Question

if everyone in the US were prohibited from using paper money and coins (credit cards and checks would be acceptable) what effect donyou think this would have on society?

Answer 1

Talking about the removal of paper notes and coins from the economy, it will rather not affect the economy as such. Everything has become digitalized and if credit cards and cheques are acceptable, then there will hardly be any harm that will be caused to the economy.

Money is just bits of paper or even just some bits in a digital system. Prohibiting money is not that big a deal from the macro perspective, although when someone's paper money goes up in smoke, it does change his financial situation i.e. he becomes less wealthy. But money is not wealth. A point that brings out the distinction between money and wealth is that money can be destroyed more easily than wealth.

Governments routinely engage in the theft of wealth through the creation of money. Since governments have the monopoly on the creation of money, whenever it wants to consume more, it prints money. It then exchanges the newly printed money for wealth. This leads to inflation. Inflation means that the money you have will buy less stuff than you could have bought before i.e. the amount that the government has stolen from you by printing money.

One way out of this theft of wealth through the creation of money is to have a competitive market for the creation of money i.e. private money. Taxes could be paid using government issued money. But for all other purposes, people would be free to use whatever money they want to use.

There is much truth in the old saying that money is the root of all evil but not the truth that is traditionally claimed for it. The actual truth is that the government’s monopoly to print money with abandon is the root of a great deal of evil.