Country Living Series

Wednesday, April 8, 2015

When cash is no longer king

Anyone who's ever listened to the Dave Ramsey show knows his mantra: Cash is king.

What he means by this is, credit can kill you. Too many people get into horrifically deep debt due to the ease of credit cards (and other debt-enhancing methods).

But using just cash, literally cash, is becoming rarer and rarer, it seems.

Lately our family has been transitioning to as much of an all-cash lifestyle as possible. In many respects it makes things much easier. We don't overspend, we don't bounce checks, we don't risk identity theft, and seeing those bills empty out of our wallets makes us realize how fast and easy spending is, and we can adjust or slow down accordingly.


Besides, as I wrote earlier, we don't like the idea of having a little cyber-trail following us all around town, monitoring what we buy. Data mining is everywhere. Cash eliminates that possibility.

As such, our local bankers are now familiar with our pattern of going in and withdrawing sums of money, which we then portion out for whatever spending we plan to do. (It helps that we bank at a small credit union in a small town where we're friends with the bankers.)

Granted, most of our cash withdrawals are fairly modest, since our income is modest. But once in awhile we have fairly large purchases -- winter hay or a piece of used farm equipment, for example -- and the people we buy from are grateful to receive cash since they know the payment won't bounce. Besides, farmers usually aren't set up to take credit cards, so cash works perfectly.

Once in a great while we'll need larger sums, so we've been known to call our bank and ask if they have sufficient cash on hand. Sometimes it takes them a day or two to acquire it, at which point we go in and make our withdrawal.

The point is, it's our business what we spend our money on. It's ours. We've earned it. We can spend it however we please.

But it seems the government disapproves of cash spending, if this article is anything to go by.

The article states: "Earlier this week, a senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police. What a lot of people don’t realize is that banks are already unpaid government spies. Federal regulations in the Land of the Free REQUIRE banks to file ‘suspicious activity reports’ or SARs on their customers. And it’s not optional. Banks have minimum quotas of SARs they need to fill out and submit to the federal government. If they don’t file enough SARs, they can be fined. They can lose their banking charter. And yes, bank executives and directors can even be imprisoned for noncompliance.

"But now the Justice Department is saying that SARs aren’t enough. Now, whenever banks suspect something ‘suspicious’ is going on, they want them to pick up the phone and call the cops: '[W]e encourage those institutions to consider whether to take more action: specifically, to alert law enforcement authorities about the problem, who may be able to seize the funds, initiate an investigation, or take other proactive steps.' So what exactly constitutes ‘suspicious activity’? Basically anything.



And this "suspicious activity" includes cash withdrawals of $5000 or more. Oh goody. I wonder if the federal government is aware that used farm equipment often costs more than $5000?

The logic behind these policies, of course, is to catch criminals and terrorists. But by casting such a wide net, they're also "catching" ordinary folks doing ordinary things (which, I suspect, is the point).

It's now becoming the norm to prove our innocence rather than our guilt. There are endless stories of people acquiring cash through legitimate lawful means, only to be "caught" with it and have it "confiscated" as suspicious.

I never thought about it before, but I've learned it's no accident that America no longer has any bill denominations higher than $100. My parents used to have a 1972 set of World Book encyclopedias, and I clearly remember leafing through the Money section and seeing photos of $500 bills, $1000 bills, etc. I just checked our 1990 version of the encyclopedias, and sure enough, $100 is the highest bill shown.


Why is this? Well according to this article: "Despite this enormous depreciation, the Federal Reserve has steadfastly refused to issue notes of larger denomination. This has made large cash transactions extremely inconvenient and has forced the American public to make much greater use than is optimal of electronic-payment methods. Of course, this is precisely the intent of the US government. The purpose of its ongoing breach of long-established laws regarding financial privacy is to make it easier to monitor the economic affairs and abrogate the financial privacy of its citizens, ostensibly to secure their safety from Colombian drug lords, Al Qaeda operatives, and tax cheats and other nefarious white-collar criminals."

I should point out, this is not just an American trend; it's worldwide. The urge to track, apparently, is an international phenomenon. "The governments are desperately using terrorism as the excuse to hide their war on cash," notes Armstrong Economics. "They are trying to eliminate money all together to force 120% tax collection. There is no reform contemplated, just raise taxes all the time. There is no end game here that has anything to do with preserving our freedom and way of life."

