econlife - Where People Prefer Non-Cash Transactions by Elaine Schwartz

Last week, Washington D.C. started pondering whether to prevent businesses from becoming cashless. Philadelphia, New Jersey, and San Francisco have already said that retailers need to accept cash payments. In New York City, a ban will soon go into effect.

After this photo was taken in San Francisco, the city said businesses could not refuse cash:

Countries That Like Cash Transactions

You can see that Sweden, at 20 percent, is close to the bottom of the list. In 2018, just 13 percent of the Swedes surveyed said they had used cash for a recent purchase. Businesses say non-cash transactions save time. The one group that gets short changed are those who have no credit cards nor bank accounts:

Non-Cash Transactions

Recently, Visa offered 50 small U.S. food service businesses a $10,000 award to assist a move toward cashless transactions.

As Visa hopes, a 2019 San Francisco Fed study indicates we could be moving in a cashless direction. Predictably, we are using cash for “small value” purchases, mostly those that are less than $25. It also depends on your age. Individuals 18 to 25 and over 65 have more of a tendency to pay with cash. But the trend is down from 30 percent of all transactions in 2017. For the three consecutive days during October covered by the study, participants used cash for 26 percent of all their transactions.

Represented by green, cash transactions are diminishing:

We use cash more typically for gifts and payments to friends, family, and others, but not our household expenses:

Our Bottom Line: Money

Cash is not the only kind of money. To be defined as money, a commodity needs three basic characteristics;

It should be..

• a medium of exchange (people accept it)
• a store of value (it retains it spending power)
• a measure of value (people know what it can buy)

As a result, demand deposits and the bank accounts accessed by a debit card are also money. So, even if a city permits businesses to ban cash, they still could be accepting money.

My sources and more: It’s always so nice to discover a synergy between articles. For that synergy, I suggest this NPR article and a San Francisco Fed report.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - Why the Secret Service Monitors Fake Movie Money by Elaine Schwartz

When Rush Hour 2 needed many millions in 100 dollar bills, Independent Studio Services (ISS) sent them 14 pallet loads of 4′ x 4′ cubes of fake money. During the filming, the Secret Service showed up, issued a cease and desist order, and accused ISS of counterfeiting. It appears that movie extras had been spending the cash nearby.

Although no one wound up in jail, the raid cost ISS a lot of real money. Their digital files were confiscated and billions destined for a slew of movies, destroyed.

Below, the real $100 bill is the top image while the Rush Hour 2 fake is under it. Commenting on the bogus bill (that does look rather real), a Secret Service agent said,”…son of a gun, if it’s green and it says ’20’ on it, somebody will take it.”

In this Rush Hour 2 scene, the fake money flies after an explosion in a casino:

Occasionally a movie maker decides to use actual cash. When The Brinks Job (1978) needed close-ups of U.S. currency, they borrowed the money from a bank. Real guards hovered near huge piles of real cash that, after filming, was counted and returned ASAP.

So, where are we going today? To what makes money real.

But first…

Counterfeiting History

Abraham Lincoln signed the act that created the Secret Service on the day he was assassinated (April 14,1865). Because somewhere between one-half to one-third of U.S. currency was reputedly fake, the Secret Service’s sole purpose was to combat the counterfeiting.

Fast forwarding to 1992, we can look at current counterfeiting criteria. According to the Counterfeit Detection Act of 1992, the fake money has to be clearly bogus in several ways.

It should be…

• either 75% smaller or 150% larger than real cash.
• one-sided.

Also, after its final use, the equipment used to make the money has to be destroyed.

Our Bottom Line: What is Money?

The textbooks say that any commodity can be money if it has three basic characteristics:

1. a medium of exchange
2. a measure of value
3. a store of value

It makes sense that money needs to be real for us to believe it is a medium of exchange. Get enough of those fake movie dollars in circulation and we have a problem.

My sources and more: Thanks again to 99% Invisible for another quirky episode. Only the beginning, the fake money story took me to more detail about movie prop money at priceonomics and Mental Floss. From there, it made sense to look at some counterfeit money history.

Please note that sections of Our Bottom Line were in a previous econlife post.

Ideal for the classroom, econlife.com reflects Elaine Schwartz's work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

From the Homeschool Front...Frederic Bastiat by Colleen Hroncich

One of the perks of homeschooling is that I get to learn alongside my children. Not long ago we studied Frederic Bastiat, a French economist and statesman who lived from 1801-1850. He had a tremendous ability to use analogies from daily life to explain economic phenomena.

One of his most important essays was “That Which is Seen, and That Which is Not Seen.” Here Bastiat explains that we must evaluate an action not just by looking at the immediate – or seen – effects. We must also examine the subsequent – or unseen – effects from the action.

