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Estonian Economist Suggests Abandoning Cash

timothy posted more than 3 years ago | from the not-so-specieal dept.

The Almighty Buck 454

J-Georg writes "Raul Eamets, professor of macroeconomics at the University of Tartu, proposed today during his TEDx talk that Estonia should stop using cash at all when adopting the Euro as the national currency (Estonian original). He also pointed out that abandoning cash would not be only important for the Estonian economy as a whole but also is a real challenge for both IT and banking sectors and would also improve Estonia's image as an IT-tiger."

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Abandon all your cash (3, Funny)

Anonymous Coward | more than 3 years ago | (#34295508)

I'll take it

Oh man (0)

Anonymous Coward | more than 3 years ago | (#34295514)

Shit's so cash.

Re:Abandon all your cash (1, Insightful)

iammani (1392285) | more than 3 years ago | (#34295538)

If you are the only one with cash and everybody has abandoned it, it would be useless (except to burn it and keep yourself warm may be).

Re:Abandon all your cash (5, Interesting)

naz404 (1282810) | more than 3 years ago | (#34295636)

While we're at it, I propose the removal of the artificial rounding off of citizens' bank accounts to 2 digits after the decimal point.

It is an outdated model stuck on physical money and a scam run by institutions pocketing the fractions (think salami slicing).

The rise of "paperless" money, rapid currency exchange fluctuations + digital microtransactions at consumer level have made this very feasible.

I want my bank account to be able to say ".0238538327" after the whole numbers' place. If I make games, I want to be able to sell virtual goods at $0.00056 per transaction if I want to. When your audience is the entire internet, small amounts like that can rack up to substantial numbers. I want institutions to be able to do that for me affordably, and I want to see that number reflect in my account instead of being thrown away.

I mean in this age of digital, how much does it cost to actually make/record/monitor a transaction when everything's already digital?

Any takers? Maybe this is an opportunity to create a new startup. Maybe this is a niche that can challenge Paypal. Take it. Run away with the idea. I don't care who implements it, as long as it gets implemented.

Re:Abandon all your cash (0, Troll)

jlarocco (851450) | more than 3 years ago | (#34295750)

Any takers? Maybe this is an opportunity to create a new startup. Maybe this is a niche that can challenge Paypal. Take it. Run away with the idea. I don't care who implements it, as long as it gets implemented.

If you think it's such a good idea, implement it yourself.

Re:Abandon all your cash (5, Insightful)

Gerzel (240421) | more than 3 years ago | (#34295822)

Oh sure. Like most any man on the street he happens to have the time, income to support himself, money to start the project, PHDs in encryption, economics, programming and good expieriance at international diplomacy to implement this himself and not be a lazy ass.

Re:Abandon all your cash (0, Troll)

jlarocco (851450) | more than 3 years ago | (#34295958)

So instead he's just going to sit back and demand that somebody else put in all that effort so he can take advantage of it?

Re:Abandon all your cash (2, Informative)

muridae (966931) | more than 3 years ago | (#34295970)

Who pockets the fractions? So the bank tells you that you get 4.0391759% interest, there is no magical fractions of a penny being made. They round off the number, and pay you from the amount of rounded off payments they get from someone else. All of the money they collect is rounded off from some fraction, but there is no fractional cent being created from thin air.

I know the whole "magic money" thing made for a great plot device in some amusing movies, but can anyone show how it would work? Show your work, double entry book-keeping records for extra credit.

The price of gas (2, Insightful)

poptones (653660) | more than 3 years ago | (#34296092)

Seriously? It ain't that hard to see all around you. The gas station prices their gas something something-point nine. Say it's 2.50 a gallon rounded up, but it's really 2.49.9 - so for every ten gallons you buy, you keep a penny of that 2.50. Whoopee right?

Now you're the government. You tax everyone at 7 percent.A sale of 5.33 now becomes 5.7031 - except it isn't, because registers are set to round up. So it's actually a sale of 5.71. Multiply that by how many Billions of sales in a year? In a year that's probably an extra $15.00 a year from every man woman and child. It may not make the difference between you going broke, but it does add up to those who collect the money.

Re:Abandon all your cash (5, Funny)

Ethanol-fueled (1125189) | more than 3 years ago | (#34295994)

While we're at it, I propose the removal of the artificial limitations of citizens' double precision data to 16 digits with a floating decimal point.

It is an outdated model stuck on cheap hardware and a scam run by institutions paid by institutions pocketing the fractions (think salami slicing).

I want my bank account to be able to say ".0287863987569328746598137649582736985555726938475629835576459837" after the whole numbers' place. If I make games, I want to be able to sell virtual goods at $0.000000000000000000000000056 per transaction if I want to. When your audience is the entire internet and even very poor bushmen from Africa are on it, small amounts like that can rack up to pay for my six-pack. I want computer manufacturers to be able to do that for me affordably, and I want to see that number reflect in my account instead of being thrown away.

