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View Poll Results: Are you for or against cashless society without banknotes?
Against cashless society 145 79.23%
Undecided 9 4.92%
For cashless society 29 15.85%
Voters: 183. You may not vote on this poll

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Old 01-21-2019, 01:39 PM
 
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Quote:
Originally Posted by Hoonose View Post
It will not.
A CBDC central bank digital currency will not get rid of hyperinflation. What I said was that in a highly inflationary economy, the government must continually introduce higher and higher denomination banknotes as the banknotes decrease in value. There is not much incentive to introduce coins as inflation will quickly make them more expensive to produce than their face value.

The USA has that problem with pennies and nickels. Now imagine if that happened with new coins every few years.

For example look at Iceland

In 1981 Iceland introduced a new currency that cut two zeros off the old currency. The high denomination banknote introduced is 500 ISK. Although the 500 ISK banknote was worth $80.13 at the beginning, by the end of 1983 it was only worth $17.44

So Iceland must introduce a new 1000ISK banknote in 1984. but by the end of 1985 the 1000ISK banknote is only worth $24.66
So Iceland introduces a new 5000ISK banknote in 1986.

The central bank also introduce a 2000ISK in 1995 but the people don't use it and only tiny numbers are in circulation.

That banknote is sufficient for a long time, but all the banks go bankrupt at once in financial crisis. In December 2008 the 5000 ISK banknote drops to a low of $33.79, and by the end of 2012 the 5000ISK banknote has recovered slightly and is worth $38.84. So Iceland must once again introduce a 10,000ISK banknote in 2013.

As of 14. Jan. 2019 the 10,000ISK banknote is worth $82.73

The three smallest banknotes introduced in 1981 are replaced by coins: 10 krónur pieces in 1984, 50 krónur in 1987 and 100 krónur in 1995. You can buy the banknotes on e-bay for hundreds of times their face value

Uruguay has much worse inflation than Iceland so the problems of keeping cash at current levels are worse. A CBDC won't stop inflation, but it will be much easier to keep pace with.
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Old 01-21-2019, 08:39 PM
 
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Total U.S. circulating currency = $1.7 T
Total M2 Money stock = $14.5 T

That makes us 88% cashless now. So for every $1 in circulation, there's $8.80 of digital money sitting in savings accounts, credit cards, money markets, etc. Most of what we call "money" are just digits on a hard drive on a server somewhere.

Me, I'd say I'm 99% cashless. Virtually all of my transactions are by debit card, credit card, ACH transfers, PayPal, and electronic bill payments. I like it, it's so much more convenient than dealing with piece of paper and little metal disks. About the only time I pay cash is for a CraigsList transaction.
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Old 01-22-2019, 12:47 AM
 
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Quote:
Originally Posted by Elliott_CA View Post
Total U.S. circulating currency = $1.7 T
Total M2 Money stock = $14.5 T
Bankers are referring to this money as "commercial bank money". It is electronic money, but it is ultimately created by debt.

Circulating currency is called "sovereign money" because it is owned by the central bank which operates by charter from the government. What they may introduce in Sweden by this or next year is Central Bank Digital Currency (CBDC) which is digits on a server, but it is not based on commercial debt.


Quote:
Originally Posted by Elliott_CA View Post
That makes us 88% cashless now. So for every $1 in circulation, there's $8.80 of digital money sitting in savings accounts, credit cards, money markets, etc. Most of what we call "money" are just digits on a hard drive on a server somewhere.
But even if you charge every single purchase you make, and you have FDIC insurance on all your bank accounts, the odds are very high that you are not opposed to the existence of banknotes.

Most people (particularly Americans) consider holding banknotes to be a fundamental right as a citizen. A very small percentage of people want to see banknotes eliminated.

Swedes have not had checks for decades. But even in Sweden which is currently circulating only about 21 banknotes per inhabitant, if you poll people they don't want to see the banknote vanish.

In the four major currencies of the world, the currency in circulation (CIC) went up from 2016 to 2017, while GDP often went down, or in the case of the USA went up by an amount smaller than the change in CIC.

CIC GDP change 2016-2017
2.36% -0.21% China
3.69% -7.53% Euro area
4.21% -5.32% Japan
6.43% +3.75% United States
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Old 01-22-2019, 11:15 AM
 
8,499 posts, read 3,655,586 times
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Quote:
Originally Posted by PacoMartin View Post
Bankers are referring to this money as "commercial bank money". It is electronic money, but it is ultimately created by debt.

Circulating currency is called "sovereign money" because it is owned by the central bank which operates by charter from the government. What they may introduce in Sweden by this or next year is Central Bank Digital Currency (CBDC) which is digits on a server, but it is not based on commercial debt.




But even if you charge every single purchase you make, and you have FDIC insurance on all your bank accounts, the odds are very high that you are not opposed to the existence of banknotes.

Most people (particularly Americans) consider holding banknotes to be a fundamental right as a citizen. A very small percentage of people want to see banknotes eliminated.

Swedes have not had checks for decades. But even in Sweden which is currently circulating only about 21 banknotes per inhabitant, if you poll people they don't want to see the banknote vanish.

