Still waiting for the "cashless society" to come along and make greenbacks obsolete? Prepare to wait some more, says Michael C. Keeley. Cash is still king and it's not about to abdicate.
Despite a decade or more of news stories that hard currency would soon go the way of wampum as a medium of exchange in favor of plastic "debit" cards and other electronic marvels, greenbacks, says Keeley, are instead becoming even more popular as a means of payment.Keeley is an economist with the Federal Reserve Bank of San Francisco, the parent bank of the Salt Lake City Federal Reserve branch.
He says a new Fed survey shows that a typical American family pays 57 percent of its bills and purchases by check, 7 percent by credit card and 36 percent with cash a figure said to be "surprising" in its size.
(It doesn't surprise me. I began paying in cash whenever possible two years ago in an attempt to control spending. It works. Writing a check or handing over a piece of plastic creates the illusion of getting something for free. Having to hand over three or four Andrew Jacksons forces one to ask the question "Do I really need this?" Often, the answer is "no.")
Electronic wire transfers to pay for goods and services or monthly bills has not caught on with consumers, said Keeley. Financial institutions and large corporations, yes, average American, no.
The amount of currency in circulation is at an historic high, said Keeley, expanding 35 percent from $148 billion five years ago to $200 billion in 1987. Thanks to the growth in popularity of ATM's (automated teller machines) a big chunk of that mountain of greenbacks is in $20 bills.
So how come our love affair with the long green refuses to die in the electronic age? Well, it's still quicker and more convenient to use cash than checks or credit cards, says Keeley as anyone who has stood in a long checkout line while checks are slowly written, ID's checked and supervisor's approval sought (supervisors are always out back someplace and have to be paged a minimum of three times.)
And then there's the fact that money talks loudly. They may not take your check and they may not even take your credit card. But they'll always take your cash. Even if it's a wadded up lump that you've just pulled out of your grungiest pair of jeans.
Another reason is those ubiquitous ATM's. People no longer have to worry about "banker's hours" to get some cash. Need some midnight money? No problem, just slide in the card, push the buttons and jackpot!
Over the past 10 years, says the Fed, the number of ATM's has grown from 10,000 to 80,000 nationwide.
So stop worrying about the cashless society. Just show 'em the color of your money.