Might I suggest an alternative currency (5, Funny)

Anonymous Coward | more than 3 years ago | (#34295518)

Leaves might be a better choice. Given the country's forests every citizen would become quite wealthy overnight and it wouldn't require any additional infrastructure. I believe the next US Congress will be considering adopting leaves in the next session as the new US currency since leaves are worth more than the dollar.

Re:Might I suggest an alternative currency (2, Funny)

jappleng (1805148) | more than 3 years ago | (#34295534)

Then we can all agree that money does grow on trees.

Re:Might I suggest an alternative currency (0)

Anonymous Coward | more than 3 years ago | (#34295544)

Given the country's forests every citizen would become quite wealthy overnight

BREAKING NEWS: Forest fires from coast to coast -- in the middle of winter! Scientists puzzled.

Re:Might I suggest an alternative currency (1)

supersloshy (1273442) | more than 3 years ago | (#34295604)

Leaves might be a better choice. Given the country's forests every citizen would become quite wealthy overnight and it wouldn't require any additional infrastructure.

I know you're joking (hehe), but in reality that wouldn't exactly be true. The more of a currency there is, the less one unit of it is worth. For example, lets say there are a quadrillion dollars in existence; one dollar by itself isn't worth very much. However, if there were only a billion dollars, the dollar is worth a heck of a lot more. Same with leaves; the more leaves there are, the less each leaf by itself is worth. Every time someone plants a tree and waits for it to grow (err, that might take a while, but disregard that) the value of the currency drops, thus inflation.

Re:Might I suggest an alternative currency (2, Funny)

Anonymous Coward | more than 3 years ago | (#34295622)

I know you're joking (hehe), but in reality that wouldn't exactly be true. The more of a currency there is, the less one unit of it is worth. For example, lets say there are a quadrillion dollars in existence; one dollar by itself isn't worth very much. However, if there were only a billion dollars, the dollar is worth a heck of a lot more. Same with leaves; the more leaves there are, the less each leaf by itself is worth. Every time someone plants a tree and waits for it to grow (err, that might take a while, but disregard that) the value of the currency drops, thus inflation.

We can solve that problem (and effectively revalue the leaf) simply by burning down all the trees.

Re:Might I suggest an alternative currency (1)

demonlapin (527802) | more than 3 years ago | (#34295854)

One person gets the joke...

Re:Might I suggest an alternative currency (3, Insightful)

guyminuslife (1349809) | more than 3 years ago | (#34295766)

You clearly have not read The Hitchhiker's Guide to the Galaxy series. (I believe it was Restaurant.) If you had, you would know that the early Earth colonists' solution to this particular inflationary dilemma was to burn down all the trees. Problem solved.

I suggest you bow your head and accept that you have been judged on your geekdom, and found lacking. You may recover some lost face by immediately purchasing or borrowing a copy of The Ultimate Hitchhiker's Guide [amazon.com] .

Re:Might I suggest an alternative currency (1, Insightful)

blue trane (110704) | more than 3 years ago | (#34295864)

In fact the value of currency is psychological. If one dollar buys one candy bar, why should that change if there are more dollars? Nothing has really changed in terms of the candy bar's production costs. The only reason the price would go up is if the shopkeeper decides I'm going to gouge the buyer because he suddenly has more money. But if the shopkeeper already has enough money to get what he wants, why should he raise prices?

Re:Might I suggest an alternative currency (1)

Fareq (688769) | more than 3 years ago | (#34295930)

Because there needs to be some inherent balance between the availability of money and the availability of things to buy with it.

If suddenly there were zillions of dollars lying about, candy bars sold for only $1 apiece would sell out everywhere, and there'd be a huge shortage of candy bars until someone had the bright idea to charge more for them -- enough more that they could handle the demand.

Re:Might I suggest an alternative currency (0)

Anonymous Coward | more than 3 years ago | (#34295948)

If the world went to hell, I wouldn't prepare by buying gold. I'd buy, cigarettes, liquor, and bullets. Nothing wants to make you smoke like a nuclear ice-age.

Re:Might I suggest an alternative currency (5, Informative)

ChatHuant (801522) | more than 3 years ago | (#34295974)

In fact the value of currency is psychological.

In fact it's not. Or more precisely, not only.

If one dollar buys one candy bar, why should that change if there are more dollars? Nothing has really changed in terms of the candy bar's production costs.

The price of an item is a function of its scarcity and of the effort required to create it. If everybody had lots of money, nobody would be willing to work to create more candy (why bother making candy for a buck a piece, when you can just shake the money tree in the backyard, and get more bucks with less effort?). So candy becomes a scarce resource, and everybody competes for the same limited amount of candy. The only way to get the sweet luxury is to pay more. The price of candy goes up, and will continue growing until either people give up on candy, or the price becomes high enough that making candy becomes profitable again.

Re:Might I suggest an alternative currency (1)

reasterling (1942300) | more than 3 years ago | (#34296058)

Money is a medium for the exchange of goods or services.

