Ask your bank for permission to pay!

August 23, 2016 2:05 PM

"Our concern was an intuitive one about a potential future world in which we'd have to report our every economic move to a bank, and the effect this could have on marginalised people."
posted by Lycaste (58 comments total)

Especially disturbing when the US government leverages FDIC insurance to attack disfavored industries extra-legally: Operation Chokepoint.
posted by jenkinsEar at 2:15 PM on August 23, 2016 [3 favorites]

Is this a Europe thing right now? I've never once had a place that wouldn't take cash in the US. (And in Japan there are still tons of cash-only businesses, at all scales/prices). I mean yeah there are various payment systems attempting to replace cash, but at this point they're all strictly voluntary and don't seem too widely used (other than credit cards, of course, but thats not exactly new).
posted by thefoxgod at 2:17 PM on August 23, 2016

During recessions central banks could then use the banking system to deliberately corrode people's deposits via negative charges, 'inspiring' them to spend rather than hoard.

That....would be excellent, wouldn't it? You're trying to save up a little against the next blow that life deals you and every month you get dinged for not spending.

Actually, you have to wonder if something like this wouldn't be a boost for alternative currencies/bitcoin - if there's no obvious place to store certain kinds of money, surely something will be created. Not that this will be better than cash, of course.
posted by Frowner at 2:19 PM on August 23, 2016 [3 favorites]

The argument here strikes me as missing the forest for the trees. The problem isn't digital transactions so much as we need stronger protections on data collection, period.

And jenkinsEar, you're buying into bank propaganda there. The US government didn't crack down on adult industries, the banks tried to use them as a tool to attack the government rightfully cracking down on usury.
posted by NoxAeternum at 2:19 PM on August 23, 2016 [5 favorites]

It is like a taken-for-granted public utility,

Enclosure and extraction.

There are an increasing number of places in the US that don't take cash, generally framing it as a hassle or security issue.
posted by the man of twists and turns at 2:21 PM on August 23, 2016 [3 favorites]

During recessions central banks could then use the banking system to deliberately corrode people's deposits via negative charges, 'inspiring' them to spend rather than hoard.

Let me tell you a story about Canada's incredibly stable financial system and service charges....
posted by srboisvert at 2:22 PM on August 23, 2016 [1 favorite]

There are an increasing number of places in the US that don't take cash, generally framing it as a hassle or security issue.

I'd really like to see some evidence of this, because like thefoxgod I've never once had any place I've been to not take cash. The only time that happens that I can think of is buying things during a flight on an airplane.

During recessions central banks could then use the banking system to deliberately corrode people's deposits via negative charges, 'inspiring' them to spend rather than hoard.

That....would be excellent, wouldn't it? You're trying to save up a little against the next blow that life deals you and every month you get dinged for not spending.

A population over-saving can actually be a real problem. It's been cited as a problem in restarting the Japanese economy, and in fact Japan has been doing limited experimentation with a negative interest rate to do exactly this, with mixed results.
posted by Sangermaine at 2:29 PM on August 23, 2016

I'd really like to see some evidence of this
I'm not sure about large-scale evidence to point to, but at least within the realm of personal experience I've run into quite a few places which are card-only. A local brewery, for example
Or quite a few food trucks around here, an IPad with a Square reader is the only payment option.

Cash is a hassle, ultimately, so it seems to be much easier for small businesses to get started with a Square account and a product.
posted by CrystalDave at 2:34 PM on August 23, 2016 [1 favorite]

He argues that, apart from facilitating crime and tax evasion, cash hampers central banks from setting negative interest rates. In the absence of cash, everyone must keep their money in the form of digital bank deposits. During recessions central banks could then use the banking system to deliberately corrode people's deposits via negative charges, 'inspiring' them to spend rather than hoard.

Jesus. This is morally wrong in so many ways. Most people live from paycheck to paycheck. Imagine losing what little you have saved away because someone in a suit somewhere decided you need to spend more.
posted by Kevin Street at 2:36 PM on August 23, 2016 [9 favorites]

srboisvert, service charges are certainly excessive, but I think they can be explained more by greed than any desire to control individual spending on a macroeconomic level. The banks discovered a long time ago that they can bleed us this way, so they do it as much as they can.
posted by Kevin Street at 2:40 PM on August 23, 2016 [1 favorite]

Brett Scott is a fantastic guide to these murky waters, and his Heretic's Guide to Global Finance is essential reading.

Good to see the Long+Short on here, too; I'm literally working on a piece for them as we speak. (If I had known this was the kind of tone and voice they were going for, I'd have written it a trifle differently. Ah well.)
posted by adamgreenfield at 2:41 PM on August 23, 2016

That....would be excellent, wouldn't it? You're trying to save up a little against the next blow that life deals you and every month you get dinged for not spending.

