Last week I did myself a favour and re-watched that great Australian film called The Castle, where Darryl Kerrigan nicely asked his Lebanese neighbour, who he was helping to keep his home from a greedy developer:

“What is it with wogs and cash?”

Sure, the new age cancel culture mightn’t tolerate such working-class name calling, but in the context of the film, it showed that a person from a different era should be judged more by their actions than their words.

But why is this relevant to my daily money column? Well, the SMH today carries a story about the incredible shrinking world of cash, since the economy-changing arrival of the Coronavirus and its locking down of our lives in 2020 and 2021.

Research from CommSec’s chief equities economist, Craig James, shows that for the first time since decimal currency was introduced in 1966, the amount of cash in the economy has shrunk by a billion dollars over the past year. That means the RBA has taken out a billion dollars’ worth of notes because there’s less demand for them as we use credit and debit cards to buy and sell stuff.

This doesn’t surprise me as I often feel bad about not carrying cash when someone down and out asks me for some cash, or a guy offers to clean my car windows at a set of lights and I have zero coins! When you use a lot of cash, you end up with a lot of coins, but they are becoming a thing of the past.

In fact, thinking about our changing cash world, I was walking down George Street Sydney, when a street person asked for money and I explained that I was cashless. He quickly replied: “I do accept credit cards!”

The pandemic increased our addiction to credit cards with the explosion of online spending by consumers, who were effectively banned from shopping in the malls and on our high streets.

I recall interviewing Australia’s most well-known demographer Bernard Salt, who admitted that being locked down in Melbourne in 2020 forced him to buy something online for the first time! Bernard said he enjoyed it so much that he’d be happy to shop and buy online forever!

Decisions like this (forced upon us by the pandemic) have put a large chunk of cash on death row.

Yep, it’s a changing world and the following shows what’s happening to cash:

1. $50 notes are less in demand nowadays.
2. The RBA says three out of four Aussies are low cash users. In 2019, half of us were seen as low cash users.
3. Over the past three years, the percentage of cash payments has fallen from 32% of total transactions to only 16%. This means card payments cover 84% of spending transactions.
4. The $100 note is the only note growing but that growth has fallen from 7.4% in 2021-22 to 2.4% in the past financial year.

This trend in cash is explained by a new world of consumers who like to use cards. It tells us why the Government has declared that cheques will die in 2030.

The SMH’s Shane Wright is on the money when he looked at the implications of an increasingly cashless society. On the shrinking of notes in circulation, he wrote that “…economists say [it] will hurt criminals operating in the black economy but potentially make day-to-day life more difficult for the elderly and those living in regional areas.”

On cracking down on the black economy, most shopkeepers, cafes etc now have to accommodate consumers who want to use the fantastic plastic and simply prefer the ‘tap and go’ world of modern transactions. This has helped the Tax Office collect more tax from small business. Clearly, the growth of $100 notes helps the black cash economy but it’s only a matter of time when Darryl Kerrigan’s question about certain ethnic groups (and their adoration of cash) will become virtually meaningless in a modern world. Who knows, one day $100 notes might come with a tracking device so authorities will actually know where they’re stored! That could be a world that criminals and tax dodgers would hate!