Although the race for the Republican nomination is all but over, Ron Paul has brought issues to the fore that would otherwise have remained obscure. One of his classic refrains – one that has received support in different forms from the likes of Allen Greenspan and Robert Zoellick – is to shut down the Federal Reserve and return to the gold standard. Although this proposal is rarely seen as feasible, a similar movement is picking up steam in both domestic and international contexts: the call to do away with physical currency.
Fans of the West Wing will fondly remember Rob Lowe’s character Sam Seaborn’s passionate diatribe against the penny, which this year our Canadian neighbors decided to get rid of. Author David Wolman, who recently sat down with the New American Foundation’s Global Assets Project for an interview, recently lived without cash for one year as research for his book “The End of Money,” which he initially felt would be a “eulogy meets valentine to banknotes and little metal plugs.”
From a rather modest scope, Wolman’s exploration grew into an analysis of mobile money, the uneven distribution of costs of cash, alternative currencies, banknote design and counterfeiting history. Some of the most compelling reasons he cited in his interview for moving away from cash:
- Manufacturing costs, which are currently 2.4 cents per penny and 11 cents per nickel;
- Cash is the currency of crime, drug trade and tax evasion; and
- In war zones, US dollars in the battlefield are the best payment vehicle for terrorists and insurgents.
NAF's Global Assets Project has made a similar case for national governments to electronically transfer money to beneficiaries of public benefit programs instead of handing out cash. In addition to the efficiency and safety benefits that Wolman cites, depositing public benefits such as pensions directly into poor households' bank accounts, as is done in Peru, has the additional benefits of enabling them to reliably save money and be better prepared for emergencies. Even more broadly, as we have argued in the context of official development assistance, giving funds directly to beneficiaries, as opposed to foreign governments or aid agencies, decreases corruption and has a greater impact on the people we aim to help.
Hear the full sitdown with David Wolman here: