A
very interesting article by Miles Kimball advocates for replacing paper dollars with electronic dollars as the "unit of account" in the United States. Mr. Kimball's motivation for advancing this cause is that this electronic-dollar regime would allow the Federal Reserve to charge negative interest rates, which would allow it to fulfill its full-employment function without having to resort to exotic (and controversial) activities such as "quantitative easing."
I don't generally blog about monetary policy, of course, but another reason for moving from cash to electronic dollars is that it
makes crime much more difficult and less worthwhile. In a cashless society, economic exchanges always create a paper trail—so illicit exchanges become much more difficult to pull off without getting caught. And much other crime, such as robberies and bank heists, become far less lucrative. There's no point in robbing a bank if that's where the money
isn't. Would-be bank robbers are presumably
smart enough to figure that out, eventually.
Mr. Kimball's proposal, in which paper money would still exist, just not as the "unit of account," reduces these anti-crime benefits significantly. But presumably cash would still become less and less useful, and less and less common (as it already has become, frankly).
Anyhow, I thought of this anti-crime benefit of electronic money today when I read that, for the second straight day, masked men in Evanston had
robbed a pizza delivery man at gunpoint. Of course, they stole the driver's cash and wallets, etc., so you might think that this is the kind of crime that abolishing paper money would eliminate. But, in each case,
they also stole the pizzas. The lesson may be that even in a cashless society there will be crime—as long as there is pizza.
