One of those thoughts I've been having. I've been meaning to write about it for a while but I've been lazy and avoiding things which once brought joy to me so yeah...here we are. This is a simpler version of my original thought. Perhaps I'll get around to that one some other day. Wow, has October seen a dearth of posts!
Gresham's Law, simply stated, is "Bad money drives out good if their exchange rate is set by law."
It makes me wonder about the rising use of credit and debit cards. Those cards and things like PayPal are not cash: they're what I like to call "electronic currency". It's digital money that "circulates" with the same value as our cash money and by law, they exchange at a one-to-one rate. So...am I right in thinking that electronic currency is the bad money driving out the good money (cash)?
It's not a rapid withdrawal, but electronic currency is making gains in transactions with each passing year. It is sold to the public by banks as a more convenient, hassle-free way of spending money not that I ever saw the hassle in using cash. As a cashier, cash transactions tend to be noticeably faster (except in those cases where the customer decides that right then and now is a time to go on a fishing expedition - always when there's a line too - through their wallet/purse for exact change. How about while I'm scanning your shit, you take some coins out and put them in your pocket for quick retrieval later?) And I know I can't be the only one who gets suspicious when money institutions want to put a layer between me and my money, and electronic currency [credit money] is definitely a way this is done.
Do I use credit money? Yes. Why shouldn't I? I have ample supplies of cash on hand and as Gresham's Law points out, I have every incentive to use the most debased currency in my transactions when going about my business. But I do wonder about the long-term consequences of forcing cash and credit money to have the same values...
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