Why do we even have physical currencies in this day and age?

[Grummgug]

The government isn't powerless against gold and silver, nor are we being controlled by paper currency. Gold and silver do not have inherent value and are only given the value people assign it, exactly like paper money. Do you even know why currency came about?

Given a situation where digital currency replaced paper outright, history tells us that its just a matter of time before government becomes so corrupt that they destroy the digital currency. It would likely happen within one generation. Maybe 30-50 years. It takes time for people to stupidly trust such a system. We know this because there are many examples of societies going through it.

After that, gold and silver would make a roaring comeback.

To help you understand why this keeps happening, let's look at something similar that we all should now understand: housing bubbles.

Housing bubbles / real estate bubbles have happened MANY, MANY times throughout human history. Yet they KEEP happening. We just had one in the United States last decade. As the bubble inflated, we heard from MANY confident, smart people that it couldn't possibly happen. People were swayed. They ignored history and allowed it to occur. And then it burst, and many people were hurt.

It will be the same with currencies. Despite the overwhelming evidence that fiat currency is a HORRIBLE idea, despite the numerous currency disasters throughout history, people refuse to learn. I bet what will happen is the exact same thing with the housing bubble. MANY confident, smart people will tell us that a currency collapse cannot possibly happen, that a digital currency is perfectly safe and government won't abuse it. And people will be swayed. They will ignore history. It will be tried. And another currency will be destroyed, and many innocent people will be ruined.

And then we will go back to gold and silver currency. Always happens.

---------- Post added 2012-12-25 at 12:49 PM ----------

Again, an unfair judgement because the situations in which paper (or rather fiat currency, which is what you seem to be arguing against) have been introduced have other circumstances of economic instability. Not to mention the issue of consumer confidence.

Gold is no less 'secure' than paper, ultimately.

Gold survives economic instability. I agree that digital currency is very unlikely to. Corrupt government will destroy its value to try to "stimulate the economy", or rather stay in office.

[Deleted]

I don't know many Dutch people that still carry cash... everyone always uses their bank pass to pay for everything, both in normal stores as online.

I guess you don't get out much. Paying with a bank pass isn't as popular in restaurants (probably because of tips), but it's even impossible in most bars.

You're right about most kinds of shopping though.

[Kardezar]

Not many drug dealers will take your credit card.

[Kurioxan]

Isnt it only about ~10% of all money is in physical form anyway?

Also what are some people on about, inflation has nothing to do with paper money, it has to do with banks borrowing money they dont have and creating it out of thin air, which then devalues the currency since there is more money in circulation than there is "value"

If you truly, truly want to fix the economy, close down stock markets and restrict banking activities to keeping peoples money.
Speculation forms of economy hardly ever work, they give nice bursts of power and strenght for short periods of time followed by nasty periods of recession, its like a drug and should be treated as one...

[Bigbazz]

Physical money has actual value, it is something you can hold in your hand. It represents a value in gold. If you remove physical money then it no longer has any real value, it is not something you can hold in your hand.

With that said, I never really carry any cash with me, as I can pay it with my bank card. Even so, the fact that that money does exist in a physical form is what gives it real value.

[Laize]

Isnt it only about ~10% of all money is in physical form anyway?

Also what are some people on about, inflation has nothing to do with paper money, it has to do with banks borrowing money they dont have and creating it out of thin air, which then devalues the currency since there is more money in circulation than there is "value"

If you truly, truly want to fix the economy, close down stock markets and restrict banking activities to keeping peoples money.
Speculation forms of economy hardly ever work, they give nice bursts of power and strenght for short periods of time followed by nasty periods of recession, its like a drug and should be treated as one...

Actually, you're talking about fractional reserve banking. What they do is by design.

Currently, in the US, banks take deposits. Say you got 100,000 customers who all deposited $10,000 into bank accounts they hold with you and you pay 1% interest p.a.

You now hold $1 billion for them and, by the end of the year, will owe them $1.01 billion.

The government says you can lend out 90% of what you hold in deposits, so you have $900 million you can loan out to people in need of said loans.

You loan that $900 million out in loans averaging 5% interest p.a. By the end of the year you'll have $45,000,000 in what you can call revenue (The rest of the money is on your balance sheet as assets).

