Cash Is Making a Comeback

There is an interesting article in the NYT on the emergence of alternative paper currencies. “Artisanal” or “low-batch” currencies have been popping up all over in the past decade.  They have been issued by municipal governments in Great Britain, a private nonprofit entity in Amsterdam, and a regional network of businesses, nonprofits, and consumers in Bavaria.  One of the most successful low-volume currencies is the BerkShare,  issued and accepted by a consortium of 400 participating businesses and banks in Berkshire area of western Massachusetts.  There is $138,000 worth of BerkShares currently in circulation and $1 million worth has been printed since 2006.

Now, it is true that these alternative currencies are not really money in the technical sense of the general medium of exchange, but are more like “scrip.”   In the past, for instance, scrip was issued by mining and logging companies in the U.S. located in isolated areas to pay their employees.  During the Great Depression, many U.S. municipalities emitted scrip as a form of credit payment to their employees.  Today “Disney Dollars” issued  by The Walt Disney Company and accepted at its resorts operate as a form of corporate scrip.  Scrip initially attains value by virtue of the issuer’s (or a network of issuers’) pledge to redeem it for goods and services and/or the dominant medium of exchange immediately or at some point in the future.

These modern alternative currencies are by no means the path to sound money and their promoters and proponents tend to wildly overstate their economic and social benefits as well as their potential for growth.  Nevertheless, they are an important development because they reveal an inarticulate but very real dissatisfaction with nationalized money in general and the global movement orchestrated by governments and its crony banks toward a “cashless” society in particular.  The spread of artisanal currencies as a reflection of the growing sentiment in favor of cash was nicely depicted by a passage in the NYT article:

These . . .  small-batch currencies [are] lovingly handled by millennials, who came of age during the rise of the Internet, the meltdown of the stock market and Edward Snowden’s National Security Agency revelations, and would be forgiven for becoming more wary of credit and debit cards. Many are already opting for standard paper money over plastic. . . . Once a marker of a business with suspicious tax practices, the phrase “cash only” has come to signify hipster entrepreneurialism at places like Stumptown Coffee at the Ace Hotel in Midtown Manhattan or the Emerson Bar in Brooklyn.