Day 22 - Reflections on the Cashless Society

In order to properly understand the concept of the ‘cashless society’ it is important to grasp something else: what is currently understood to be money in more than 90% of the cases, is not actually money.

More than 90 % of all the cash amounts that are called ‘money’ in today’s economy, are simply digits on a computer. You may think that this is a very banal statement. Yet, the law is very precise when it comes to the definition of what is money. Money, is the Legal Tender which is printed by a (supposedly) government owned Bank. Thus, legal tender in the sense of the law does not include digits on a computer.

Now, you may say that this has little relevance since the digits on a computer are de facto being accepted as money.

To some extent, yes. However, not in every way.

The majority of people believe that the digits in their current or savings account with the bank, are a reflection of the amount of ‘money’ they own. This is not true.

When you open an account with the bank, you become an Account Holder. Please note that the word Holder is very precise and indicates that you do not own the account. You are merely Holding it. In other words, the account belongs to the bank. But how can this be? And what about ‘your money’?

There is actually no money on your bank account. The numbers that you see, represent the amount of the DEBT that the bank has towards you. And this debt needs to be paid out in Legal Tender, in other words, in official money, such as EUROS or DOLLARS or YENS, depending on the country where you are in. When you withdraw cash from a teller, you are actually requesting the bank to REPAY you some of the MONEY that THEY OWE YOU. This is why it comes out of the machine in the form of Legal Tender and not in any other form. Through paying you that amount in Legal Tender, the amount of the debt which the bank owes you, equally decreases. This is why when you withdraw (‘take back’) 100 EUR from the teller, the number in ‘your account’ will go down with 100 EUR.

Now that you hold the cash money ‘in your hand’ you can say that it is ‘your money’ in the sense of the law.

I will continue on this topic in a next blog. Thanks for reading.