Yeah, at the normal human level where most people are a few paychecks away from ruin, even if they are "comfortable," discouraging savings is almost criminally insane.
posted by GenjiandProust at 2:42 PM on August 23, 2016 [5 favorites]

Cash is a hassle, ultimately, so it seems to be much easier for small businesses to get started with a Square account and a product.

I guess this is anecdote vs. anecdote but the opposite is true in my experience: I've never been to a card only business, but I've been to plenty of cash-only restaurants. Especially for small businesses the hassle of cash may be outweighed by the ability to...fudge the law...afforded by cash.
posted by Sangermaine at 2:47 PM on August 23, 2016 [7 favorites]

thefoxgod, you must have not tried to buy a drink or a snack on an airplane lately. No cash accepted - at all. In fact, while I imagine you can still buy an airline ticket for cash, I imagine it will cost you at least a trip to the airport to do so.
posted by scolbath at 2:47 PM on August 23, 2016

Is this a Europe thing right now?

See How a Cashless Society Could Embolden Big Brother.
posted by adamgreenfield at 2:48 PM on August 23, 2016

Since people here seem to be discussing negative interest rates as if they were purely theoretical, some info on negative interest rates that have been implemented in the EU and Japan: Bloomberg, Investopedia, The Economist.
posted by Sangermaine at 2:51 PM on August 23, 2016 [2 favorites]

And here in the UK, too, Sangermaine. NatWest is moving to negative-interest business accounts.
posted by adamgreenfield at 2:53 PM on August 23, 2016

See How a Cashless Society Could Embolden Big Brother.

Wow, it's...disturbing to see how easily people are suckered in by bank propaganda.
posted by NoxAeternum at 2:54 PM on August 23, 2016

Yeah banks sure do stand to lose a lot by becoming the universal middleman to every transaction once we get rid of cash. Boy do they hate being middlemen, I tell you what. We all done swallowed their propaganda whole. Tear the scales from our eyes, NoxAeternum.
posted by indubitable at 2:58 PM on August 23, 2016 [4 favorites]

I guess there's a lot of national and regional variation when it comes to financial matters. To me negative interest sounds like a cthuloid horror, but in other places the Overton window was moved some time ago.

Now that I think about it, the movement toward minting coins instead of paper money is probably helping to prod Canadians toward a cashless society. Since we have $1 and $2 coins instead of bills, many people don't carry around a lot of cash anymore. It's heavy and clinks in your pocket when you move. Cheaper for the government to make, but less useful for consumers than paper.
posted by Kevin Street at 2:59 PM on August 23, 2016 [1 favorite]

thefoxgod, you must have not tried to buy a drink or a snack on an airplane lately.

Yeah, never bought anything on a plane in my life (despite being a shiny metal frequent flyer).

I have seen quite a few cash-only restaurants / trucks here in LA. Never a no-cash place. And plenty of service businesses that prefer cash (especially for tips, presumably so they can avoid reporting them).

Japan is definitely the opposite end of this, though, as cash is supreme.

Cheaper for the government to make but less useful for consumers than paper.

Agreed, although we are in the minority on MeFi with that opinion based on past threads. I absolutely hate coins and am happy the US has stuck with the $1 bill.
posted by thefoxgod at 3:02 PM on August 23, 2016

(I should point out that the Atlantic piece is by Sarah Jeong, another reliable guide to this space, and not by any stretch of the imagination someone likely to be taken in by self-serving propaganda on the part of any institution. I do dislike the "Big Brother" phrasing, but writers are almost never responsible for the headlines their pieces appear beneath.)
posted by adamgreenfield at 3:04 PM on August 23, 2016

They don't hate being middlemen. They hate being held accountable. Which is what Chokepoint was about - forcing the financial industry to stop turning a blind eye to fraud. The argument that they can't process payments for Alexander because of the government was absolute bullshit. And they get away with it because the people reporting seem to not actually understand. Case in point - this comment from the piece:

Looking at the FDIC bullet point list of “high-risk” industries, it’s strange to see a list of a handful of actually-illegal activities (e.g., “scams” and “Ponzi schemes”) alongside legal vices—gambling, tobacco sales, and pornography.

Actually, it's not strange at all to see that, because fraud and vice (legal and otherwise) have always gone hand in hand, because one of the fraudsters greatest tools is shame.

