Insert on Page 581 (Box 27.2), Titled

¶ … insert on page 581 (Box 27.2), titled "Are the Days of Cash Numbered?" And discuss, giving reasons for your answer. Modern cash - Federal Reserve Notes, are but the newest incarnation of Man's attempt to use simulacra to denote value. Our money is fiat or fiduciary money - the force of the United States Government backs it, as it does the value of the Treasury bond.

Since the 1970's-era breakup of the Bretton Woods system, the value of gold has served as a counter-weight to the value of the United States dollar and rises and falls with political instability, the amount of gold that is mined, and the decisions of central banks to hold gold or dollars (or Euros or whatever) in reserve. In much the same way, paper money is a counter-weight to electronic transactions.

Whereas most of our money is in a bank and electronically represented for us, we remain confident that this may at any time be exchanged for Federal Reserve Notes. It is important to see the idea of a cash-less society in this context. Australia has embarked on an ambitious cashless society project, and in Finland people use their cell phones to buy vending machine projects. The transition of Europe to the Euro was called the greatest logistical endeavor since D-Day, and required over twenty years of consistent political endorsement.

Even as such, Sweden and Denmark are still opposed to the Euro, citing loss of sovereignty. Many vocal conservatives equate a cashless economy with a move toward one-world government. Conspiracy theorists and nay-sayers aside, everyone with a reason to conceal a transaction has a reason to resist a cashless economy, not only Osama's minions and drug dealers but also waitresses who don't report their income.

Alternately, almost everyone with a reason to promote transparency would support a cashless economy; the millions defrauded by Enron and other scandals would breathe a sigh of relief if concealing transactions became nearly impossible. From the perspective of economics, cash transactions still hold merit vis-a-vis electronic ones if the transaction cost is lower, as it is with small purchases. A switch to electronic transactions could make every bank's job easier, making borrowing, lending and investing also less costly than they are now.

Electronic transfers would also be a boon to commercial borrowers; 'unspent' money could be swapped for commercial paper and the like. Paypal is currently implementing such a system. However, small transactions would also require a basis for exchange. Using credit cards and the like to purchase meals is normal, but what of candy or cigarettes? Many smaller establishments would bear the burden of the cost of implementation. Another problem arises when we see the cashless economy in the context of the court system.

If a borrower is delinquent and forced to pay, is he automatically bankrupt? In the current system, such people are flagged by the credit rating agencies, but they are not left penniless. Many people are effectively economically disenfranchised.