Deep Dive
Shownotes Transcript
- There's a lot of controversial topics dividing our nation these days. Mind benders like, is a hot dog a sandwich? Do Marvel movies lack imagination? - Yes.
Was the dress blue and black or was it white and gold? And of course, are we headed toward a cashless society? If you haven't noticed, more and more businesses are only accepting digital payments, especially following the pandemic. And some people are pretty freaked out about cash and coins going away for good and whether a cashless society would really look different than the world we live in now. So today we're going to break down everything you need to know and debunk some serious junk too.
But first, let's start with something a little less controversial, giving us the old like, subscribe, and share combo. You know you want to. You've been waiting for it. You've been waiting for me to give you permission. This is your permission, okay? Don't be shy. It's okay to show how you feel. This is a safe place. You sure about that?
All right, so let's start by making sure we're all on the same page about what a cashless society means. Cashless society is one where all physical money, cash and coins, is totally replaced by a digital currency. That means you can't spend or save paper dollars because they're no longer accepted as payment. Just like skinny jeans are no longer accepted as fashion anymore. Thanks a lot, Gen Z. I don't look good in parachute pants, okay? ♪
That means the money in your bank account only exists in digital form. No driving through an ATM to withdraw a fresh stack of Alan Jacksons. Wait, Andrew Jacksons. Not Alan Jackson. Different guy. But remember when cash was king? Remember when cash was king and there was no Google Pay, Samsung Pay, and no Venmo?
All right. The only way to pay for stuff in a cashless society is through digital transfers. And these transfers can be done with debit or credit cards or through digital wallets like Cash App, Zelle, PayPal, Google Pay, Venmo, Apple Pay, or for all three of you, Samsung Pay. Now you might be thinking, wait,
don't we already kind of live in a cashless society? Well, you're not completely wrong. Cash is still king, but because of the convenience factor, a lot of people, including me, make their everyday purchases with cards or apps. Think about it. When was the last time you actually used hard physical cash as your primary payment option? At a garage sale, maybe? I mean, I still personally use cash to get a cash discount at my barber. Shout out to Daniel for keeping me fresh.
Pew Research found that in a typical week, 41% of Americans make absolutely zero purchases using cash. Instead, we just swipe our cards to pay for everything and have our wallets stuffed with receipts, gift cards, gum wrappers, and of course, lens wipes. Don't sleep on those. Literally anything but cash.
But that's not really what I'm talking about when I say cashless society. I'm talking a society where the only physical cash is behind display cases at museums, where no one is paid under the table, and where every transaction you make is traceable because it runs totally on a government-backed digital currency. ♪
So then, what is digital currency? Well, it's created in a computer network and it only exists electronically. Kind of like your Sims, except digital currency can't visit an alien planet or create a custom holiday. Yet. Now hear me say, electronic currency is not the same thing as digital currency. If you look at your bank account balance, you'll see a number that represents electronic currency that can be withdrawn at any time for actual dollar bills. You probably even get your paycheck through an electronic transfer that shows up in your bank account.
The difference between electronic and digital currency is that digital can't be withdrawn from physical cash. It stays digital forever. And if you're thinking, this kind of sounds like crypto, you're right. It's kind of like crypto because crypto is a type of digital currency. But here's the catch. Crypto isn't overseen by a government central bank and it's not legal tender, which means businesses aren't legally required to accept it as payment.
And unless you're dealing with a business that accepts crypto, you've got to convert those coins into actual dollars in order to spend it. Don't ask me how to do it because I'm not telling you.
Because I don't know how. Now, for a cashless society to become cashless, it needs a government-backed digital currency that is legal tender, otherwise known as a central bank digital currency, or CBDC. Now, that C is very key here. CBD, very different. Side effects of CBD include dry mouth, drowsiness, fatigue, and diarrhea. My body would just be like, we're just going to shut everything down. The side effects of CBDC is that grandpa can't slip a $1 Sacagawea coin piece into your birthday card.
So CBDCs are legal tender that can be spent pretty much like cash. Several countries have even created their own CBDCs and the Federal Reserve, our US central bank, is currently in the beginning stages of exploring the pros and cons of its own CBDC that some people refer to as Fedcoin. Not to be confused with FedCon, the hottest science fiction convention and all of Dusseldorf.
And all the Germans said? Thanks, Timo. That was my German friend Timo, who I called in. This started in March of 22, when Biden signed an executive order announcing that the government would look into the potential of a USCBDC because they'd been scrambling to come up with a good response to all of the mining and investing boom of cryptocurrencies like Bitcoin, Ethereum, and Doge. But let's be clear, FedCoin doesn't exist yet. It's just a twinkle in Biden's eye.
Anyway, the Fed's most recent report on a potential CBDC said that it would complement rather than replace current forms of money and methods for providing financial services. AKA, a CBDC would exist with paper dollars, at least at first. The Fed also thinks a CBDC would be safer for Americans because they would be held directly by the Fed instead of a commercial bank, which could be a tad less risky. But for you Xenon girls of the 21st century saying, bring on the future, there's a catch here.
A CBDC would have a huge effect on the banking industry and its customers by drastically reducing the amount of money banks have available to lend. And if the Fed creates a CBDC, it would expect private companies and banks to offer accounts and digital wallets to make spending and saving digital currency possible. Another legitimate concern here is privacy. Because think about this, the government would know exactly how you spend those digital dollars.