So yeah, I have a problem with the argument of "the government is preventing the banks from processing this" getting swallowed wholesale.
posted by NoxAeternum at 3:08 PM on August 23, 2016 [7 favorites]

The negative interest rate in Japan applies to money on deposit with the Bank of Japan. It's intended to spur investment by large banks and corporations. It no doubt has an effect on interest rates for individual savings, but those -- while never high to begin with -- were still positive last time I looked.
posted by oheso at 3:10 PM on August 23, 2016 [7 favorites]

I guess this is anecdote vs. anecdote but the opposite is true in my experience: I've never been to a card only business, but I've been to plenty of cash-only restaurants. Especially for small businesses the hassle of cash may be outweighed by the ability to...fudge the law...afforded by cash.

I'm going to add another anecdote. I've been researching point of sale payment systems for micro-businesses lately (I'm thinking of starting up a side gig). The way that services like Square and can automate things like sales tax collection and reporting make it really tempting to eschew cash sales all together. Especially since my business would be primarily online with only the occasional in-person sales opportunities.

When you combine my lack of interest in fudging any laws, the security issues involved with handling cash, and the additional accounting headaches of counting/reconciling cash, it really may not be worth it to me unless I find myself doing more in-person sales than I predict, AND my customer base wants to pay cash (which is doubtful at the price points I'm targeting but still possible because some people budget their "fun money" using cash).

I can understand why established small businesses might prefer cash -- even the ones who aren't tempted by tax fraud probably don't think that the fees that payment processors charge are worth it. But for new businesses run by tech-savvy folks, paying the processing fee just gets wrapped into the overhead calculation and cash free is less risky and less of a hassle overall.

All that being said, this article did highlight how cashless enterprises will make things worse for the unbanked in a way that I hadn't considered. I will need to consider how the prospect of excluding unbanked folks from my potential customer base should affect my decisions. My side gig won't be selling anyone any essentials of life, but denying someone a meal because they don't have a piece of plastic seems cold.
posted by sparklemotion at 3:15 PM on August 23, 2016 [9 favorites]

They don't hate being middlemen. They hate being held accountable.

I doubt that banks give half a fuck about some marginal added compliance costs weighed against becoming the sole intermediaries of every financial transaction and the fees they can draw from that. The argument that article is making is that electronic transactions centralize control in the hands of the federal government and the few payment and banking giants that handle everything. The fact that you cannot even donate money to someone who is ill without being subject to their (arbitrary) approval is an illustration of the serious problems with that kind of centralized control.
posted by indubitable at 3:38 PM on August 23, 2016 [6 favorites]

One more quote, and I promise to stop for now. (This is a good article!)

What's more important to Ancilla and me is the looming sense of an external watcher that 'assists', 'guides' or 'helps' you in your life, tracking and logging your moves in order to influence you. The watcher is not a single entity. It's a collective array being incrementally built in stages by startups and companies around the world as we speak. We feel it seeping deeper into our lives, a mesh of connected devices, cookies and sensors. Whether we visualise it as the benevolent eyes of a parent, or the menacing eyes of a tyrant doesn't matter. The point is that the eyes have the potential to monitor you, all the time.

We've seen this same concern come up in many different ways over the years. At first it was a debate over advertising, and just how much information advertisers and corporations like Google should be allowed to gather from us. Then there was the debate about government surveillance that reached a peak with Snowden, and now seems to be almost over. Then there was some concern (although not any kind of mass debate) over remote storage of data, and what it means when everything we value is stored in "the cloud." And now maybe there'll be a debate over what kind of control we lose as consumers when there's no options left other than cashless systems.
posted by Kevin Street at 3:43 PM on August 23, 2016 [2 favorites]

Airlines no longer take cash for inflght services. Also, anecdotally, some checkout lines and self-pay kiosks have been credit card only, though cash was still an option in other lines.
posted by forforf at 4:37 PM on August 23, 2016

We've seen this same concern come up in many different ways over the years.

And since the chattering classes tend not to be directly repressed by the state, we'll keep having those debates in isolation, while the technological infrastructure for total surveillance continues to pervade every corner of our lives.
posted by Gerald Bostock at 4:39 PM on August 23, 2016 [2 favorites]

While I was recently in Sweden (a country on the forefront of eliminating cash, and also with strict laws on things like drugs and prostitution), I was thinking about how the abolition of cash, along with mass algorithmic surveillance, could win (at least in the short term) the War On Drugs:

All the government would need to do is to eliminate cash, and then run mass surveillance of transactions. Using just this data, identify individuals meeting certain criteria (i.e., receiving payments in the range of 1x-5x the street price of a drug, at or shortly before peak usage times for that drug, and correlated with fluctuations in the street price), and identify the buyers. And keep watching, gathering data. Maybe take down a drug dealer or two (using parallel construction to give the impression that they were caught by means other than mass statistical surveillance of payments), and then watch where their customers go, and flag more nodes. In parallel with this, train statistical learning machines to identify likely drug-dealer or drug-user behaviours from other factors (legitimate purchases, messaging metadata, geolocation, &c.); it has to be good enough to provide a lead for further investigation, not necessarily to hold up in a court of law.

