CHAPTER ONE
INTRODUCTION AND OVERVIEW

A sudden loud noise wakes you from a deep sleep. What was that? You reach for your bedside lamp but it won't turn on. Suddenly your bed is shaking. Earthquake! Your lamp dances across the bedside table and falls off, crashing on the floor. You clutch the sheets and wait for the quaking to stop. Then you slip out of bed and walk carefully to the bathroom to splash water on your face and wake up fully.

A dribble of water comes out of the faucet and then stops. Looking out the window you see your neighbor's house has a huge crack. Part of the roof is hanging over their front door. You pull on some clothes, thinking fast as you feel another tremor shake the floor. No electricity, no water, more quakes coming - you need to get out of here!

In the dark you quickly collect your phone, computer, wallet, and keys. What else do you need? You grab your medications, and some warmer clothes, just in case. Wishing for coffee, you grab some juice and leftover dinner from the refrigerator. You back your car out of the driveway, listening to the news on the radio. The earthquake destroyed the city near you and many roads are impassable. Which way should you go?

Two houses away you see your elderly neighbor waving frantically from her front steps. You roll down your window and ask how she is. Her house is badly damaged and she begs you to take her with you away from this dangerous place. You agree and she rolls a small suitcase to your car and climbs in.

You drive to the route recommended by the radio broadcast. Along both sides of the road you see fallen trees, cracked buildings, and dazed people. The streetlights and traffic lights are out but there aren't many cars of the road yet. You hope you can make it to the next city where your sister lives.

After driving for about an hour you need to get gasoline. Up ahead you see a service station and pull into the line of cars waiting for the pumps. Thank heavens they are still working! You leave your neighbor with the car and go in to the convenience store to buy some food and coffee. At the checkout you present your credit card only to be told, "Cash only. The phones are out and the credit card machine is down."

Shocked, you stumble back to the car to tell your neighbor you can't buy anything. Not even gasoline! She says, "I have cash. My daughter told me two weeks ago I should always have some for an emergency so I got some. And I think this qualifies as an emergency!"

Thank goodness you brought her along! You thought she would be a drain but here she is saving the day. You fill the gasoline tank and buy sandwiches, fruit, and bottled water, along with that coffee you need so badly. Now you can make it to your sister's house. What would you have done without cash?

You haven't used cash in months. You either use your phone for electronic payments, or tap a credit card on a keypad. But the earthquake has knocked out the telecommunications that electronic payments require.

So many people have, like you, shifted to relying on electronic payments. But when a huge hurricane, raging wildfire, towering tsunami, or colossal solar storm knocks out electricity or telecommunications, electronic payments don't work. When a hacker takes control of central computer systems, your credit cards, debit cards, and Bitcoin can no longer be accepted in payment for food, transportation, or services. That's when cash is a lifesaver. Cash works when your phone runs out of battery, or your phone falls out of your pocket into the toilet, which happens more often than you think. Cash even works when it's soaking wet. In today's electronic payment world having cash gives you resilience.1

SHIFT AWAY FROM CASH

The world has seen a dramatic change in just a few years in how people use and conceive of money. Until the end of the 1900s people primarily used coins and paper money. Then, beginning in the early 2000s, people started abandoning paper money and switching to electronic forms of payment like credit cards, debit cards, cryptocurrency, and mobile payments.

The switch is not happening at the same rate everywhere. It depends on which country you live in. Places like China and Sweden are currently almost entirely cashless. Sweden has abandoned paper money to such a large extent that the Swedish government passed legislation forcing banks to handle cash. China has so thoroughly adopted mobile payments that some tourists try to get a Chinese cell phone number to effectively pay for purchases when visiting the country.

Other places in the world have not abandoned cash. Japan is still a cash-dependent society, where making large purchases with paper money is normal. If you want to purchase a home or apartment in Argentina, most transactions are done in cash. However, because Argentina's economy and currency are unstable, most sellers want the funds in US paper money. Around the world many rural communities, often located far from banks, still primarily use cash for transactions.

The abandonment of cash is both generational and based on income. Older individuals who grew up using cash still use it at a much higher rate than younger people. Poor people are using cash more often than the rich.

Although the rush away from cash is happening at different speeds around the world, it is clear that paper money is being abandoned from all directions. Restaurants, stores, and even many types of transportation are steadily preventing customers from using cash. For example, airlines used to accept cash to purchase in-flight food and drink. Today no major airline accepts cash for in-flight purchases. Not only do airlines no longer accept cash to buy a snack while flying but also it is difficult to pay for a plane ticket with cash. Decades ago many airlines had ticket offices located in major cities that accepted cash. Today many of those offices are shut and customers are directed to buy a ticket on the internet using a debit or credit card.

WHY THE SHIFT?

The shift is happening because there are many powerful groups pushing to get rid of cash.

Credit card companies like Visa, Mastercard, and American Express; financial service companies like PayPal, Afterpay, and Klarna; and a host of smaller financial startups want you to use electronic payments instead of cash because they get a small cut of every purchase. Although the percentage each takes is not large, a small percentage times billions of purchases adds up to huge amounts of money.

Banks and stores want you to use electronic payments because they know people who use electronic payments overspend. Stores are in business to sell. Encouraging people to overspend is a simple way of boosting sales. Cash, for reasons discussed later in the book, restrains people's spending, and electronic payments do not. Banks encourage overspending because after overspending, people borrow money, on which banks make billions each year in interest payments.

Companies selling on the internet also don't want you to use cash. It is impossible to hand paper money through a computer or phone screen to them. Instead, getting your financial information like a credit card or bank account number is far more efficient for them. Giant internet retailers want the online shopping experience to be as fast and frictionless as possible. Storing your financial information in their database enables them to offer one-click shopping. This sounds wonderful, but heavy internet shoppers need to ask themselves - how often do packages show up and you don't remember what you ordered?

Last, governments and the world's central banks, which print and distribute paper money, are also encouraging the trend away from cash. Many government officials believe most cash is used by criminals to hide their activities. The idea that eliminating cash will boost tax receipts, reduce crime, and eliminate corruption is demolished later in this book, but not all public policy decisions are based on facts or data. Central bankers dislike paper money because it reduces their ability to control a country's macro economy.

KEY QUESTION - IS THE SHIFT GOOD?

The shift to electronic payments is wonderful for credit card companies, banks, high-tech companies, and governments. However, what is good for them is not necessarily good for either you or society. Every large-scale societal shift has both good and bad points. People and companies benefiting from electronic payments are trumpeting the positives and ignoring the negatives.

This book shows the overlooked power for individuals and society of continuing to use paper money. The book's goal is to puncture the fairy-tale world presented by the world's largest banks, high-tech companies, and governments by showing that keeping and using "old-fashioned" cash has many positive aspects, ranging from improving a country's self-defense to helping individuals spend less.

The book is needed for three reasons. First, because of immense profits many types of businesses have a strong incentive to convince you that using paper money is bad and electronic payments are good. Next time you take a flight, count how many ads there are for credit cards and other cash alternatives. There are giant billboards, leaflets in the plane's seat pockets, flight crew announcements, and even small ads snuck into places like napkins and baggage carts. Then try counting the number of ads trying to convince you...