I guess in our own small way, we'll continue to be "domestic terrorists" and continue our habit of using cash whenever possible... until it's no longer possible.

My -- ahem -- two cents' worth.

36 comments:

  1. Just think how the bank calling the police could play out:

    How Cops Got A License To Steal Your Money

    http://www.cnn.com/2015/01/21/us/asset-seizures/

    http://www.forbes.com/sites/jacobsullum/2014/09/11/how-cops-got-a-license-to-steal-your-money/

    It even made the news on the BBC!

    http://www.bbc.com/news/blogs-echochambers-29228851

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  2. I am 71 and I can only remember writing a check once for a purchase. I do use checks to pay my monthly bills. I have four ATM cards two of which cannot be used as debits. One is a debit and ATM because the credit union won't issue a ATM only. I have never used debit. I've seen it used so I could probably do it but again I pay cash for everything. There is one exception, I use the credit card to buy gas when I'm traveling. It's easier because you can pay at the pump and save steps and ti . Also my motorhome has a 55 gallon gas tank which really cuts into my wallet stash. I hate beingin lne behind someone paying for a $4 purchasewith a checkor credit card.

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  3. Great article, thanks. Looks like things are moving towards a cashless society and then the mark of the beast.

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  4. We have the majority of our bills setup to be paid through our online banking account. But we also use Dave Ramsey's method of paying cash. (Or maybe it's mama's method since I've had envelopes with cash in them for over 50 years.) We pay cash for groceries, farm/ garden expenses, gifts, home & auto repairs, gas, etc. At some point, we may find ourselves on the government's watch list. For right now, our bank is used to us making a withdrawal every other week when I get paid. If everything didn't have to be direct deposited, we'd just deposit less of each paycheck. It's a very low stress way to live.

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  5. We have no debt, credit scores of over 800, a paid off house worth 350k and income of over 12k per month, and been in the same field of work for over thirty years. We are buying a house and then going to sell ours and pay off the mortgage. You would not believe what we have gone through because our down payment would be in cash. We do almost all our transactions in cash. They will not accept it as a down payment. We had to use my mother in laws money as our down and turn around and pay her back with our cash. I never ever thought I would be penalized for using cash.

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    Replies
    1. my understanding of federal law is that federal money must be accepted in any transaction in the USA. it used to be the law. has it been repealed?

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  6. Good post, Patrice, and spot on.

    I continue to be amazed at the number of people who still don't know what a Fusion Center is.

    It's enough to make the old East German Stazi look like amateurs.

    A. McSp

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    1. a mcsp
      just looked it up. had never heard of it. right there on 'homeland security' website!

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  7. It's easy enough to get a cashier's check for large sums of money. I wouldn't want to be carrying around thousands of dollars of cash to pay for large ticket items.

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    1. The problem is what do you do with the cashiers check? I recently told my sister in law who was selling her mobile home to not accept a cashiers check. It is impossible to tell a fake cashiers check from a real one and it takes the bank longer to discover this than it does a fake personal check. About the only thing you can do with a cashiers check is move money fromone bank to another.
      I regularly carry $500 more or less and often carry $1000's. Do I look any different to a crook when I'm carrying money? The real risk is that I would lose it. I am over 70 and have never lost my wallet in my life. The risk is manageable.

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    2. Jane, I understand your concerns. Dealing with large sums of cash presents challenges. But you raise a larger issue. With the state of civility today, fearing for our lives and safety trumps fear of carrying large sums of cash.

      Liberty requires responsibility. Folks, protect yourselves at all times AS IF you were carrying thousands in cash. Fear not. Exercise your 2nd Amendment rights. My concealed carry instructor emphasized, time and time again,’ Refuse to be a victim!’

      I just want to be left alone. But I will be prepared to resist any punk or tyrant intent on harming me or my love ones. I am not going to live in fear.

      Montana Guy

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  8. I am told by a reliable source (someone working in a bank) that they only need to fill out the forms on someone if they withdrawal $10,000.01 or more. As long as you keep the withdrawals 10 grand or less, you shouldn't have to worry about the guvmnt.