The value of the effort (labor + monetary cost) that the shopkeeper put in to get the candy bar needs to be reflected in the value of the money you spend for the candy bar if the shopkeeper is to break even. if you can acquire the cost of the candy bar with less effort than the shop keeper can then the shop keeper will eventually go broke.

To use the tree leaf idea if the shopkeeper said the candy was worth 30 leaves and it took you less then a minute to pick those leaves then you are saying that the candy bar is worth less than one minute of labor. By extension if everyone on average increased their income by 50% then the cost of goods must go up accordingly, or else your goods would actually diminish in value.

In the end the price of a thing is not really determined by the dollar amount by rather by what you had to do to get the dollar.

Re:Might I suggest an alternative currency (2, Informative)

demonlapin (527802) | more than 3 years ago | (#34295732)

There's only one problem: when leaves become currency, everyone becomes immensely rich. But there is a small inflation problem owing to high leaf availability. Unfortunately, it takes something like three major deciduous forests to buy one ship's peanut.

Re:Might I suggest an alternative currency (1)

blue trane (110704) | more than 3 years ago | (#34295840)

Think about the root causes of inflation. Just because more money is available, why does that mean anyone HAS to raise prices? The only reason to raise prices is you want to create artificial scarcity. Inflation due to increased money supply is a choice, not a natural law.

Re:Might I suggest an alternative currency (1)

cetialphav (246516) | more than 3 years ago | (#34295936)

The sudden availability of money does not mean an instant increase in the production capabilities of the economy, but it will increase the consumption of the economy. In other words, there will be a supply/demand imbalance. Everyone will become very rich and be able to buy anything they want and so they will go on a shopping spree. Shops will start to sell out of goods and the factories will be unable to supply new inventory at a fast enough rate, so merchants will be forced to raise prices until they can maintain their inventory at a decent level. This will lead to an inflation cycle throughout the economy until an equilibrium gets reached.

Re:Might I suggest an alternative currency (2, Insightful)

Vaphell (1489021) | more than 3 years ago | (#34295938)

it is a natural law of economics. Everything except Imaginary Property has some hard limits built in. When you increase pool of money everybody is willing to pay more in nominal terms to be able to put the hands on desired goods which are not infinite in supply, thus prices are bid-up and new equilibrium is achieved thanks to the supply and demand mechanics. If you are not willing to bid, you will never buy anything with your watered down money. If you are a producer, you are killing your profitability and survivability when prices of everything else rise and yours do not.

Re:Might I suggest an alternative currency (2, Insightful)

Fareq (688769) | more than 3 years ago | (#34295946)

OK, fine. Nobody raises prices. Instantly all products sell out, since everybody has enough money to buy everything they need, everything they want, and everything that they feel like buying because its just lying there. Only there isn't enough stuff in the whole world to fill everybody's needs, wants, and whims. So people start fighting over the last few items. Someone offers to pay double, then someone offers to pay double that, etc.

On the subject of economics and money... (3, Interesting)

complete loony (663508) | more than 3 years ago | (#34295540)

... I highly recommend people read up on the work of Steve Keen [debtdeflation.com] .

a professional economist and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous debts accumulated in Australia, and our very low rate of inflation

Re:On the subject of economics and money... (4, Informative)

Orgasmatron (8103) | more than 3 years ago | (#34295626)

Steve Keen knows his stuff. I highly recommend his blog to anyone interested in economics, even though I disagree with several of his conclusions and proposals.

He was recently able to give the full (long) version of his standard presentation in Michigan. Go watch it. http://www.debtdeflation.com/blogs/2010/11/15/why-credit-money-fails/ [debtdeflation.com]

Have a point (1)

gmuslera (3436) | more than 3 years ago | (#34295548)

Money won't be zero... just will be an undefined variable.

no thanks (5, Insightful)

Trepidity (597) | more than 3 years ago | (#34295550)

So I won't be able to give $20 to a friend without: 1) being tracked; and 2) giving a cut to some payment processor like PayPal? I'd rather use cash.

Re:no thanks (1)

hipp5 (1635263) | more than 3 years ago | (#34295566)

So I won't be able to give $20 to a friend without: 1) being tracked; and 2) giving a cut to some payment processor like PayPal? I'd rather use cash.

Hmm, maybe there's a way for the mint to be in charge of the digital cash. There is already a non-zero cost to making money. Perhaps that cost could be used to implement digital money without a middleman.

Re:no thanks (1)

KermodeBear (738243) | more than 3 years ago | (#34296034)

Or you could just use cash, and not pay for all of the expenses of the machines and the staffing, plus not have the big brother factor.

Re:no thanks (4, Insightful)

0123456 (636235) | more than 3 years ago | (#34295570)

So I won't be able to give $20 to a friend without: 1) being tracked; and 2) giving a cut to some payment processor like PayPal? I'd rather use cash.