This, he notes, is the difference between a good economist and a bad economist: “the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee.” We witness this frequently in the political world. Politicians love to gain votes by supporting laws that seem to be beneficial one group or another. They rarely worry about the future consequences of their actions, knowing they’ll be gone when it comes time to pay the piper.

Let’s face it, though, we can see the same thing right within our own homes. If we use a credit card to go on a fantastic family vacation, we might be paying for it for years to come. Every year millions of people take on a huge debt burden buying Christmas gifts for everyone on their lists. Some are probably still paying it off when the next Christmas comes around. It can be easy to whip out a credit card in the heat of the moment, but we need to look ahead and see what the long term effects of that swipe will be.

When it comes to raising children, the same principle applies. Sometimes it is easier for me to just clean up a mess than to corral my kids and get them to finish the job. The seen effect of me doing the work is that the mess gets cleaned up more quickly. The unseen effect is that I’ve missed the chance to teach my children to clean up after themselves … thus ensuring future messes left for me.


Whether dealing with economics, politics, or home life, considering the unseen effects of an action can save a lot of problems down the road.

Colleen Hroncich loves that homeschooling allows her to learn right alongside her children. A published author and former policy analyst, Colleen’s favorite subjects are economics/public policy and history. She has been active in several homeschool co-ops and is a speech and debate coach.

We Will Change the World by Dave Smith

I'm fortunate that students at Garden Spot Middle School in New Holland, Pennsylvania have really big hearts.  

A large percentage of them know what it’s like to live below the poverty line because their families do, and in turn, they have real empathy for others around the world that live in difficult situations. Some have first-hand knowledge of growing up in a country like Haiti. And they have powerful stories to share with their classmates.  


For example, every day our Haitian student’s family would wake up early to go to school. Then after school they walked for miles with their father, hauling five-gallon jugs from the village well up the mountain to their house, so that they would have drinking water for their family—an amount that would last for only a day.

Just like those students, people around the world have powerful stories to tell. It is critical in this global community we all live in now that every student is made aware of how others around the world live. Living standards are different in most countries, and we’re fortunate here in America. 

As a teacher, the best way I have found to do this is by incorporating the Pennies A Day video. Pennies a Day shows firsthand how the idea of microloans plays out in the real world. Microloans are a critical component to helping end world poverty, so I've made giving microloans to people around the world a key component of our class’s service projects.  

In my classroom, I give students the opportunity to replicate in real life what they see done in the video. We use the website, www.kiva.org to lend out $25 to entrepreneurs all over the world.  The kids do what they can to raise money in a variety of ways, and then choose whom they want to lend to on the website, and then we do the loans live in class. It makes it even more real to the kids, and takes the lesson from the kids hearing about it, to seeing it, and finally to doing it. Most importantly, by making it “real” to them, they see that even they--at 13-years-old--can really make the world a better place.  I tell students that we not only can change the world, but we will change the world.  

I had the opportunity and pleasure of hearing my hero, Muhammad Yunus, speak this past year at a local college; and I must say this man is truly a rare, living treasure in this world.  To be able to see his idea come to fruition in this Pennies A Day video in a very concise, easy-to-understand way is awesome. My students can see how such a simple idea can truly change the world and work towards eliminating poverty. Students get real insight into the lives and culture of the people of Bangladesh, and see their homes, their clothing, their food, their cooking stoves, their transportation, and their water sources and so on. We learn the differences between their banking systems, made up of a card table and benches, versus the brick-and-mortar banks students are familiar with here in America. It’s a powerful lesson.

I've now been doing this with my students over four years, and in that time our "One Million Dollar Team" on the Kiva website has loaned nearly $60,000, helping over 2,300 families in 67 different countries around the world- including the United States.

My ultimate goal is to have the kids take on the role of entrepreneurs, to go above and beyond to do things to help raise the money to help others. Some have chosen to do bake sales, others have made duct-tape wallets, while others have made jewelry to sell and have donated their profits.  This lesson encourages them to set goals, and to make real change in the world. 

The best part is to see a real change that occurs in the students’ thinking and behavior. They begin to think globally, as opposed to simply thinking about their own little home town. They can learn about geography, history, mathematics, economics--the possibilities are endless--all the while actually making a real difference in the world.  It simply doesn’t get any better than that.

Thank you, izzit.org.

New Release: 4 Ways to Spend Money, The Musical

Olivia's fallen in love...with economics! She's fascinated by Milton Friedman's premise that there are only 4 ways to spend money. In this glee-ful high school musical, she shares the specifics about how people spend money differently, depending on whose money they're spending, and who they're spending it on.

Click here to watch the entire video and order as your FAV (Free annual video). Click here to purchase.