/biz/ - Business & Finance

CASHLESS PAYMENTS ARE ABOUT INFLATION

When even a large minority still use notes, there is a limit to how much inflation will be tolerated by the general public: consider the clichéd moaning pensioner. The banks can issue new banknotes every decade or so, with the denominations ever larger and size of the smallest notes ever smaller, to make the public feel as though for example a £5 note is “supposed” to be worthless today, whereas it used to be this giant white thing (pic related).

They still had to limit inflation though, it couldn’t be too noticeable within the period of a note series’ issue. But if they get rid of banknotes entirely the public can become used to and accepting of even massive annual inflation. Banknotes used to limit this, because everyone had an idea of what a given note was supposed to buy at least for a while. Who is to say anymore that you should be able to live off of £50 a week? Who is to say anymore that £5 “should” buy a morning snack and a newspaper? If you suddenly need £100 digital pounds a week to live and that snack and paper now cost £20, well that will just be the new normal and without a psychological anchor to the old prices it will be easier for people to accept a 50p, £1, £2 increase, not over decades or years anymore, but perhaps within a single year.