But that's the whole reason for governments wanting to eliminate cash: it means every transaction will be taxed and no transaction will be possible without their permission.

Well, except that everyone will start using US dollars or whatever for their free market transactions.

Re:no thanks (1)

0123456 (636235) | more than 3 years ago | (#34295576)

But that's the whole reason for governments wanting to eliminate cash: it means every transaction will be taxed

Actually, I meant to write 'tracked', but it's pretty much the same thing :).

Re:no thanks (3, Insightful)

guyminuslife (1349809) | more than 3 years ago | (#34295782)

Or Euros because the currency in question is the Euro, and it's already printed and minted in Europe where this is taking place.

Barter is the workaround when cash is abolished (1)

Anonymous Coward | more than 3 years ago | (#34295824)

Barter is a solution which leaves Big Brother out of the loop, as long
as what is involved doesn't require a transfer of title, as in the case of
cars or real estate. Even then there are workarounds, the details of which
I will leave as an exercise for the reader.

Re:Barter is the workaround when cash is abolished (1)

Jeff DeMaagd (2015) | more than 3 years ago | (#34295888)

Barter is an option even when there is cash, it's been a form of trade before there was any kind of currency. The problem is, in order to be reasonably convenient, each party has to have something the other wants. If that's not true, then one of the parties is going to have to trade with other parties to get what the other party wants. That problem is a reason why currency was adopted in the first place, it made trade so much easier, since one side of the trade is always in something everybody wants because it's easily exchangeable with everything else, that allowed for much more efficient commerce.

Estonian commerce giving up paper money doesn't mean it can't be traded, Euros are still printed. It would be a little harder to move as you'd have to leave the country to really spend it above the table.

Re:Barter is the workaround when cash is abolished (1)

kvezach (1199717) | more than 3 years ago | (#34296076)

Maybe high tech barter could make use of algorithms like those used for organ transplant networks [eurekalert.org] to match those who have and those who want. The problem is similar: find a chain of exchanges, not too long, so that you end up with the item you want.

Not exactly (1)

pizzach (1011925) | more than 3 years ago | (#34295836)

I would much prefer to think it would force the comeback of the barter system. Either that or local community currency.

Re:no thanks (0)

Anonymous Coward | more than 3 years ago | (#34296032)

The ability to exist, something that DOES require money, should not be dependent upon infrastructures that have not proved sustainable beyond political, natural, or human other forces.

For those of you who do not understand what I'm talking about, I refer you to the global economic collapse of 2008 as the most recent reference point. Go study a bit more of human history, and you'll find out just how unstable we are as a civilization.

Re:no thanks (3, Insightful)

iluvcapra (782887) | more than 3 years ago | (#34295584)

Use virtual cash to buy ounce of silver, hand silver to friend. Another serous problem is that, if this were done in the US for example, you'd probably have people starving to death because they have bad credit, or at lest you'd be giving banks a huge potential to become rentiers. A solution would be to create a banker or last resort, like a postal banking/remittance system that will do business with anyone.

Re:no thanks (-1, Troll)

Anonymous Coward | more than 3 years ago | (#34295684)

> if this were done in the US for example, you'd probably have people starving to death because they have bad credit

That's not a bug; it's a feature

Re:no thanks (3, Insightful)

Kjella (173770) | more than 3 years ago | (#34295814)

if this were done in the US for example, you'd probably have people starving to death because they have bad credit

Heard of debit cards? They're very common over here in Europe and go directly against your bank account. As long as you are using an online terminal, like pretty much every grocery store has, then the card will only work if you have money. The only people taking something on credit would be private transactions or backup solutions if the terminals are offline, everyone who regularly handles money today would get one if they don't already. What I don't like around here is that they're using the "by volume" argument to say removing cash is not a problem, which is ridiculous. It's no secret that I do groceries and pay for utilities and insurance and so on, but maybe I don't want that medical specialist or strip club or whatever on there even if they make up 1% of the volume. Same with my location, I'm often at home or at work so by duration I mostly don't care if everyone knows where I am. Again, it's the exceptions that matter.

Re:no thanks (1)

Idiomatick (976696) | more than 3 years ago | (#34295906)

They do have 'debit cards' in the states. But there they generally are in reality credit cards. The thing that makes them similar is that they are credit cards with automatic payments and punishments if you go over.

Re:no thanks (1)

im_thatoneguy (819432) | more than 3 years ago | (#34295898)

You can buy things on Debit without any credit.

Re:no thanks (1)

Fareq (688769) | more than 3 years ago | (#34295966)

However, with sufficiently poor credit, it becomes impossible to even open a checking account.

Re:no thanks (1)

grumbel (592662) | more than 3 years ago | (#34295666)

So I won't be able to give $20 to a friend without: 1) being tracked; and 2) giving a cut to some payment processor like PayPal? I'd rather use cash.

Anonymous electronic payment exists, they would simply have to implement a solution that makes use of it.

