering it worthless and throwing the economy into chaos.

That $5 bill in your wallet is only worth $5 because the government says it is. "Backed by the full faith and credit of the United States Government". But other than that, it isn't worth any more than the paper it's printed on.

Ever wonder why pre-1965 quarters have completely disappeared from circulation? Because the currency has been debased by some 95% in the past hundred years, and the silver content of what was ostensibly a 25 cent piece is now worth more than five dollars.

We have been at the mercy of the Fed's printing press for a century now, with predictable results. And the increasing trend towards "electronic" transfers only accelerates this vulnerability.

In order to get my degree in Economics I had to write a capstone report to the board at my college - I spent a significant amount of time discussing the negative effects of inflation and how governments deliberately set out to cause such inflation in order to further it's own interests (in the short to medium terms, at any rate).

I -think- the increasing use of electronic fund transfers is why the Fed stopped publishing the M3 back ~2005. Because they don't want us knowing how quickly the money supply is -really- growing.

[/end economics rant, I'll post in greater detail and conciseness when I find the report].


Back to credit card usage: I use it when possible, because I get 5% on gas and 1.25% on everything else. But there's certain things - such as when buying my Prius - when a big ole stack of Benjamins improved my negotiating position remarkably.

 

are you saying it's illegal to make a real estate transaction in cash?

 

This is old news. Cash has been dead since Sept. 12, 2003

Johnny Cash Dead at Age 71

 

I wanted to post that myself, at first I thought that's what this thread was about.


Posted from my iPhone via the Tapatalk app.

 

I'm not certain I agree with this. The government fine-tunes the money supply, and seems able to do this to its liking with cash. Electronic money will not be any easier, because it's already as easy as they want it to be.

I am not an economist, but I was under the impression that most economists believe that a low but non-zero rate of inflation is necessary to assure that people will invest their saving rather than stuffing it in the mattress, and the economy needs investment in order to function.

Raul Salinas, brother of former President Carlos Salinas, made a habit of flying to New York and depositing suitcases full of cash in accounts under false names at Citibank. Raul was then Minister of Ports and Harbors. The money is widely believed to have been pay-offs for allowing drugs to pass through Mexico. And drug money is generally believed to have been behind the phenomenal growth of heavy industry in Monterrey, Mexico, adopted home town of the Salinas brothers.

Citibank chose not to notify the authorities of Raul's cash deposits, since the bank profited from helping the Salinas's to launder their drug pay-off money.

Raul ended up in prison in Mexico for murdering his own brother-in-law.

I stopped following news of the Salinas brothers' antics when I left Mexico. At that time Carlos Salinas was living in Ireland, which, not coincidentally, does not have an extradition treaty with Mexico. He was believed to have embezzled five billion dollars ($5,000,000,000) from his country during his six years in office.

 

I do cash whenever possible.

 

I am going to question this. If you cannot provide any documentation of where you got the money, then you probably will have problems. Obtaining that much cash with no traceability takes real effort to prevent that traceability. But if you show up with the cash and the documentation showing that you got it from a valid bank transaction, then I don't see a lingering problem.

I will agree that a paying a huge sum in cash should ring alarm bells.

 

I have a friend who tells the story of when he used to sell new Hondas. An older couple entered the lot in an old pickup truck and got out to look at cars. The experienced salesmen all made themselves scarce and my friend the most junior salesman was left to help them.

The gentleman was a farmer who had twin daughters getting ready to graduate high school. He bought two new Honda Accords and paid sticker price, in cash that he carried in a paper sack. They had saved a little bit every few weeks over many years. They saved it the old way, by putting it in a cookie jar.

My friend always uses it as a never judge a book by the cover story. The experienced salesmen were quickly upset when they realized the commission that they had just lost.

 

Disregarding the emotional arguments for/against cash, the economic cost of both cash and credit cards is significant. For example:

Most credit card companies (and possibly one or two merchants somewhere) claim that credit cards are preferable to the merchants because they don't have to deal with the costs of protecting, transporting, counting, and depositing all those bills and coins. Certainly armored cars use a lot more gas than our favorite vehicle.