Then comes zero hour; sweep in, and arrest all the dealers, as well as their suppliers, and everybody involved in the production or importation of the drugs. Keeping up this surveillance would allow any attempts to rebuild such networks to be picked off; the ground would be truly salted.

By then, there would be no means of value exchange that is outside the surveillance network, so setting up parallel underground networks for people to score a line of coke would be unviable. Scoring illegal substances would involve going very far underground, further than the casual user would be willing to go.

Of course, this would involve turning society into a panopticon, far more so than in, say, low-tech East Germany, and abolishing privacy on an unprecedented level, but then again, we've already signed up for that when we accepted that we, as a society, are under permanent siege by paedoterrorists, and that only mass surveillance can have a chance of holding off the existential threat.

This could, of course, be expanded. If a future government decided to ban, say, coffee, or extramarital sex, or crack down on Couchsurfing/Airbnb-style crowdsourced services (down to finding people bartering help without giving the taxman his cut), it could use the same surveillance techniques.
posted by acb at 4:41 PM on August 23, 2016 [4 favorites]

Here is an article from the Boston Globe on the trend.
posted by skye.dancer at 4:52 PM on August 23, 2016

The watcher is not a single entity. It's a collective array being incrementally built in stages by startups and companies around the world as we speak. We feel it seeping deeper into our lives, a mesh of connected devices, cookies and sensors...

[We use cookies to help us improve this site and your experience.
Continue to use the site if you’re happy with this or click to find out more.]

Every action you take must forever be attached to your digital persona, dragging with it a data trail extending back to the day you were born. We face creating an entire generation of people who do not know what it feels like to not be monitored.

"Imagine it has data tentacles everywhere, reaching into browsing and buying records; game worlds; chats; texts; friend networks; phone conversations; airline, banking, utility, and entertainment records; GPS locations; surveillance cameras; whatever. It could know more about us that a spouse or lover knows. It could figure out who we really are, and what we really want—down to the dreams we won't admit to ourselves—and then steer us in that direction, onto new paths that optimize who we are, that lead us toward the lives we're best suited to live." --Linda Nagata, The Red: First Light*

a few things...

1) it doesn't have to be, like taler offers anonymous payments
2) they don't have to be through banks, if something like 'fedwire for all' is adopted
3) here's a nice intro i think to terms and concepts that provides some historical context, which helps define what's at stake: "Economists like to say that money is unique because it is a medium of exchange, store of value, and unit of account. Lawyers and judges have a different story to tell about money's uniqueness. Unlike goods, money can't be 'followed.' " ('where payment is the settlement')

but yea...
This Company Has Built a Profile on Every American Adult

some say it's not about having a list of every transaction you've ever made on record per se but about limiting the consequences/lowering the stakes of that -- 'protecting the person, not the data' -- which of course may be naive, but if it is 'out there' already, (somehow) regulating what can and can't be done with such information might be the 'best worst' option! but then the price of freedom is eternal vigilance anyway :P
posted by kliuless at 4:52 PM on August 23, 2016 [3 favorites]

This is morally wrong in so many ways. Most people live from paycheck to paycheck. Imagine losing what little you have saved away because someone in a suit somewhere decided you need to spend more.

There is nothing inherently immoral about negative interest rates. 3%, 2%, 1%, 0%, -1% are just numbers on a continuum. It is just a mental fallacy to think that there is something special about -1% especially considering that, say 2% interest in an environment of 3% inflation is effectively a negative interest rate.

The Paradox of Thrift tells us that if everyone saves then we all become poorer. Negative interest rates may be necessary to keep us all from becoming unemployed and poorer, as difficult as that might seem to accept.
posted by JackFlash at 5:09 PM on August 23, 2016 [6 favorites]

I've never once had a place that wouldn't take cash in the US.

It was really, stupidly hard to buy my computer at an Apple store with cash. Took something like 45 minutes and 2 sales people plus the manager to make it happen. They actually ended up turning my cash into a pile of prepaid gift cards, then charging those. It was crazy.
posted by ryanrs at 5:15 PM on August 23, 2016 [9 favorites]

I agree with Kliuless above that the problem isn't digital currency per se, it is that we've allowed Visa and Mastercard to monopolize it and profit from it. The federal government could provide digital currency as a free public service, the same way they now provide physical currency as a free public service.
posted by JackFlash at 5:24 PM on August 23, 2016 [4 favorites]

Maybe, but it still has the trackability issue and the ability for government to shut down commerce in any area they want.

