Return to a cash economy? I wouldn’t bank on it.

Return to a cash economy? I wouldn’t bank on it.

 At the risk of setting off a spate of break and enters in the suburbs of the post-employed, it must be said that the myth of old people with wads of money stuffed under the mattress is an intriguing possibility. I, for one, remember my snowy-haired mother producing the deposit for the last house she bought from a bed-sock. I don’t think I’ll ever forget the stunned look on the agent’s face, and his repeated disbelief as he counted out the eight hundred fifty-dollar notes… twice - “I was sure you were joking.” In fact, he begged us before leaving not mention the cash to anyone. It was late on a Friday afternoon, and naturally he felt a bit uneasy about having $40,000 sitting in his top-drawer over the weekend.

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 And that’s pretty much it in a nutshell, isn’t it? Old folks have an unreasonable distrust of banks, and none of us feels safe with any amount of cash over a hundred dollars or so.

 Well, actually, I’m not sure about that. I would have thought a certain degree of distrust of banks is an indicator of mental health, rather than its opposite; and as for the hazard of being generously cashed-up, it clearly can be a cause for concern. But is it really more worrying than the all too frequent alternative scenario of the four-digit credit-card debt placed in the hands of those legalised thugs we call ‘debt collection agencies’?

So, as a society, where are we at in our relationship with the banks?

The answer, of course, is that there is no one answer. All that you and I know is what we read or hear in the media. We are almost totally dependent upon the reliability of our sources, and yet we cannot possibly even begin to trust that reliability. It is a law of the media-infested universe we inhabit that for every expert opinion there is an equal and opposite expert opinion. It then becomes a matter of ‘Take your pick!’ Meanwhile, life goes on, and we hear of members of the Big Four slow in passing on the interest rate reduction granted by the RBA, and thereby making extra millions every day. A week later we are told by various bank heads, like Michael Chaney (NAB) and Mike Smith (ANZ), that customers won’t necessarily be receiving the fruits of further interest rate reductions, at least not in full, for reasons that have something to do with Europe’s financial woes. Are their arguments for this policy reasonable, or even truthful? Again, some say yes, some say no.

There is, however, one issue we may have to take a stand on sooner rather than later, and that issue is: ‘cash or crash’? It’s happened too often in the past twelve months that a system crash has stopped the cash. The other day it was the CBA, a “technical glitch” leading to “network connectivity problems” and about four and a half hours of unfunded chaos in which people suddenly couldn’t pay for the petrol they’d put in the car, or the meal they’d consumed. Others had to flee checkout queues in deep embarrassment. No ATMs or netbank either. There were stories of balances being altered and wages not going through. If it were a blue-moon occurrence we could probably let it go, but in a recent annual report published on the RBA website, in the last twelve months Westpac, CBA and NAB have all suffered similar “glitches”, in some cases on more than one occasion. And if you think it’s a pain for the individual, what about the poor struggling small business that loses 80% of its Thursday night sales in return for a recorded message of apology from the relevant bank.

Maybe it is time for a return to cold hard cash, not a huge stash of it under the bed, not a world without credit card or EFTPOS, but an amount to get you through those “connectivity problems”. It would be a bit like carrying around a spare tyre; you hope not to have to use it, in fact you probably don’t have to use it except once every couple of years; but it’s there for when you’re stuck.

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And now that we’re on the topic, I’ve heard it said that cash can actually benefit your financial health. Apparently, people are more willing to hand over their card than their cash. When McDonalds, that renowned purveyor of quality food, abandoned its cash-only policy and started accepting credit-cards and EFTPOS, the average customer spend rose by 75%, from $4 to $7. It may well be a case of ‘what you can’t see doesn’t hurt you’.

You can certainly see why the banks encourage the use of plastic money. In the first place it means they never have to give you any of the real thing; and in the second, whatever you’ve got you’re more likely to get rid of more quickly, until you end up announcing, like American poet, e.e.cummings: “I'm living so far beyond my income that we may almost be said to be living apart.”