In the four major currencies of the world, the currency in circulation (CIC) went up from 2016 to 2017, while GDP often went down, or in the case of the USA went up by an amount smaller than the change in CIC.

CIC GDP change 2016-2017
2.36% -0.21% China
3.69% -7.53% Euro area
4.21% -5.32% Japan
6.43% +3.75% United States
I have to disagree with you a bit.

The Fed can create money from thin air, without the associated debt. Historically it has then been exchanged for a like amount of debt.

Sovereign money would also include non-circulating currency.
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Old 01-22-2019, 04:42 PM
 
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Quote:
Originally Posted by PacoMartin View Post
But even if you charge every single purchase you make, and you have FDIC insurance on all your bank accounts, the odds are very high that you are not opposed to the existence of banknotes.
While I prefer to have the cash option available, there's not that much difference between our current state of affairs and a 100% cashless society. If everybody did a bank run and demanded paper dollars in withdrawals, there's nowhere near enough currency in the system to meet all those demands. Either way my demand for cash will not be met.

I guess if the powers that be declared an end to cash, I could live with it, not much adjustment needed.
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Old 01-22-2019, 09:38 PM
 
9,322 posts, read 9,560,447 times
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Quote:
Originally Posted by Hoonose View Post
I have to disagree with you a bit.

The Fed can create money from thin air, without the associated debt. Historically it has then been exchanged for a like amount of debt.

Sovereign money would also include non-circulating currency.
I am not sure what you are disagreeing with. I said that Commercial Bank money is always associated with debt.

The Fed is not a commercial bank, it is a central bank. It can create money from thin air, but they would lose seignorage.

I agree that sovereign money would also include non-circulating currency, but there is very little of that in America. Personally, I think one of the reasons why Sweden considers production figures a state secret is that they keep a lot of cash in vaults in case this relatively cashless society breaks down.

AFAIK, every other nation reveals "production statistics" even if they are simply ordering banknotes from a foreign manufacturer.

Quote:
BANK OF SWITZERLAND
The term “commercial bank money” describes the portion of a currency which is made of debt generated by commercial banks. It is the opposite of “central bank money” or “sovereign currency”, which is issued by a central bank, such as the Swiss National Bank in Switzerland or the Federal Reserve Bank in the U.S.

Commercial bank money is created when banks make use of fractional reserve banking to issue loans worth many times the value of the actual sovereign currency they hold (typically up to 10 times more).

When a bank lends out money which it does not actually have, that money is generated as scriptural money, meaning it only exists “on paper”. This commercial bank money currently makes up a large part of the money in circulation.
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Old Today, 12:30 AM
 
9,322 posts, read 9,560,447 times
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Quote:
Originally Posted by newtocolumbia View Post
You seem to love confusing stats and abbreviations, just like many politicians, who get paid huge salaries for doing nothing just creating more mysterious abbreviations wasting our time making the GP trying to decipher them and the stupid stats.
Partly to try and convince people that banknotes are not vanishing, but in fact are increasing faster than expected, I looked at a report covering the world trends.

I ranked the currencies in order of growth in currency in circulation. We observe that most countries are increasing currency at a rate much faster than GDP growth.

The United Kingdom and the United States have the same growth in currency in circulation despite having radically different changes in GDP.

Sweden may be having some societal backlash in 2018 as they increased their primary banknote (500SEK) which is about 50 Euros, by 16% in 2018.


Growth in Currency in Circulation <=>Growth in GDP (2006 through 2016)
  1. -44% Sweden 22%
  2. -2% Norway -8%
  3. 20% Denmark 8%
  4. 27% Japan 9%
  5. 59% Canada 36%
  6. 76% New Zealand 54%
  7. 78% Switzerland 54%
  8. 79% Eurozone 7%
  9. 81% Australia 63%
  10. 84% U.K. -2%
  11. 87% U.S. 35%
    ---
  12. 89% Morocco 53%
  13. 110% Thailand 83%
  14. 135% South Africa 135%
  15. 148% Oman 46%
  16. 170% Brazil 160%
  17. 178% Russia 165%
  18. 180% Nigeria 179%
  19. 183% Colombia 74%
  20. 191% Kazakhstan 65%
  21. 198% Israel 79%
  22. 208% Kenya 173%
  23. 224% Mexico 85%
  24. 234% Chile 104%
  25. 243% Indonesia 240%
  26. 250% South Korea 69%
  27. 280% Iraq 140%
  28. 287% India 263%
  29. 318% Algeria 44%
  30. 329% Iceland 18%
  31. 350% Pakistan 107%
  32. 355% Ukraine -13%
  33. 359% Turkey 228%
  34. 362% Bolivia 195%
  35. 369% Egypt 213%
  36. 372% Afghanistan 166%
  37. 413% Myanmar 365%
  38. 441% Angola 114%
  39. 442% Mozambique 33%
  40. 522% DR Congo 145%
  41. 621% Sudan 167%
  42. 904% Argentina 135%

China is not on the list as it did not reliably report for all those years. Hong Kong and Singapore and Brunei are basically "banking countries" and are not on the list.
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