As we have discussed, the only reason printed paper money has purchasing power today is because people accept it as having value. You accept paper money in payment only because you have confidence in the fact that other people will accept your paper money when you wish to pay for something.
It is not too difficult to see how check writing came into practice. It, too, was based on convenience and confidence. The practice of check writing was somewhat of a throwback to the old idea of signing over to someone else the receipt that the goldsmith had issued when you gave him your precious metal to hold in his vault for “safe keeping.”
The explicit instruction on that paper check allowed a depositor to tell the holder of the value to transfer the funds from the depositor’s account to the account of another to whom the payment needed to be made. As long as the intended recipient of the funds was convinced he would actually end up with the funds, he would accept the written check as payment.
The plastic credit card was a phenomenon of my lifetime. In the beginning it was not really seen as money, because the credit card required another form of money, either cash or check, to pay off the monthly charges. But the convenience of the plastic credit and debit cards was so alluring and so addictive that the requirements for the factors of confidence were hardly given a second thought. More and more usage of the plastic credit cards included the direct authorization of transfer of value from holder, through the financial institution, and on to the merchant.
Over time, the tangible aspect of money has come to be seen as a nuisance as well as a nescience. There is so much tacit confidence and presumption in the emerging system of ethereal money that to me it smacks of overwhelming incredulity. The full confidence is placed not in something that is even remotely tangible and protectable, but in the wishful thinking that envisions a failsafe system of convenience and absolute confidence placed in a collection of numbers stored in a computer. Cash has become a concept and not a tangible asset. That is a scary and very vulnerable position for a culture.
(Research ideas from Dr. Jackson's new writing project on Cultural Economics)