From that $45 million you give $10 million to your deposit-holders for interest leaving you with $35 million for paying employees, overhead expenses and profit. Big, successful banks can generally run profit margins around 20%. So that'll give you $7 million in pure profit. It's all yours. You can then take that $7 million and reinvest in your business or pay out to shareholders. Or you can just keep it on the books as extra collateral against defaulting loans.

In the end, a 10% reserve requirement, however, means that whatever money the Federal Reserve creates, the total amount "created" can never go above 10x that much.

---------- Post added 2012-12-26 at 05:08 AM ----------

Physical money has actual value, it is something you can hold in your hand. It represents a value in gold. If you remove physical money then it no longer has any real value, it is not something you can hold in your hand.

With that said, I never really carry any cash with me, as I can pay it with my bank card. Even so, the fact that that money does exist in a physical form is what gives it real value.

Physical money doesn't represent a value in gold. It hasn't done so in over 40 years.

[frogger237]

Do you know how many peoples credit card info gets stolen each year? What about how many people are pick pocketed?

Far fewer people get physically robbed in the US than digitally robbed.

Also its alot easier to manipulate a digital currency (and cheaper for the criminals)than manipulating physical currency.

[Sledfang]

Physical money doesn't represent a value in gold. It hasn't done so in over 40 years.

Physical money represents value in gold equivalent to spot price plus any premium margins. When you cant trade it in for a pre-specified amount according to the physical money, then its not backed by gold.

[gutnbrg]

bc if we didnt have physical currency, i wouldnt be able to do a scrooge mcduck money dive into my vault.

[Gorilla Eyes]

I pay cash for nearly everything at stores. I know how weird it seems.

The reason I do this is I don't have a credit card. I have a debit card, but I much prefer withdrawing cash a couple times a month than checking to make sure each charge went through correctly if I were to purchase things in a store with the card.

[obdigore]

I'm honestly wondering if currency as a whole won't be done away with within 100 years. With the advent of robotics, I would estimate that well over 40% of the world will be out of jobs within 50 years, and with 3d printers and an increase in self-reliance that comes with them, it seems to me that currency itself will go away, unless we wish to again become serfs to the few who control all the robotics.

If we ever wish to become a true spacefaring species, it will be done by those who wish to explore, regardless of monetary gains. Those who wish to create, invent, design, will all do so because they want to, not because they need to for their job.

[shimerra]

I'm honestly wondering if currency as a whole won't be done away with within 100 years. With the advent of robotics, I would estimate that well over 40% of the world will be out of jobs within 50 years, and with 3d printers and an increase in self-reliance that comes with them, it seems to me that currency itself will go away, unless we wish to again become serfs to the few who control all the robotics.

If we ever wish to become a true spacefaring species, it will be done by those who wish to explore, regardless of monetary gains. Those who wish to create, invent, design, will all do so because they want to, not because they need to for their job.

Funny thing is people have been saying exactly what you're saying about technology X for 100s of years, and yet people are still working. You'll have to excuse me if I don't find your predictions credible.

Society already works like that to a great extent. People want to do things and they find a way to get paid to do them. Not everyone's so lucky but life goes on. A financial incentive can be just as powerful as this magical fairy power within you seem to like.

It's kinda like this fiscal cliff coming up. It's been "an imminent threat" to some for 30 some odd years. Or the world is ending nonsense. I mean do you really get credit for predicting something if you call it 100 times but on the 101st time it happened?

[obdigore]

Funny thing is people have been saying exactly what you're saying about technology X for 100s of years, and yet people are still working.

Society already works like that to a great extent. People want to do things and they find a way to get paid to do them. Not everyone's so lucky but life goes on.

I'm aware, from the Cotton Gin to Assembly line robots. I just can't see what the majority of society will do once robots do all the manual labor jobs. People who don't have the mental capacity to hold down high intelligence requiring jobs will have nothing to do, from what I can see. I would love someone to give me some reasonable ideas for what people, in general, will do.

[Feardotwin]

the same reason people like to have things, i.e. possessions are of value to all peoples. Currency is a natural resource developed by us so trading would be so much better and faster.

History is important to learn and not a subject to be passed on in grade school.

This is abit off topic:

Similar to this U.S. debt issue. People need to look back and learn so we can move forward.

[v2prwsmb45yhuq3wj23vpjk]

physical currency creates jobs. there are many people who's livelihood depends on manufacturing currency.

Probably the worst justification. Preventing the advancement of a society because some people will lose jobs is pants-on-head retarded. Should we stop using various technological devices because more people would be involved with solving problems and thus more jobs would be available?