Also, whats the advantage? I guess it would be good for people who have trouble getting credit/bank accounts who want to buy things online, which might be useful. But in person cash works fine now, building a federal digital currency/payment system seems like overkill (but again maybe not because of cash not working online... hmm).
posted by thefoxgod at 5:38 PM on August 23, 2016 [1 favorite]

There are an increasing number of places in the US that don't take cash, generally framing it as a hassle or security issue.

If anything, I'm running into more places that don't take cards lately. The Thai place that my team goes to for lunches fairly often only takes cash and it's such a pain to split the checks.
posted by octothorpe at 5:58 PM on August 23, 2016

I work in sales tax. And the lack of paper trail with cash is A Problem on audit. Because without evidence, it was taxable. (Where I work, it's more like a missing invoice. But it's interesting to read tax news out of New York, because that state loves going after mom & pop businesses and raking them over the coals for piss poor documentation)

A lack of privacy is really just fundamental when it comes to taxation. I mean, we can put in protections, so taxing authorities treat people equitably. But you can't have a tax system work without regularly auditing law abiding folks. I was an auditor for a spell, and it was 100% just checking accuracy. There were often errors, but never suspected fraud or criminal activity.

For consumption taxes, most of this auditing happens at the corporate level. We audit the taxes you paid to Amazon by auditing Amazon.

But for income taxes, it's a mixed bag. Most auditing is still corporate auditing, because income and revenue have vastly different definitions. For individuals, it mostly overlaps.

Except for poor people. There are a lot more money transfers that are not income based, simply because there isn't a lot of income. And this lack of banking records kills them. This is why you see sums of money seized until they can prove it was obtained legally.

But anyway, because of my background, I kinda see this level of record keeping as a civic duty. I appreciate that everything goes on the card, so that I don't need to manually track receipts. For me, the problem isn't that we are asking poor people to use banks to engage in a cashless society. The problem is that banks refuse to evolve to provide equitable services to everyone, regardless of income levels.
posted by politikitty at 6:02 PM on August 23, 2016 [5 favorites]

There's always gold.
posted by overeducated_alligator at 6:16 PM on August 23, 2016

There is nothing inherently immoral about negative interest rates.

well said: "If negative rates are a robbery of savers, then positive rates are a robbery of borrowers."

also btw...
-There are two types of negative interest rates
-Negative yields, the euthanasia of the rentier & political economy
-The Politics of Negative Interest Rates

and fwiw, speaking of historical perspectives, the wörgl experiment -- negative rates (+helicopter money ;) -- if adopted more widely could have headed off the great depression! "We'll never know what would have happened, because the Austrian Central Bank closed down the Worgl experiment, and the same month he took office in March 1933, Roosevelt did the same to the stamp scrip currencies."
posted by kliuless at 7:34 PM on August 23, 2016 [4 favorites]

oh and just to note that the inspiration behind the worgl experiment was silvio gesell, who among other things: "considered himself a world citizen and was inspired by Henry George to believe that the Earth should belong to all people, regardless of race, gender, class, wealth, religion and age and that borders should be made obsolete. His land reform proposal is essentially what is known presently as Georgism."

among which one of its policy prescriptions is for a land value tax and one of the keys for the effective implementation of a LVT is a well kept land registry, so per politikitty and re: taxation, one thing that a digital record of all (property) transactions could net you is a '21st century georgism' or a global wealth tax:*

"With the register, tax authorities could tell, essentially immediately, if their citizens are using tax havens. Zucman notes that a global register of this kind could have other benefits, helping to combat the financing of terrorism, bribery, and money laundering; public and private corruption might be added to this list. He notes too (and here he will immediately lose some readers) that such a register could facilitate the imposition of a global wealth tax, of the sort proposed, very controversially, by Thomas Piketty..."
posted by kliuless at 8:44 PM on August 23, 2016 [1 favorite]

I've never once had a place that wouldn't take cash in the US.

My barber and at least two restaurants I like to go to ONLY take cash.

Also, isn't it printed right on the actual bills that cash has to be accepted to settle any debts public or private?
posted by hippybear at 8:44 PM on August 23, 2016

No, only the government must accept it unless state law says otherwise

There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services

(I think the wording on the bill: "This note is legal tender for all debts, public and private" means it is legal to use it for private debt, but not required that it can be used for private debt)
posted by thefoxgod at 8:50 PM on August 23, 2016

one reason I always use cash in small businesses: they are charged by interact/credit companies for every transaction. I don't want to cost a small business more money.
posted by jb at 9:17 PM on August 23, 2016

So when I was in customs last week, and they said they only took money orders, they were lying? On the other hand, they all had guns.
posted by maxwelton at 10:28 PM on August 23, 2016

Remember how Margaret Atwood's The Handmaid's Tale begins? The coup starts on a Friday just after work, when American women find that their ATM cards aren't working. Of course most of them have enough cash to get them through the weekend, so long as nothing bad comes up, and the bank'll be open on Monday morning to straighten it out. Over the weekend, something very bad comes up.
posted by Harvey Kilobit at 11:02 PM on August 23, 2016 [2 favorites]

one reason I always use cash in small businesses: they are charged by interact/credit companies for every transaction. I don't want to cost a small business more money.

