Still use cash? You're a dinosaur. Last year in the UK, a mere £1 in every £5 was spent in cash. Most people now use debit or credit cards (or some other kind of digital money) for everything. It might seem to you that this doesn't matter much or perhaps that it is a good thing.
Cash is grubby; it's a bore to get hold of (the number of ATMs in the UK is falling) and impossible to replace when lost. Its absence also makes life easier for honest traders. With no cash to deal with, VAT returns practically calculate themselves, tills don't need reconciling and those trying trips to the bank to deposit takings disappear forever (as do the robberies that come with having cash).
The lack of it also makes life harder for dishonest traders: it's tough to avoid tax if you can't get paid in cash. Finally, the disappearance of cash is great for central bankers: no cash means no lower limit to interest rates (no cash, no bank runs!).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, cash also has features we should be very wary of giving up. It is one of the few things left that is not dependent on some sort of technology and that allows for entirely cost-free transfers. It is also good for our personal finances. The less we use cash, the more we seem to spend (card payments just don't seem to us to be real money in the same way cash is).
One example: a few years ago, McDonald's said that the average bill in the US when people used cash was $4.50 with credit cards it was $7. Might the death of cash be one of the causes of rising indebtedness and bankruptcy, particularly among the young? It's worth thinking about. Finally cash is anonymous.
Use your debit card to buy something and your bank knows where you are and what you are up to. Use cash and your privacy is maintained. The upshot? Cash is special because while it is issued by the state, it also allows us, as a recent report from Cash Matters (cashmatters.org) put it, "to create a space outside the state". Let's hang on to it.
Now might be a good time to suggest you turn to our cover story. You could argue that holding gold also lets you create a space for yourself outside the state. It's been the go-to currency for all nervous investors every time the political and financial environments start to look more volatile than usual. Is now one of those times?
I think everyone should hold some gold as portfolio insurance. It might not make your fortune but it is very unlikely ever to be valueless unlike the likes of Thomas Cook. Matthew Partridge gives us a run down of what went wrong here (it looks like the usual debt and dodgy accounting).
Finally, Japan. You'll be bored with us liking Japanese equities given that we have done so for (I think) 18 years. But it hasn't been an awful call: the Topix is up around 50% since then; the best funds have made you many hundreds of per cent in the last ten years; and with dividends rising and merger activity picking up, there might be real momentum behind the market. My own portfolio certainly hopes there is.
-
Six out of 10 retirees who accessed a pension didn’t use Pension Wise - how does the guidance service work?Many pension savers don’t bother using the free government-backed service Pension Wise. So, how does it work, and could it be useful for you?
-
UK-EU trade deal: Britain to get a £9bn boost to the economy by 2040The government’s agreement with the EU follows on from separate deals with India and the United States. Will it breathe life into the UK economy?
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
-
Car hire and the strangeness of the post-pandemic economyEditor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
-
Everything is getting more expensive – including moneyEditor's letter Investors are about to start feeling rather more pain, says Merryn Somerset Webb – from the rising price of money.
-
We may be heading for recession – and it will be no ordinary recessionEditor's letter Just as the downturn in 2020 was not a typical recession. the next downturn could be very different too, says Merryn Somerset Webb.
-
What companies should be prioritising this decadeEditor's letter In a world beset by uncertainty, companies should be prioritising slack over efficiency, says Merryn Somerset Webb.