When I buy something with my credit card, I get "reward points" which I can use to buy stuff (or, if I have a lot of points, even things). But the merchant gives a rake-off to the credit card company, some of which ends up in my pocket, some in the card company's pocket. All of it comes out of the merchant's pocket, which will cause him to raise his prices. Hence, $3.50/gallon cash price, $3.70/gallon credit. How much more would you pay for a car if the dealer did take credit cards? Maybe $300-$500!

In most cases, merchants have the same price for cash and credit. Cash payers in this case are giving up the benefits of the rewards programs, which are significant, or, looking at it slightly differently, paying a credit card tax. I will always ask for a cash discount when one isn't offered (and it often is). If no discount is offered, I'll pay with a card. If the government finds out my favorite ice cream flavor I'll just have to cope.

Richard

 

2% of my bottom line is a big hit at the end of the year. i only do it as a convenience to attract customers and deadbeats to avoid bad debt chargeoffs.

 

this sounds more like drug dealers than someone walking into a dealership with thirty grand for a prius. you'd more likely worry about getting robbed than arrested.

 

My uncle used to own a grocery store. He had to deal in a lot of cash. Bundles of bills and bags of coins. A lot of both.

But he never sent cash to the bank. He bought cash from the bank. Most people back then paid by check, and most wanted to write the check for a bit extra and get some cash, so my uncle had a net cash outflow. What he sent to the bank were lots of checks.

I'm sure there are costs associated with processing checks, but at least in those days if you deposited a check you didn't pay a fee. The bank ate that cost. I don't know if it was the same for businesses that deposited lots of checks. I think the bank got its cut indirectly, by paying less interest on the money than it could get from it. I still don't pay a fee for depositing checks. But that money earns hardly any interest. So the bank makes out like gangbusters.

I think FL_Prius_Driver is right about the cash: If you can document that you withdrew the cash from a legitimate bank account you'd be safe. But why would you? Most people would take that much money from their account in the form of a cashier's check. And if I was selling my house, I would not accept cash, because then I'd have to convince the bank (and maybe the cops) that it was not drug money, and I would wonder if it was counterfeit. I'd tell the buyer to deposit his cash in a bank, and then go through proper escrow to buy the house. And if he offered to pay extra, for me to accept cash, the more he offered, the more suspicious I'd be that it was counterfeit or otherwise tainted in a way that would get me in trouble.

 

The merchant's contract with Visa stipulates that they can not charge more for a purchase on the credit card but can offer a cash discount. Visa takes 3%. There is no limit on the size of the transaction. Because the dealer accepts Visa in the Parts & Service Dept. technically they have to accept it for a new car purchase. If they don't your recourse is to file a complaint with Visa.

So after negotiating a price of $25000 for the car you whip out your credit card. Dealer says "no" & you threaten to report them to Visa. Dealer now says the $25000 is the discounted cash price. The car's real price is $26000. The Visa contract is satisfied. Dealer makes a bit more profit. You just paid more for the car. I hope your kickback was worth it.

In some venues cash is preferred. Cash transactions are harder to trace. Income & sales taxes are under-reported. Cash transactions of at least $10,000 have to be documented with the IRS. Doesn't matter if it is a deposit at a financial institution or a purchase. The IRS will track it down.

Yes, the merchant has to know who you are. If you are an unsavory character that has landed on anyone's list (OFAC is the big one in the USA) it is illegal for them to conduct business with you.

 

After all negotiations were over the finance manager at the Toyota Dealership asked me how I wanted to pay, I handed her my Visa. She put a $5,000 charge through with no complaints or increase to me. I guess the $150 charge that Visa charged them for that transaction they considered to be a cost of doing business. They never said a word.

 

i have been allowed to put up to $4,000. max deposit on a car on amex .