My retail business paid about 2% on credit card processing charges in July. We pay 0.2% to our credit union for cash deposits (if we exceed $10k/month). So yes, on those terms, someone paying us cash does save us a little bit of money. (For a larger retailer, the cost of cash handling would be greater and the cost of credit card handling likely lower.)

But then there's a week when you get hit with a $300+ chargeback from a fraudulent card transaction and two counterfeit $100 bills slip past your staff and you realize you can get screwed pretty hard with cash and cashless.
posted by jimw at 11:02 PM on August 23, 2016 [3 favorites]

We face creating an entire generation of people who do not know what it feels like to not be monitored.

Some commentators have said that this is actually a return to the mediaeval mindset, when people believed that God and His recording angels were watching and judging their every move. We've just mechanised the recording angels, and turned the final judgment into a rolling, continuous judgment.
posted by acb at 2:25 AM on August 24, 2016 [3 favorites]

There is nothing inherently immoral about negative interest rates. 3%, 2%, 1%, 0%, -1% are just numbers on a continuum. It is just a mental fallacy to think that there is something special about -1% especially considering that, say 2% interest in an environment of 3% inflation is effectively a negative interest rate.

Maybe not on centralized banks used only as a depository by other banks, but they're certainly immoral on consumer (FDIC-insured, 6-figures-at-most) bank accounts. If I have ten thousand dollars sitting in a rainy-day account, and the interest rate shifts from 0% to -1%, what exactly am I going to do with it instead? I'm going to look for the savings instrument that costs me the least, because I can't afford the volatility of the stock market. At 0%, that's a savings account. At -1%, that's "stack of large bills stuffed under the mattress," because most people don't know the first damned thing about federal bonds or whatever. Then you've created all sorts of external problems, and made poor people's lives worse. It's not like most people are holding onto their savings rather than starting up venture capital firms. I'm all for centralized government banks incentivizing the extremely wealthy to reinvest in the larger economy, but when Chase or BofA starts talking about negative interest rates on personal savings accounts, we should start talking about getting the torches and pitchforks.
posted by Mayor West at 4:21 AM on August 24, 2016 [3 favorites]

Came in just to say: CASH CAN BE EXPENSIVE

When you take into account not just the financial costs and risks of storing and depositing cash, but also of having the personnel and/or time to handle money, make change, and transport it around, it's not nearly as "free" as one might suspect.

When you then consider the taxpayers' costs in actually making and maintaining the physical currency, it seems a bit ridiculous that the world isn't heavily investing in digital cash equivalents.
posted by Nutri-Matic Drinks Synthesizer at 5:15 AM on August 24, 2016

All the government would need to do is to eliminate cash, and then run mass surveillance of transactions. Using just this data, identify individuals meeting certain criteria (i.e., receiving payments in the range of 1x-5x the street price of a drug, at or shortly before peak usage times for that drug, and correlated with fluctuations in the street price), and identify the buyers. And keep watching, gathering data.

Spurious correlations
posted by oheso at 5:56 AM on August 24, 2016

Remember how Margaret Atwood's The Handmaid's Tale begins? The coup starts on a Friday just after work, when American women find that their ATM cards aren't working. Of course most of them have enough cash to get them through the weekend, so long as nothing bad comes up, and the bank'll be open on Monday morning to straighten it out. Over the weekend, something very bad comes up.

There's an Asimov short story about a guy who has committed some crime, so the state takes away his ability to use their cashless system. It's a post-scarcity society, so other people sort of take care of him - he has to beg for everything, though, like beg for someone to buy him a sandwich, etc etc.

It would be difficult and expensive for the federal government to create one unified electronic system that covered all transactions, with every state, merchant and banking institution all able to "talk" to each other such that it was easy to surveille people completely and fast. Anyone who has ever dealt with a large institution with many purpose-built systems realizes this. However, I think that the move away from cash could easily generate enough oppressive power, both at the structural level (for the unbanked generally) and at the state-directed level (surveillance, removal of electronic access) to make things pretty shitty for large numbers of marginalized people.