Re:no thanks (0)

Anonymous Coward | more than 3 years ago | (#34295920)

Anonymous electronic payment cannot exist in a cash free society. Think about it. You go to buy one of those prepaid Visa or Mastercard debit cards using only electronic means, which means they can track the card back to your account, which means they know where, when and how you spend that money.

Re:no thanks (0)

Anonymous Coward | more than 3 years ago | (#34296070)

There are just too many audit trails in place for cashless anonymous transactions. To boot, if there are places that don't send info of transactions to FinCEN, they will end up compliant or shut down.

E-Gold anyone?

Re:no thanks (4, Interesting)

jc42 (318812) | more than 3 years ago | (#34295682)

So I won't be able to give $20 to a friend without: 1) being tracked; ...

Yup; and this is exactly why it won't be implemented, not in Estonia, not in the US, not in any other country.

A more illustrative example would be: You want to give $20,000 to your favorite local politician, in exchange for "consideration" during part of the law-making process. This only works well if your "gift" can't be tracked and be made known to the voters (and to legal authorities).

The recent election in the US is a good example. Political gift-giving used to be mostly public information. But recently, our Supreme Court changed the rules, making it legal for anyone to give money to politicians and keep the source of the money a secret. So before this election, political contributions went up roughly an order of magnitude over what they had been in previous elections. Mostly to the Republicans, but the Democrats got a large increase, too.

This would be very difficult with an all-electronic money system. The political system relies on the non-tracability of most of the "gifts". So we can trust that the politicians who got elected won't pass laws that eliminate the money that put them in power.

All the recent news of financial systems being "hacked" and their information made available to the wrong people is all the proof our politicians need that electronic money can't be trusted to keep a secret. So they won't allow it to happen while they're in office.

Re:no thanks (1)

Shakrai (717556) | more than 3 years ago | (#34295772)

But recently, our Supreme Court changed the rules, making it legal for anyone to give money to politicians and keep the source of the money a secret.

Actually, no, SCOTUS said nothing of the kind. Citizens United dealt with speech, not money. The current anonymous groups are using loopholes in the tax code that existed long before SCOTUS ruled on Citizens United.

Re:no thanks (1)

morari (1080535) | more than 3 years ago | (#34295812)

That's how I feel about stores and gas stations, not just friends. I don't like being tracked, and rarely use my debit card. Online purchases make it unavoidable and is really the only area where I accept it as a necessity.

Re:no thanks (1)

kwerle (39371) | more than 3 years ago | (#34295818)

So I won't be able to give $20 to a friend without: 1) being tracked;

On a piece of paper, write "IOU $20". Sign it. Or do the same with GPG.

and 2) giving a cut to some payment processor like PayPal? I'd rather use cash.

Paypal won't take a cut of anything that small if you pay right.

But in general I tend to agree. Of course greenbacks will remain available for that kind of thing for quite a while, I think.

Re:no thanks (4, Insightful)

khchung (462899) | more than 3 years ago | (#34295880)

Please don't use the broken banking system in the US as your reference.

I have no problem doing instant electronic bank transfer of 20 bucks into my friend's bank account at no extra cost to either of us. In fact, we often settle the our lunch bills this way.

Only in America's broken system would you run the risk of losing money by just giving people your account number.

Yes, it made it possible for the govt to find out these records. But you have to fear being taxed only because of America's broken income tax system. Other people in sane countries don't have that problem at all.

Re:no thanks (0)

Anonymous Coward | more than 3 years ago | (#34296012)

Why does everyone assume that it is impossible to develop an electronic means of anonymous money transfers?

Without cash... (5, Insightful)

arunce (1934350) | more than 3 years ago | (#34295586)

No way. Economies can't work without thieves or corrupt politicians. Even if something emerge to fill the gap, like gold, drugs, diamonds, name it, the neighbor country with real cash would get the benefits. At the bottom, cash on your pocket grants some privacy... and security.

Re:Without cash... (1)

cheekyjohnson (1873388) | more than 3 years ago | (#34295680)

Economies can't work without thieves or corrupt politicians.

Or scarcity. It especially loves that, even if it's artificial.

Re:Without cash... (1)

khchung (462899) | more than 3 years ago | (#34295960)

At the bottom, cash on your pocket grants some privacy... and security.

Your idea of security might change after you have been pickpocketed, or robbed, or just plain dropped your wallet a couple times.

Personally, I feel LESS secure when carry any significant amount of cash (ie large enough that would very much care if lost).

I pay for anything over ~20USD by credit card or electronic payment. If all the money I carry was stolen, I won't lose any sleep over it. So if some is to rob me, I would immediate hand over all my cash.

So I feel very secure in the fact that barring some huge worldwide disaster, I can be 99.99% certain that all my money is safe in the bank.

IT-tiger (0)

Anonymous Coward | more than 3 years ago | (#34295608)

Rawr!

Sounds great... (5, Insightful)

Beelzebud (1361137) | more than 3 years ago | (#34295638)

...Until the power goes out.

