The day paper currency disappears, so will our autonomy.
The day paper currency disappears, so will our autonomy.
T he neighborhood dive bar is one of the last places in America people can go to be truly anonymous. On any given night (or day), my local watering hole is stocked with people who don’t want looky-loos knowing both that they are there and whom they might be entertaining. Bicycles lean on the outside of the bar, ridden there by men forbidden from taking the wheel because they have gotten too many drunk-driving tickets. Young people drink there to make new memories, old people drink there to forget the memories they made.
There are dozens of touches that make the bar a time capsule from the 1960s. (It opened in 1968.) The jukebox plays real records, none of which are more current than 1975. The place isn’t littered with TVs, so people actually speak to each other.
But most importantly, you have to use cash. No credit, no debit, no checks, no tapping your phone on a screen.
In this sense, the bar might as well be operating in the 18th century. Today, people rarely carry cash, and if they do, it is typically in case something goes drastically wrong.
But with the loss of cash also comes the loss of anonymity. When you pay with a card or a phone, there is always an electronic trail of both your purchases and your whereabouts. You are forever on the grid, subjecting yourself to the monitoring of nosy, prying busybodies.
There is nothing more American than the dollar bill and the independence it offers. No matter where you are in the country, it speaks the regional dialect. It fits neatly in your pocket, it can survive a run through the wash, and it intimidates people. Would anyone actually feel threatened if Clint Eastwood chomped on a cigar and declared he was in search of “a fistful of PayPal”?
Some municipalities, like Evanston, Ill., are considering ordinances to block businesses from going completely cash-free. The businesses say that going cashless protects their employees from being held up and that customers prefer other payment methods.
But poor people are also less likely to have credit cards, bank accounts, and smartphones with which to make purchases. Eliminating cash transactions effectively bars them from an establishment. (And how are you supposed to give money to homeless people on the street when there is no longer any cash? If you wave your phone over a hobo, not only does it not give the fellow a dollar, it provokes the hobo’s ire.)
Think about all the ways paper currency has entertained us throughout a century of popular culture. Had Hans Gruber not needed to break into the vault at Nakatomi Plaza to steal paper bearer bonds, we would have been denied the catharsis of seeing him fall (spoiler alert) to his death. From now on, we will be subjected to movies where the only drama is watching a thief nervously glare at a status bar as a digital-dollar transfer approaches completion.
More importantly, how are rappers supposed to make it rain digital cash? And consider the difficulty of slipping bitcoin into a stripper’s G-string; look for future adult dancers to don QR-code tattoos.
(Side note: The demise of cash and the rise of the internet is what has fueled the website OnlyFans, where adult performers twerk from home and receive digital “tips.” This has prompted me to invest in OnlyFans for Political Writers, where a performer would receive digital tips for reading your column, nodding while mumbling, “Well put.”)
Remember a few years ago when there was a heated controversy about putting Harriet Tubman on the 20-dollar bill? It’s not going to matter in a few years, because nobody is even going to know what a 20-dollar bill looks like. The U.S. Mint could put “Weird Al” Yankovic on the $100 bill and nobody would think twice.
Most importantly, the disappearance of cash will only be accelerated if the U.S. Treasury Department moves toward a central bank digital currency, or CBDC, which the Federal Reserve defines as “a digital liability of a central bank that is widely available to the general public.” A CBDC would be directly available to you from the feds in the same way a paper dollar is.
Last fall, Treasury announced it will convene “an interagency working group to explore the development of a CBDC.” Under Secretary for Domestic Finance Nellie Liang had previously announced that Treasury was committed to “promot[ing] further work on advancing a CBDC,” and that digital bucks were “just a different form of money.”
But CBDCs are in fact a fundamentally different form of money, in that, unlike cash, they have an everlasting digital trail. And that fingerprint means every digital dollar you spend is under the watchful eye of the government.