It will be just like it already is, only worse - the people who suffer will be mostly poor people, with the occasional better-off person caught up in a one-time horrible Kafkaesque crisis. That person will write an expose for Mother Jones or Medium or whatever, we'll all be genuinely appalled, and nothing will change because it's far too profitable to extract money and suffering from the poor, and because we live in a class-stratified society where the poorest have almost no ability to make their case heard.
posted by Frowner at 6:31 AM on August 24, 2016 [7 favorites]

Appears thelongandshort.org themselves is not concerned enough to let Tor users access their site. It's just an impassable CloudFlare CAPTCA wall. Anyways, I've read a version of this when it popped up elsewhere or an archive.is link or something.

GNU Taler (code, api) is the solution to the problems of both cash and credit card payments. Taler transactions are always anonymous for the customer, but the customer and exchange together can deanonymize the merchant, meaning Taler is useless for criminal activities like extortion, etc. An exchange sees a merchants income too, so Taler facilitates honest tax declarations by merchants.

Taler transactions are extremely consume minimal resources, making them cheap. Bitcoin transactions cost as much electricity as 1.5 American house holds use is a day! All the code is GPL, which should help avoid rentier payment system monopolies. And customer anonymity means Taler can only be used to model credits, not debts, meaning no reason for expensive settlement or protest procedures. Yet, the customer has a receipt digitally signed by the merchant if they need to involve the courts.

We nailed this one with respect to the technology itself representing the right mix of features. Actually convincing anyone to deploy it remains another matter though. :)

Also, if do you want a digital payment system that facilitates breaking the law, ala buying drugs online, then I'd recommend Z Cash (github) because it offers strong anonymity protections for both merchants along with customers, although the customer anonymity is technically not as strong as in Taler. Z Cash will be expensive in real terms, like BitCoin, but speculators might effectively pay those costs for you so long as Z Cash stays small while seeming promising, much like in BitCoin.

Ain't likely that Z Cash would quickly supplant BitCoin, but if it did then it'd hit the blocksize wall issues much harder, due to anonymous transactions consuming 40kb on the blockchain. That said, Zooke, et al. are far more competent than all the BitCoin core devs, so they'd adopt sensible fixes much faster. These could include deploying Taler exchanges denominated in Z Cash, or using BOLT, either of which should help control costs.
posted by jeffburdges at 6:50 AM on August 24, 2016 [2 favorites]

This discussion about negative interest rates is really interesting when you contrast it with how individuals are encouraged to save against emergencies.

I'm thinking specifically of the thread we had a while back about how women should have an "eff you fund," to make it financially possible to get out of abusive situations. And there is the classic advice to save enough to get you through being laid off--something that's increasingly likely, especially for adults my age or younger.

We really don't know what we want individuals to do; we don't want them to save, but we're also happy to tell them that they have to save in order to be responsible, and blame them for being irresponsible if they don't.
posted by Kutsuwamushi at 8:22 AM on August 24, 2016 [1 favorite]

Almost any transaction system can support negative interest rate if desirable. For cash, print denomination as initial_value - exp(-rate (time - issue_date)) on the bill. Anyone worried can check if issue_date is too far in the past, but normally bills need not stay in circulation so long. A blockchain based currency like BitCoin could obviously embed negative interest rates. Also Taler cold do so. Z Cash maybe no. In any case, there is no obvious reason to fight against negative interest rates, especially not with technical measures.
posted by jeffburdges at 11:06 AM on August 24, 2016

We really don't know what we want individuals to do; we don't want them to save, but we're also happy to tell them that they have to save in order to be responsible, and blame them for being irresponsible if they don't.

I think the answer here is "We want individuals to be wealthy". After all, people need sufficient savings to afford both day-to-day expenses and individual shocks (The "6 months salary" rule, etc); but there's also encouragement to keep spending as quickly/as-much as they can, because that's what drives the economy/makes us Good Citizens. So the only way to combine the two is to have enough coming in that savings can be replenished and any interest penalty doesn't hurt.

For everyone else, though? "Once the rockets are up, who cares where they come down" seems to be apt.
posted by CrystalDave at 11:11 AM on August 24, 2016

Although apparently some central bankers see it that way : "Andy Haldane, Chief Economist at the Bank of England, has .. suggested that all money should become digital, which would permit real-time negative interest rates to be imposed on all of us, thus forcing everyone to spend at once."
posted by jeffburdges at 11:45 AM on August 24, 2016

"instead of Fedcoin, we may just end up with banking-consortia-coin carrying a de jure or de facto govt guarantee..."

Big banks plan to coin new digital currency - "UBS, the Swiss bank, pioneered the 'utility settlement coin' and has now joined forces with Deutsche Bank, Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018..."