Re:Sounds great... (0)

Anonymous Coward | more than 3 years ago | (#34295674)

um, in Estonia? Get real.

Re:Sounds great... (1)

AnonymousClown (1788472) | more than 3 years ago | (#34295778)

...Until the power goes out.

Or when you step into the local titty bar. How are you going to put electronic money in her garter?

Re:Sounds great... (1)

Techman83 (949264) | more than 3 years ago | (#34295842)

In aus you buy "Tipping Dollars" which are paper. Smallest note here is a 5 and all the notes are plastic.

Re:Sounds great... (0)

Anonymous Coward | more than 3 years ago | (#34295862)

Easier to hose off at night?

Re:Sounds great... (2, Funny)

UCSCTek (806902) | more than 3 years ago | (#34295868)

Swipe your card through her cleavage.

Re:Sounds great... (1)

Kjella (173770) | more than 3 years ago | (#34295830)

Hmm yeah, because stores never experience that and don't have backup solutions.

Re:Sounds great... (0)

Anonymous Coward | more than 3 years ago | (#34295990)

"Hmm yeah, because stores never experience that and don't have backup solutions."

Their preferred solution around here is to close them and god help if they ever decided to stay open anyways, the clerks can barely make change when the fancy machine tells them exactly what to give you let alone add and subtract without it...

Re:Sounds great... (0)

Anonymous Coward | more than 3 years ago | (#34295882)

Frankly, based on the number of debtor nations (and the levels of debt they're carrying), I think a "power outage" is merely step two in the process toward pressing the "global economy reset button".

Re:Sounds great... (1)

sco08y (615665) | more than 3 years ago | (#34295890)

I've been using EagleCash in Iraq in areas where cell transmissions are spotty at best. It's a smartcard, and it can do a transaction without immediate access to a server.

Re:Sounds great... (1)

khchung (462899) | more than 3 years ago | (#34295900)

Yes, just like the whole computer and internet thingie. You better stick to sending letters by courier instead of sending email, and avoid electric trains, avoid electric heating. Because all those things, you know, go down when the power is out.

And just person to person transactions (1)

Sycraft-fu (314770) | more than 3 years ago | (#34296030)

As of yet there is no good universal transaction system for individuals. Credit/debit cards work fine for businesses that have infrastructure, but not for you and me. Services like Paypal are inconvenient in that you can to access a computer and they take a cut. Checks are rather a pain unless the amount is fairly large. Cash just works real well for small, personal, transactions.

Now that isn't massive, doesn't mean that can economy can't be based on electronic transactions, but in most countries that's already the case. In the US, the EU, etc the electronic databases on the backend are what really keep track of money and where things really happen. Cash is just a small part of things. That's fine, though it may not be the biggest, doesn't mean we should drop it.

I see no particular reason to do anything with cash. It needn't be encouraged, but nor should it be eliminated. People will use it when it is convenient or makes sense, and not when it does not.

I live a largely cashless life but that doesn't mean I don't find a use for it from time to time. Can be as simple as something like loaning a friend a dollar to go buy a soda from a vending machine. It is worth keeping around.

this could be why (0)

Anonymous Coward | more than 3 years ago | (#34295642)

you have never heard of an estonian economist before.

Ironic (2, Insightful)

ebonum (830686) | more than 3 years ago | (#34295662)

This comes out at the same time as I have stopped using credit/debit cards. I've started paying for everything with cash ( minus my web purchases... ). The government's ability to track non-cash transactions has improved to the point where I would rather have my privacy and take my chances with the possibility of theft.

Re:Ironic (2, Insightful)

TarPitt (217247) | more than 3 years ago | (#34295806)

"... take my chances with the possibility of theft."

Compare the chance of a mugging and the average amount of cash in your wallet you would lose

Compare the chance of a mugging and the average amount the crook could charge to your card(s) before you can report it. Maybe you will be able to halt the credit card theft at the regulatory limit of $50, but with debit cards you might not be so lucky.

Now compare the chance of online fraud ("identity theft") or skimmers at an ATM (or other non-intrusive theft) and the potential loss of thousands of dollars along with the value of your time in correcting the fraud

I think carrying lots of cash is less risky than using debit or credit cards for transactions.

Re:Ironic (1)

zorg50 (581726) | more than 3 years ago | (#34295980)

I think carrying lots of cash is less risky than using debit or credit cards for transactions.

It seems like you lumped credit and debit cards together by the end of your argument, after admitting that you're probably not liable for more than $50 in fraudulent charges on a credit card. If you go with a decent credit card agreement, the customer's often not liable for fraudulent purchases at all. Even assuming the $50 limit you provided, how could you argue that it's better to carry a lot of cash (maximum liability: all you have) than to just carry a credit card (maximum liability: $50)?

how will people pay for dope, sex, gambling (1, Insightful)

Anonymous Coward | more than 3 years ago | (#34295664)

illegal goods, illegal help, kickbacks, etc. It sounds like this economics professor thinks the answer is, they can't, and therefore all this crime and shady stuff will go away.