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    1. Apparently you missed the case several years ago against Rush Limbaugh. Knowing about the "reporting $10,000 policy", and to avoid constantly explaining his personal spending to the gov't, he developed the habit of withdrawing amounts in the $9,000 range. Well, it didn't escape gov't notice. They investigated him on charges of purposely withdrawing less than $10,000 to avoid government notice. I don't remember the details of the outcome, but surely it can be researched.

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    2. We were regular withdrawers of the "less than 10,000" until we were told that doing so would look like a deliberate attempt to avoid the $10,000 SAR. It was a conversation that began with "a little bird told me..."
      To deliberate structure a transaction to avoid the SAR is a crime. You are darned if you do, and darned if you don't.
      sidetracksusie

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  9. So the government disapproves of cash spending, does it? Well, isn't that just too darn bad? We paid off and threw away ALL of our credit cards many years ago. If we need something, we pay cash or get it on lay-away. No more credit cards. Not even ONE! And we've been doing just fine. We own a Honda CRV, a Dodge Caliber and an old Jeep we use to haul a water trailer (we haul our own water), and they're all paid for! I'm retired and my wife is retiring in less than two years. We don't have a lot of money. No huge savings account, but lots of silver and ammunition stashed away. Credit cards are a gimmick like everything else these days. A way for millionaires to become billionaires at our expense! Thanks, but no thanks! --Fred in AZ

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  10. I live simply, so I withdraw $500 per month for living expenses (gas, food, etc.).
    The rest stays in the bank.
    I only use checks as a last resort.
    I, like you, prefer to use cash so there is no record of where I have been or what I have purchased.

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  11. If you travel, you know how difficult it is to use cash, no business wants it. So we opened a checking account that is just for traveling. We deposit our travel money into it for hotels, airline tickets, rental cars and restaurants. It keeps it separate from our household account and limits the amount of money, if stolen will be with-drawn. We then carry cash for little expenditures.

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  12. I have been cash only my whole life. Like you I use cash for large and small purchases. Cash doesn't make you any bigger a robbery target. Once I was at a grocery store had just fixed my car cut the grass and looked like crap but I had 4000$ on me going to the bank ,A lady walks up to me and try's to hand me 10$ because "i looked like I could use the help".Cash is king. A pair of bib overalls tends to hold large rolls of notes. Lesson learned at a cattle sale.

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    Replies
    1. In 1963 I was working at a Lincoln Mercury dealership. A plumber came in to buy a Mercury station wagon and pulled out $2700 in small bills out of his pocket to pay for it. That's roughly the equivalent of $25,000 today. He too looked homeless or worse because he just came from a job where he was working under a house.

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  13. A few weeks ago, at a prominent chain store, I purchased something for about $50 and paid the way I normally do - with cash. After I found the same thing for less money somewhere else, I took this thing back to the first store for a refund.

    The guy processing the refund never examined my receipt.

    When he was done processing, he asked, "Shall I put that on your card?", probably wondering why I hadn't presented one.

    I said "Card? I paid cash. I'd like cash back, please."

    He took a closer look at the receipt and turned red in the face. "Oops."

    He had to start all over.

    (He was very nice the whole time. I have no complaints about his "bedside manner.")

    Just Me

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  14. In the 30 years I have been in the banking industry, it has always been the case that cash transactions of 10,000 or more must be reported as Suspicious Activity; there may be mitigating factors that keep the SAR from going further, like a pattern of cash transactions, or running a cash based business. There has never been a "requirement" to file so many SARs per year - unless of course, but they must file as many SARs as they process large cash transactions.

    While it's always possible there are nefarious purposes behind it now, the requirement started in an attempt to stop money laundering.

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  15. My daughter recently purchased her first home. To pay for her closing costs and down payment she had saved up cash. It was stored in our home safe. When she told the loan officer at her bank (she was mortgaging the balance) the officer instructed her to give us the money and have us deposit it in our bank account. Then write her a check to deposit into her account. This would eliminate extensive paperwork or so she was told. However, I was an economics student in college and know that because we deposited the money in cash and she deposited it as a check the bank just got double the value to put on their books and loan back out to others. They are only required to keep 10% or so for reserves. The rest can be loaned out. But my point with this story is the officer knew there would be extensive paper work for $6,000. Amazing that she couldn't take just cash to the closing.

