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Digital Payments Source of Anxiety
January 17, 2012

A reader forwarded me a link to a website claiming that the routine destruction of worn out paper money is now part of a secret plot to track everybody’s finances through the use of digital currency.

It is a great tribute to modern financial propagandists that they can make something so routine sound so sinister.

Years ago the Federal Reserve stopped burning worn out currency on environmental grounds and now shreds it. You can buy bags of shredded currency as souvenirs if you like. I have one. It makes quite an impression on you the first time you see it. You kind of want to try to put the pieces together again to see if you can achieve a result that might be spendable.

I have resisted that urge and my plastic bag remains sealed. I have always assumed that if anyone ever succeeded in reassembling a shredded note I would hear about it.

The move to digital money transfers is a product of the computer age in which we live and the convenience it provides. Even U.S. Savings Bonds since the beginning of the year no longer come in the form of paper.

It used to be that the Federal Reserve had a huge infrastructure for the daily collection and transportation of paper checks so accounts could be settled quickly. This allowed the recipient to get the money deposited in his account and the issuer to get his physical check returned. It was a marvel of efficiency until the internet made it a dinosaur that is now extinct. Now images of checks come back digitally to the writer of them. And checks were certainly trackable years ago in any case.

Anyone who doesn’t want a record of his expense kept can always opt for cash payments, but the great increase in the use of debit cards and credit cards and the creation of a payment system like Paypal all show Americans voluntarily adopting payment methods that are trackable on the grounds they are incredibly convenient.

Even paper money is trackable if it is used in large amounts. Banks and businesses are required to report cash payments of $10,000 or more. This has been true, if my memory serves, since Nixon was in the White House.

You might find a reason to criticize digital money, but trackability in an already highly trackable economic system does not seem to be legitimate grounds for it.

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Strike It Rich with Pocket Change, 2nd Edition

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About the Author
David C. Harper has been a coin collector since 1963. He joined the Krause Publications editorial staff in 1978 and is currently editor of Numismatic News and World Coin News. He also edits two books annually, North American Coins & Prices and Coin Digest. He is the author of the Class of '63 column that runs each week in Numismatic News. His first bylined numismatic article appeared in the June 1971 issue of Coins Magazine and his various Krause Publications assignments included a stint as editor of the magazine 1980-1983. Harper received a bachelor of science degree from the University of Wisconsin-Oshkosh in 1977. He had a double major of journalism and economics.

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