Of course, the ability to spend money without the world watching doesn’t mean you’re necessarily involved in financial subterfuge. Under a CBDC, a hypothetical Fed chairwoman Elizabeth Warren could determine whether you are donating your digital dollars to the right types of charities and restrict the flow of those dollars. Want to give money to a pro-life organization? Better check with whatever political party is in charge.
Under a CBDC, Americans wouldn’t have any financial transactions that weren’t traceable and therefore subject to manipulation. For instance, are you prone to drinking too much? The government could limit how much you can spend on alcohol in a given month. Are you purchasing the right kind of reading materials? Woke politicians could prevent you from spending your money to purchase original-recipe Roald Dahl books.
Additionally, since the government controls the digital dollar from afar, it would be much easier to freeze or seize your assets, even if you haven’t been found guilty of anything. In the past few years, Americans have read more horror stories about incidents of civil-asset forfeiture, in which law enforcement snatches the property of suspects without due process. Under a CBDC, there is no shoebox of cash under your bed for a rainy day: When the government decides you have no more money, you have no more money. The feds own the shoebox and its contents.
Of course, central command of money carries with it the possibility of malfeasance. If you are, say, a large children’s entertainment company that a “conservative” chief executive thinks is damaging children by being too “woke,” you may be looking around to see that your money has been canceled. Time for Donald Duck to start a Substack.
And imagine the damage to the economy were thieves somehow able to evade a digital John McClane and gain access to the computer vault. They could steal all the money in America, which would give them just enough to buy the Wu-Tang Clan’s Once Upon a Time in Shaolin album.
(As a side note, cryptocurrency enthusiasts believe crypto is the antidote to a CBDC, as it is more decentralized and thus less susceptible to surveillance and mass theft.)
Further, in places where a CBDC has been tried, it has been a disaster. Nigerians are currently rioting in the streets to prevent implementation of a central digital currency to cope with a paper-currency shortage. (Even with all the money I have sent to their princes following their poorly punctuated email requests.)
Federal Reserve chairman Jerome Powell has tried to quell worries over CBDC, saying he would not want “a world in which the government sees, in real time, every money transfer that anyone makes with a CBDC.”
But “just trust us” is not a compelling argument when the federal government is involved. In 2021, the Biden administration proposed a new rule allowing government surveillance of bank accounts with as little as $600 in annual activity. (The threshold was later increased to $10,000.) And who would be doing all this snooping? Well, thanks to Congress, the IRS will now have 87,000 new agents to comb through your birthday cards from Grandma, inspecting the $5 bills tucked inside to make sure the money is legit. (She still has to report her income from OnlyGrams, after all.)
Thus, when all transactions are digital, scarcely a dollar will pass through your bank account without the approval of a pointy-nosed bean counter at the IRS.
Sadly, public disclosure of personal acts may just be the natural progression of things. It’s not hard to imagine a future when your streaming service begins to warn you when you’re not watching enough movies directed by minority women or chastising you for skipping a WNBA game.
And people seem to have no problem at all announcing their financial goings-on to the universe. One of today’s great mysteries is why people on money-transferring apps like Venmo publicly divulge to whom they are giving money and for what purpose. (A brief scan of my Venmo feed shows friends transferring money for a bachelor party, for their kids’ weekly allowance, for a “speeding ticket,” and for “margarita,” followed by “margarita 2,” meaning I should be asking this friend out for drinks immediately.)
America is nearing an inflection point: We need to take seriously what people know about us and when. One way to rein in public surveillance would be for the U.S. Supreme Court to revisit a 1976 precedent creating the “third-party doctrine,” which essentially says a person loses their right to privacy once they conduct a transaction with a third party.
In a 2012 decision, Justice Sonia Sotomayor, concurring with Justice Antonin Scalia, wrote that “it may be necessary to reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties. This approach is ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks.”
If the federal government moves to a CBDC, there is no going back. The government has one chance to get this right. As Josh Billings (the pseudonym of Henry Wheeler Shaw) observed, the dollar is like a secret: Once it is broken, it is never a dollar again.
On that note, I hereby offer to buy Justice Sotomayor a beer at my neighborhood bar. For the time being, no one will know.