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  16. We do the same with envelopes/cash. Last week I visited a supermarket. Wanted to use my 'loyalty' card (not mine .. but someone once had my phone number and it works same as card). Young cashier said to enter phone number in debit key pad which then asked method of payment .. CASH WAS NOT AN OPTION on said keypad. I handed cashier a $100 for $23 of groceries .. he commented 'thanks for the tip' ... and proceeded to hand me a wad of cash as my change without even stating the amount being handed back to me. Taking my sweet time I handed him the wad of cash back and asked him to count it back to me. Stupid kid.

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  17. The USA used to print some very large bills. There is a display of such bills and bonds at the House Finance Committee room in DC. It shows $1, 2, 5, 10, 20, 50, 100, 500, 1000, 5000, and 10000 dollar bills, and an assortment of bonds with face values of up to $100,000. Probably to make this framed collection less likely to be stolen, all the bills and bonds have serial numbers that are all zeros :>)

    For me I dislike any bills larger than $20, because it is hard to spend them.

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  18. I am not disagreeing with you, but my health care provider has gone to cashless transactions for co-pays and prescriptions. I'm not sure that is really legal, but it is what they are doing.

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    1. Our dentist offers a cash discount (could be same if using a check, but is for people without insurance I suppose) .. anyhow, they will accept cash as payment, but don't have cash to make change. We usually leave with a credit balance for cash over payment.

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    2. Why wouldn't it be legal?

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    3. Some businesses and some government agencies will not accept cash. Partly to deter employee theft and partly to make their accounting simpler and more accurate. I too question how it can be legal to refuse to accept cash as legal tender for paying a debt. I suspect it technically isn't legal to refuse cash and that if you were willing to raise enough stink that they would be obliged to accept it.

      Some have mentioned the problem with cash when buyng a house. The problem is not the cash it is the proof that it is yours. In order for the bank to sell the loan it must meet certain qualifications that assure it is a safe debt. One of these is that the borrower was capable of coming up with the 5% or 20% on their own and it wasn't a loan or gift from someone else. Anyone with irresponsible children understands this issue.

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  19. A few years ago I had to withdraw $5000 from my credit ubion. They asked what it was for and I told them it was none of their business. They insisted that I tell them. I told them it was to buy a car and then I proceeded to close my accounts and I took my banking business to another bank.

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  20. Examples all over the place of ppl being investigated and their savings confiscated for doing transactions just under the SAR limit.
    Whats next? Pulled over for driving 1mph under the speed limit?
    Cash will be king ... it will be short (and sweet for those who have it) and then the events that precipitated that economic situation will be used to take us off cash entirely. -Old Soldier

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  21. Your article indicates you intend to use cash until it is no longer possible.
    what then........?
    -Old Soldier

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  22. The Feds claim to be concerned about money laundering. I too am concerned when I see suspicious activity. Like when ISIS first rolled in on dozens of identical new white pickup trucks. Me thinks cash was involved. Has anyone seen a SARs on that? Maybe its under the bed next to the Rose Law Firm documents.

    Montana Guy

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  23. My grandfather always said he would rather shoot a banker than look at one. He always exchanged cash for something of value at the bank until he couldn't. When the government declared that people had to turn in their gold for cash, he didn't. He had old gallon pickle jars he kept his money in. Others were for quarters, dimes, half dollars, and dollar coins. Some was for $1 and $5 bills, Others for $10 and $20, and others for $50 and $100 bills. He had some pennies and nickels which he always said was saved for me. When he died my mom sold all of his gold and silver and put all of the money in the bank. In total she got over 4 million dollars and that was in the early 90s, not bad for an old moonshiner. That was only what she could find in the house, knowing my grandfather he wouldn't have kept all of his eggs in 1 basket. I imagine he had a lot of money (and other things) buried in various locations. I remember as a kid fooling around digging a hole with my cousin and he yelled at us to quit digging or else we might find something we didn't want to find.

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  24. My husband is paid every two weeks and since it is the state
    it is put into the bank. So far the bank has not complian when
    I go in and preceed to take it all out. Expect for the 20% .The
    tithe and give. Those are written in checks. I then bring the money
    home divid it up into envelopes. Car insurance, wood,etc. then the money is there when the bills come due.But they are so use
    to me doing it, so far it isn't a problem. But it could be come one
    the next pay day or the pay day after that.
    Blessings

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