Yeah, Uncle Sam would know exactly how often you go to Taco Bell for cheesy gorditas, and that is personal information. The worry here is that if the government holds your money and knows exactly how you spend it, the government could also restrict your spending or just decide to take it. With cash, you're a little bit off the grid and out of reach of Uncle Joe's meddling fingers. So that's why right now the Fed is looking for ways to protect consumer privacy. Unlike other countries and totalitarian regimes,
China, the US actually still values personal freedom. On the other hand, the Fed doesn't want this digital dollar to be 100% anonymous like crypto because it wants to keep people from spending this money on illegal stuff, you know, because drug dealers don't accept debit cards. Not that I would know. They do take Venmo though.
So I'm told. Another concern is that a digital dollar would exclude people who are unbanked and primarily use cash. This includes a lot of citizens like children, the poor, the elderly, undocumented immigrants, and your paranoid friend Steve, who's been hiding bars of gold in between the drywall. I wish I was joking. That's a real thing that's actually happened.
And finally, and this concerns a biggie, tech problems could prevent you from accessing your account, or your account could get hacked. Yes, those problems kind of already exist, but can you imagine if the Fed's CBDC got hacked somehow by Siberian spies? I mean, the American economy would crash harder than, well, pick your poison if things crashing. As you can see, the Fed's got 99 problems, but, uh,
I can't think of anything they... No, they just have problems. The Fed also doesn't plan to issue a CBDC without the backing from the President and Congress. And we all know waiting on Congress to agree on anything is like waiting on the unskippable 30-second ad to finish. It might as well be an eternity.
No, stop. Don't you dare start an ad right now. So basically, don't expect a CBDC anytime soon. I mean, China launched their pilot version in 2016, and it still hasn't gone fully digital. And don't you dare come at me in the comments with, George, have you heard of a little thing called FedNow? Pipe it.
Susan, here's the scoop on FedNow. This year, the Fed does plan to launch its FedNow service. And this is a new platform that allows banks and individuals to send and receive payments instantly between bank accounts. The Fed has said FedNow isn't a form of digital currency and that it doesn't plan to replace cash or other forms of payments. It's similar to existing Fed transfer services, it's just much faster. So transfers that used to take days to clear will be done in seconds. And this is one of the few times we can say, they fixed the problem. Ah!
You know what? I take it back. The government has 99 problems, but an instant transfer ain't one. So yes, we might use less cash nowadays, but our society still has a long way to go before it's totally and completely cashless. In fact, while some countries like Sweden and China appear to be dipping their toes in the cashless waters, there are zero societies on planet Earth that are 100% cashless at the moment. And just because some stores didn't want to accept dollar bills anymore thanks to COVID, that doesn't mean a cashless society is imminent.
I mean, think about how much of your money is virtual already. Does your boss hand you a pile of cash on payday? Probably not. You probably woke up on Friday morning to a nice little direct deposit from your employer and an affirmation you wrote on your mirror that says, "I feed my spirit. I train my body."
I wipe my dog's butts. This is my time. Just my information? Okay. All I'm saying is that you never saw the money you got on payday physically. The only reason you even know you got paid is because some ones and zeros tell you that you did. And come on, you probably pay people through apps like Zelle, PayPal, or Venmo all the time. And side note, you think I don't know what those codes on Venmo mean? Watch this. Casey paid Chris for...
Chick-fil-A. Easy. Troy paid Dan for... Classic. Internet bill. Easy. Heather paid Nisha for... That's a baby shower. Baby shower. And finally, Reed paid Calvin for... Oh. Okay, I know what you're thinking here. Mario Kart party. No, no, no, no. Drugs. 100%. Drugs. Final answer. Hold up.
What I'm trying to say is cash is still alive and well. And like it or not, there are plenty of people who like and rely on using dollar bills. Plus, a big reason I'm still a fan of cash is because when you buy something with cold, hard cash, you really feel it. You got to give up something like that crusty $20 bill to get the thing you want to buy, like a bucket of popcorn and two Cokes at the movies, because that's how much they cost these days.
Nobody can afford the movies anymore. And I'm sneaking in popcorn whether you like it or not. And you would think big businesses would love for all of us to go cashless because it makes it easier for us to spend more when we can just swipe a card or scan our phones. But actually, 85% of business owners say they'll always accept cash.
So take that, cashless society. Not so fast. In fact, cash is actually making a comeback thanks to cash stuffing and the envelope system. Look, there's no need to feel like you're causing the downfall of America by not using cash. Seriously. As long as you have money in the bank, using your debit card is okay. At the end of the day, whatever kind of payment you want to use, debit, mobile wallet, cash...
Just make sure you've budgeted for it first. You've got to have a plan for every expense. And that way, you can tell your money where to go instead of wondering where it all went. It puts you in control of your money and it helps you reach your financial goals. Now, I've mentioned this app a whole bunch on here, but my favorite budgeting app that I personally use is called EveryDollar. And it makes it super easy to plan my money out for the month, keep track of all my transactions, and...
reach my financial goals. So if you want to check that out, I've got a limited time, sweet deal for you all with a two week free trial and 15 bucks off an annual premium subscription. And if you want to check that out, I've got a link for you below. If you like this video, share it with a friend who thinks a cashless society will be civilization's demise, or share it with your friend who can't wait to burn their Benjamins and get digital with it. I'd love to know what they think too. Thanks for watching today's episode. I'll see you next time.
Not to be confused with FedCon, the hottest science fiction convention in all of Dusseldorf. Scotty, be me hoch. Be me hoch, Scotty. You know what I mean? Huh? Be me hoch? Pretty good, huh?