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Will Paper Money Survive the Pandemic?

The Greenback is under attack…again.  Some are wondering whether it is time to do away with cold hard cash – not because of inefficiency (it takes time to count and make change) and the lure of criminals, but because it is filthy.  Filthy as in dirty and microbe laden rather than in the sense of being “filthy rich.”  Although there have been no studies about how long Coronavirus can survive on a bank note, research shows that the virus can survive on cardboard for 24 hours and even longer on plastic and stainless steel.

Max Levchin, co-founder of PayPal and founder and CEO of financial tech company Affirm, appeared with Liz Claman last week on FOX Business’ “The Claman Countdown” and indicated that although we will not likely do away with cash anytime soon, the coronavirus may push us in that direction.

“I don’t (know) if it’s going to quite put the final nail in a coffin, but it’s definitely going to push forward,” Levchin told FOX Business’ Liz Claman on Friday. “There’s way too much that travels on a crumpled up dollar bill from viruses to illicit chemicals, so I think it’s a good thing to get rid of paper money finally.”

Obviously, Levchin has a vested interest in seeing the demise of cash, but he is certainly not the only voice to call for moving to a cashless economy.

For example, driven, among other things, by a desire to discourage criminal activity, Sweden has moved very close to a cashless society.

According to a 2018 report by National Public Radio, the number of Swedes using cash continues to drop. At the time of the report, now almost two years old, according to the country’s central bank, the Riksbank, the proportion of retail cash transactions had dropped from around 40 percent in 2010 to about 15 percent.

Recent reports have stated that around 5000 Swedes have gone so far as to have RFID microchips implanted in their hands.  Of course, this concept will get the attention of Christians and others who will interpret these microchips as being the Mark of the Beast prophesied in the Revelation.  However, those events will be accomplished on God’s timetable, not ours. But I digress.

Mini cashless environments already exist in this country. For example, resort properties and cruise ships routinely offer their guests a cashless option while at the resort or on board the ship.

While there seem to be some good reasons to dispense with cash, the government keeps printing money as if there is no tomorrow, both figuratively and literally. Figuratively in that Congress and the President just passed a $2 trillion stimulus package to restart the economy (and there may be another trillion to follow if Nancy Pelosi is to be believed). Literally in that the Federal Reserve ordered 5.2 billion Federal Reserve notes, valued at $146.4 billion for printing in 2020.  If you are interested in the details, almost four billion of the notes were ones, twenties and hundreds.

However, according to the Federal Reserve, the order for 2020 represents an 18% decrease in the number of notes ordered as compared with 2019.

Interestingly, as the financial markets were in a free fall in March, Forbes Magazine reported that companies and individuals were flocking to cash.  Nathan Vardi reported that a number of companies were tapping lines of credit to ensure that cash was available to them to weather the COVID-19 storm.  In addition, in his March 18 article, Vardi reported

“The rush into cash has been intense enough to include physical cash. Over the weekend The New York Times reported that a Bank of America branch in Manhattan for a short period ran out of $100 bills as customers were pulling out tens of thousands of dollars at a time. Bloomberg News reported that a Chase bank branch in the Hamptons had fielded a request for $30,000 in cash that it had to review under its protocols.”

Even though digital forms of payment and currency seem to offer convenience and a safe haven from the pitfalls of having cash on hand, it appears that having a few (or more than a few) Greenbacks in your pocket makes people feel better, especially in a crisis.

As utopian as it may sound, cash money does not appear to be going anywhere any time soon. 

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