Nice try. Economists tend not to live in the real world. You would've thought that Estonians would remember an infatuation authorities had with the ideas of this guy Karl Marx...

Re:how will people pay for dope, sex, gambling (1, Insightful)

Anonymous Coward | more than 3 years ago | (#34295738)

It would go to gold or precious metals. You can't make gold or platinum, and the ecosystem around those metals is millenia old.

Of course governments will make owning gold bouillon illegal. This means that the transactions will go on, but more hidden.

Re:how will people pay for dope, sex, gambling (2, Insightful)

AnonymousClown (1788472) | more than 3 years ago | (#34295804)

illegal goods, illegal help, kickbacks, etc. It sounds like this economics professor thinks the answer is, they can't, and therefore all this crime and shady stuff will go away.

That's where the black market forms and uses:

1.Another country's currency.

2. Barter

Re:how will people pay for dope, sex, gambling (1, Insightful)

Anonymous Coward | more than 3 years ago | (#34296086)

Since the proposal was made in connection with Estonia's transition to the Euro, they could simply use existing Euro notes and coins from other countries. They are all interchangeable, and even if the local stores don't take any cash, it doesn't stop people from carrying cash for non-traceable uses. Estonia is such a small country that they even have a good justification for carrying cash, in case some authority figure has questions: they could be using the cash on trips abroad.

Worth a shot? (0)

Anonymous Coward | more than 3 years ago | (#34295692)

People are pointing out some problems with this (power outage or system outage makes payment difficult, difficulty of making small personal transactions compared to cash, possibility of government tracking things a little too much). What they've failed to mention is cash isn't the greatest thing either. You can lose cash, it gets damaged, it gets stolen, it needs to be produced and distributed, and just the necessity of counting it eats up a huge number of man hours at banks every day. Sometimes, being able to keep track of payments can be beneficial as well; maybe you'd become less inclined to swipe your card for something you don't need when you see at the end of the month how all the little things add up to a lot of wasted money. I know that using a debit card has done that for me. And so what if they try this for a few years and it does prove to cause more problems than it solves? Then they have a much better banking and electronic payment system in place and they can go ahead and start issuing physical currency again. I highly doubt giving it a shot would cause any irreversible woes.

You all laugh... (1)

neokushan (932374) | more than 3 years ago | (#34295736)

...but isn't this the way things are heading, anyway? And have been for sone time.

How many transactions have you done online this year so far? Our even this month? How about all those card payments you make? Everything from your shopping to your lunch can be paid by card and the rise of NFC being built into every phone will only make this more popular. Its probably possible to live without ever having to take out any physical cash at all. If they come up with a way to let you easily transfer cash to another person quickly, electronically and from anywhere (using your phone, that you already use for other transactions, perhaps?), then you could almost certainly completely dump it if you wanted.

Re:You all laugh... (1)

aristotle-dude (626586) | more than 3 years ago | (#34295856)

I will continue to laugh at stupid people who use their credit cards while travelling to other countries that use a different currency. You are throwing away money because not only do you pay the usual interest but you also pay a "per transaction" currency exchange fee and they rip you off on the conversion rate.

Whenever I travel to another country, I take cash in the local currency of that country before I leave to ensure that I can get the best rate and it also means that I am not spending money that I don't actually have.

If you travel to Japan for example, you might be up the proverbial creek without a paddle if you think that your foreign debit or credit cards will work over there. Most cabs in even Tokyo deal with cash only or cash and Japanese credit cards like JCB.

I like to use cash even at home whenever possible because it is easier to keep track of my weekly spending.

What about vending and video games / pinball games (1)

Joe The Dragon (967727) | more than 3 years ago | (#34295792)

What about vending and video games / pinball games.

Few vending machines are set up for credit cards and the operators have to pay the CC fees.

For video games / pinball games other then the golden tee live games I not see any one take a credit card.

Re:What about vending and video games / pinball ga (0)

Anonymous Coward | more than 3 years ago | (#34295894)

The solution for those is easy, and what Dave & Buster's does; tokens. Swipe your credit card, get some tokens, and drop them in the machines.

What about tipping peopel like bellhops / skycaps (1)

Joe The Dragon (967727) | more than 3 years ago | (#34295808)

What about tipping people like bellhops / skycaps and others who people tip who they don't by stuff from like you would with a bartender / restaurant server.

Re:What about tipping peopel like bellhops / skyca (0)

Anonymous Coward | more than 3 years ago | (#34295846)

Oh, tipping... is that still legal in the States? No taxes paid?

Re:What about tipping peopel like bellhops / skyca (1)

CRCulver (715279) | more than 3 years ago | (#34295884)

Tipping is not a common practice in the EU.

Re:What about tipping peopel like bellhops / skyca (4, Informative)

FatLittleMonkey (1341387) | more than 3 years ago | (#34296064)

In many countries, wait staff are paid a decent working wage so they don't need to rely on tips to survive. The listed price is the price you pay. (In fact, tipping is banned in some industries, such as casinos.)

I've got to agree with the Fundies on this.... (3, Interesting)

Alan R Light (1277886) | more than 3 years ago | (#34295816)

There's much to be said for streamlining financial transactions, but there are limits to what we should allow, for reasons others have stated. There is simply too much opportunity for mischief in an economy where there can be this sort of control.

I'm surprised no one mentioned it, perhaps the /. readership is too young and secular to remember the concerns of Fundies from the 60's, 70's, and 80's, but I will give the relevant quote from the Book of Revelations, chapter 13, verses 16 & 17:

"16 It also forced all people, great and small, rich and poor, free and slave, to receive a mark on their right hands or on their foreheads, 17 so that they could not buy or sell unless they had the mark, which is the name of the beast or the number of its name."

(The number is, of course, 666, or in a few ancient texts 660.)

Regardless of whether one believes ancient prophecies, I think those Fundies had one thing right: Don't trust ANYONE - not even the "Majority" - to have that sort of control over humanity.

Re:I've got to agree with the Fundies on this.... (1)

Garble Snarky (715674) | more than 3 years ago | (#34295944)

But I already have the "mark" of a bank account number..? Even my cash is manufactured by the "Majority". Everyone who exists within society is hopelessly trapped in the system already.

Re:I've got to agree with the Fundies on this.... (1)

Dutchmaan (442553) | more than 3 years ago | (#34296018)

I remember as a kid one of my fundie friends telling me to beware of VISA; something along the lines of VI being 6 in roman and S and A being a 6 in two other cultures which escape me at the time. I've always kept it in the back of my head... you never know! For the record, I have several VISA cards.

Better yet: stop using debt as money (4, Insightful)

Anonymous Coward | more than 3 years ago | (#34295844)

Few people realize that we use debt as money in our monetary system. All those dollar bills and Euro notes? Those are actually IOUs that have to be repaid with interest to central banks. All those dollars in your bank account? They too are just debt markers that have to be repaid with interest. The problem is that in order to repay the interest, new money has to be created; but the only source of new money is new debt, with more interest, that requires more money with more interest ad infinitum.

The net result is that: 1) if all debts in society were repaid there would be no money and commerce would sieze up; 2) all debts can never be repaid because the principle + interest always exceeds the money supply; 3) the amount of debt is always increasing until there is a crash.

Everyone (except bankers) would be better off if we used debt-free money issued by your government, rather than debt issued from privately controlled central banks.
http://www.youtube.com/watch?v=vVkFb26u9g8

Re:Better yet: stop using debt as money (3, Informative)

complete loony (663508) | more than 3 years ago | (#34296100)

You are confusing a stock (debt) with a flow (income). It is quite possible for money to circulate around the economy more than once in a year. Assuming bankers spend the money they make from interest, it is entirely possible for debt's and interest payments to reach an equilibrium in the economy without the continual creation of new debt. See the video from Why credit money fails [debtdeflation.com] linked earlier for more details and simulations of such a working economy. Of course it never works in practice because bankers are greedy.

Euros will still circulate (1)

flyingfsck (986395) | more than 3 years ago | (#34296016)

It will work because Estonia is so small, that everybody will still use Euros on the street, which they can easily obtain from neighbouring countries.

you Faifl It. (-1, Offtopic)

Anonymous Coward | more than 3 years ago | (#34296024)

lubrication. YGou happeN. 'At least

April? (1)

robbrit (1408421) | more than 3 years ago | (#34296084)

Is it wrong that I read this and thought that it was April Fool's?

Hindsight? (0)

Anonymous Coward | more than 3 years ago | (#34296088)

Out of all the countries in the world, Estonia should know the dangers of having such a critical entity such as currency based on digital systems seeing as when they go down [wikipedia.org] they're left in the dark.

What's wrong with cash? (1)

Vskye (9079) | more than 3 years ago | (#34296090)

Seriously, I pay for most things in cash.. minus a few online payments.

People actually look at you as rather odd that your paying for stuff in cash, and then check the money you handed them to see if it's fake or not. Honestly, it's rather insulting.. and screw um. I don't spend more than what I have, nor do I charge shit.. or, spend money I don't have.

What is so wrong about that? Nothing at all.

Wasting mod points commenting on the obvious.

"Professor" has no clue about economics (1, Interesting)

Anonymous Coward | more than 3 years ago | (#34296106)

Professor Eamets seems to have not much of an understanding of economics. I was already skeptical about this and when I forwarded the link to one of my friends who is a prominent economics professor at the Harvard Business School, he immediately confirmed that someone suggesting to abandon cash has obviously no clue about the very principles of economics and that in his 36 years of doing research in macroeconomics he had never heard of Mr Eamets.

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