Comment by AnthonyMouse | Hacker News Reader

Comment by AnthonyMouse | Hacker News Reader

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> I find it between puzzling and concerning that the mention of cash being used in real estate deals doesn't mention why.

Can you not imagine legitimate reasons for doing this?

A small business owner makes a deal with a property owner to operate the business out of the property on a payment plan where the profits from the business buy out the property owner over time. The customers of the business pay cash so the business pays cash.

The buyer or seller doesn't trust the local banking system (e.g. because they have seen recent evidence of not being able to withdraw their money from it).

The banks charge some fees that can be avoided by cutting them out of the transaction. Even small percentage-based fees add up to a lot of money on real estate sized transactions.

The seller is also the buyer of a different property and they or the other seller wants to transact in cash for one of the above reasons, so they would prefer to have cash from this transaction to use for the other one.

In theory the transaction could be made to involve the banks by everyone doing extra work for no reason, but at the margin that scuttles the transaction and even when it doesn't it still generates overhead that dampens the local economy makes peoples lives harder unnecessarily.

My point was not that there's no reason for cash in real estate. You being up a real scenario, but my point is that the scenario I describe is so common and well known that anyone with some contact with the system would know to bring it up. That the journalist didn't brings the rest of the article into question.

Imagine someone writing that anti-virus brings pain with it, because it has a negative side effect on programs that need to shim and redirect system calls. Yes, it does, because the vast majority of the time that use case is a virus. If that's all they wrote on that front you'd wonder if they really understood computers.

But that's always the argument people who want to ban things present. Bad people are using it. It's implied by the context.

The article's point is that good people are using it too and getting rid of it hurts them as well -- or hurts them worse, because criminals have alternatives that are only available if you break the law (or have the margins that come from black market trading).

And people do make that argument against antivirus. It detects things that aren't viruses and not things that are. Half the non-tech people with Windows PCs have antivirus and twelve pieces of malware installed at the same time. So if it has high cost and low effectiveness then why have it?

> buyer or seller doesn't trust the local banking system

I've had to open and maintain bank accounts in India. (No more.) The only way I got anywhere was by threatening lawsuit, under force of a lawyer and New York State's financial regulator, in an American court.

One missing part of this puzzle is tax evasion. Cash transactions allow people to avoid tax . On paper sale price can be lower thus lower tax for registration and transfer charges to govt and then pay the difference directly to the seller. Thus evade some tax.

That is the argument made by banks. It's gibberish. If you got rid of cash, people could still trade in arbitrary commodities (gold/silver/gemstones), favors, quid pro quo, hard currency of other countries, drugs, etc. Meanwhile the government can catch you evading taxes regardless because you're claiming $10,000/year in income while living in a five million dollar house and driving a $70,000 car.

Selling real estate for half in cash and half in bank deposits (wire transfer or whatever) is just a lot more convenient than half in bank deposits and half in commodities that aren't nearly as liquid.

You can then take that cash with you to your next real estate purchase, or maybe break it up over time -- maybe take less cash out when you deposit your paychecks, maybe buy larger small items with cash, maybe pay for part of your car with cash, etc.

You're saying bullion (exchangeable for the spot price at any pawn shop), or US dollars or Euros, are materially less liquid than the local currency? There are many countries where the vendors prefer USD to the local currency.

And the only reason the local currency is so liquid is because there is one. If you got rid of it, people would start using something else and it would have the same liquidity because then it's the thing that people accept.

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