Supply of paper money shrinking, reader warns
May 17, 2014 at 12:17 a.m.
Editor, the Advocate:
There is a rumored event which would radically disrupt the supply of physical money in America. Various investment sources are indicating our economy will begin a radical shift away from cash and toward an all-electronic money supply. Some even say the Federal Reserve will introduce this program in their June 17 meeting.
Does this rumor have merit? The American Institute for economic research reports that 95 percent of every $100 already exists electronically. Considering today's technology, such as smartphones, computers and other devices, there really is no need for physical cash or coins. It appears conversion to an electronic currency system is inevitable. An advantage of electronic money would be to spur the economy by saving time, mental energy and improving overall efficiency. It will advance globalization and increase the scope and versatility of the Internet. Printing money and minting coins will be eliminated. A big disadvantage is financial privacy would virtually disappear as government and private corporations could have access to all electronic transactions accounts. Also, criminal activity involving "hackers" would increase substantially. The Federal Reserve will gain more power by using the digital printing press for better or worse - probably worse. The reserve operates without direct oversight from Congress or the president. It can pump electronic money instantly worldwide using a computer system called FedWire, which serves as a hub for the world's electronic central banking system.
Many believe an all-electronic money system will never happen in the U.S.; however, a similar event happened in 1933 when President F. D. Roosevelt ordered all citizens to turn in their gold to the Federal Reserve Bank. In addition, there are quite a few U.S. government agencies, businesses and some corporations that already will not accept cash in payment for their goods or services. Also, an emerging system known as "bitcoin" has alarmed our government as this system operates with no central authority or bank managing transactions. Bitcoins are stored in a "digital wallet" that either exists in the cloud or on a user's computer but lacks FDIC insurance protection.
Allen J. Novosad, Edna