I'm aware, from the Cotton Gin to Assembly line robots. I just can't see what the majority of society will do once robots do all the manual labor jobs. People who don't have the mental capacity to hold down high intelligence requiring jobs will have nothing to do, from what I can see. I would love someone to give me some reasonable ideas for what people, in general, will do.

That's because you're using a 2012 brain.

[shimerra]

I'm aware, from the Cotton Gin to Assembly line robots. I just can't see what the majority of society will do once robots do all the manual labor jobs. People who don't have the mental capacity to hold down high intelligence requiring jobs will have nothing to do, from what I can see. I would love someone to give me some reasonable ideas for what people, in general, will do.

That's my point though, you're not necessarily supposed to see it(on average). And those who do see it coming early are usually the ones who make the big bucks. 50 years ago people "couldn't imagine" what everyone would be doing with the advent of computers. Supposedly Americans would be drowning in free time and we would be a leisure society. Instead on average they're working more while at the same time being more productive than they were 50 years ago.

500 years ago the majority of the human population was employed in food production. Now? Last I remember America has that at like less than 3%. I'm not sure what the future entails either, but history indicates to me that something will be found as opposed to your prediction.

[obdigore]

That's my point though, you're not necessarily supposed to see it(on average). And those who do see it coming early are usually the ones who make the big bucks. 50 years ago people "couldn't imagine" what everyone would be doing with the advent of computers. Supposedly Americans would be drowning in free time and we would be a leisure society. Instead on average they're working more while at the same time being more productive than they were 50 years ago.

500 years ago the majority of the human population was employed in food production. Now? Last I remember America has that at like less than 3%. I'm not sure what the future entails either, but history indicates to me that something will be found as opposed to your prediction.

Ironically the federal government spends a ton of money paying independent farmers to NOT grow crops so they don't decimate the market, then get bought out by the big corps.

My 2012 brain tells me I want to live in a society like the Cultures from the Iain M Banks novels, not the one we have now. I would support any and all moves towards that :P

[Daedius]

Credit transactions are traceable, cash in hand isn't ... hint hint.

[v2prwsmb45yhuq3wj23vpjk]

Given a situation where digital currency replaced paper outright, history tells us that its just a matter of time before government becomes so corrupt that they destroy the digital currency. It would likely happen within one generation. Maybe 30-50 years. It takes time for people to stupidly trust such a system. We know this because there are many examples of societies going through it.

After that, gold and silver would make a roaring comeback.

Sure is a lot of history to back up this claim, given how long we've had digital currency.

Also, gold and silver wouldn't make a comeback even if we went from all digital back to physical.

To help you understand why this keeps happening, let's look at something similar that we all should now understand: housing bubbles.

Housing bubbles / real estate bubbles have happened MANY, MANY times throughout human history. Yet they KEEP happening. We just had one in the United States last decade. As the bubble inflated, we heard from MANY confident, smart people that it couldn't possibly happen. People were swayed. They ignored history and allowed it to occur. And then it burst, and many people were hurt.

It will be the same with currencies. Despite the overwhelming evidence that fiat currency is a HORRIBLE idea, despite the numerous currency disasters throughout history, people refuse to learn. I bet what will happen is the exact same thing with the housing bubble. MANY confident, smart people will tell us that a currency collapse cannot possibly happen, that a digital currency is perfectly safe and government won't abuse it. And people will be swayed. They will ignore history. It will be tried. And another currency will be destroyed, and many innocent people will be ruined.

Talk about something you don't know about that isn't comparable like it is, think you've made a point.

And then we will go back to gold and silver currency. Always happens.
Gold survives economic instability. I agree that digital currency is very unlikely to. Corrupt government will destroy its value to try to "stimulate the economy", or rather stay in office.

Gold as a resource survives economic instability to some degree, not as a currency. There is no fucking way in hell we are ever going to go back to a barter system, period, nor will people start using gold and silver coinage because of the other uses of gold and silver.

[shimerra]

Ironically the federal government spends a ton of money paying independent farmers to NOT grow crops so they don't decimate the market, then get bought out by the big corps.

My 2012 brain tells me I want to live in a society like the Cultures from the Iain M Banks novels, not the one we have now. I would support any and all moves towards that :P

And I'd like to live in a society where I was king of the world and all pursuits were driven towards interstellar/dimensional travel. But the one we have now isn't too bad all things considered.