There are several rival digital cash systems being developed. Setl, a London-based group founded by hedge fund investors and trading executives last year, also aims to settle financial market payments with digital cash linked directly to central banks. Citigroup is working on its own “Citicoin” solution, while Goldman Sachs has filed a patent for a “SETLcoin” to allow trades to be settled near-instantaneously. JPMorgan is also working on a similar project.

The utility settlement coin, based on a solution developed by Clearmatics Technologies, aims to let financial institutions pay for securities, such as bonds and equities, without waiting for traditional money transfers to be completed. Instead they would use digital coins that are directly convertible into cash at central banks, cutting the time and cost of post-trade settlement and clearing.

The coins, each convertible into different currencies, would be stored using the blockchain, or distributed ledger technology, allowing them to be quickly swapped for the financial securities being traded.

in other news...
-Surprising strong esoteric case for nationalizing the means of production
-The Bank of Japan's Unstoppable Rise to Shareholder No. 1
-Unsettling thought of the day :P

Each technological age seems to have a "natural" system of government that's the most stable and common... Anyway, now we've entered a new technological age: the information age. What is the "natural" system of government for this age?

An increasing number of countries now seem to be opting for a new sort of illiberal government - the style of Putin and the CCP. This new thing - call it Putinism - combines capitalism, a "deep state" of government surveillance, and social/cultural fragmentation.

It's obviously way too early to tell, but there's an argument to be made that Putinism is the natural system of government now. New technology fragments the media,causing people to rally to sub-national identity groups instead of to the nation-state.

The Putinist "deep state" commands the heights of power with universal surveillance, and allies with some rent-collecting corporations. Meanwhile, IF automation decreases labor's share of income and makes infantry obsolete, the worker/soldier class becomes less valuable.

"People power" becomes weak because governments can suppress any rebellion with drones, surveillance, and other expensive weaponry. Workers can strike, but - huge hypothetical assumption alert! - they'll just be replaced, their bargaining power low due to automation.

In sum: Powerful authoritarian governments, fragmented society, capitalism, "Hybrid warfare", and far less liberty.

so besides putin and xi, you could also maybe include abe, modi, erdoğan, duterte... along with (erstwhilers?) waiting in the wings of course like trump, le pen, etc. pushback being that you'd have to maintain at least some semblance of an open society to attract talent given the 'returns' to human capital in an information age...

Here's the best argument that computers could replace doctors, teachers, and even nannies

TBL: Your thesis is that technology has gotten so amazing that we can produce a ton of stuff with a limited number of workers. But this seems like a problem we should be able to solve with monetary policy. The conventional view is that if there’s too little demand for workers, the Federal Reserve can address the problem by expanding the money supply. As more money circulates through the economy, people buy more goods and services until workers get scarce and wages start to rise. What’s different today?

RA: I don't necessarily disagree with that. But imagine that we've got the accelerator all the way down and unemployment starts to fall, and we get growth of real wages. I think at that point we start to see much more investment in labor-saving technology, and that places a limit on how much of growth can flow to workers rather than owners of capital. That creates this constant drag on demand.

The way you get around that is that when you keep your foot on the accelerator, prices rise by more than wages. So real, inflation-adjusted wages fall. And then it's cheaper to employ workers in low-productivity tasks. The result might be that you have 15 greeters working at the Walmart. The result might be that rich people wind up having a larger staff of servants in their households.

But critically, for there to be decent wages for a household staff, for instance, those people need to be living in the same metropolitan area as the people employing them. And the rich don't necessarily want lots of people sharing their metropolitan area with them.

So I don't necessarily disagree with you. I just don't think a world in which employment grows and grows and grows because real wages stay relatively flat is one that is politically sustainable.

on that note...
The Twin Insurgency - "The postmodern state is under siege from plutocrats and criminals who unknowingly compound each other's insidiousness."

From above comes the plutocratic insurgency, in which globalized elites seek to disengage from traditional national obligations and responsibilities. From libertarian activists to tax-haven lawyers to currency speculators to mineral-extraction magnates, the new global super-rich and their hired help are waging a broad-based campaign to limit the reach and capacity of government tax-collectors and regulators, or to manipulate these functions as a tool in their own cut-throat business competition.

Unlike classic 20th-century insurgents, who sought control over the state apparatus in order to implement social reforms, criminal and plutocratic insurgents do not seek to take over the state. Nor do they wish to destroy the state, since they rely parasitically on it to provide the legacy goods of social welfare: health, education, infrastructure, and so on. Rather, their aim is simpler: to carve out de facto zones of autonomy for themselves by crippling the state’s ability to constrain their freedom of (economic) action.

posted by kliuless at 5:26 PM on August 24, 2016 [2 favorites]