Author: David Wolman
Publisher: Da Capo Press – 228 pages
Book Review by: Sonu Chandiram
Money is a means of exchanging value that has been around not only for centuries of recorded history, but even before that. When cavemen hunted for animals as food to eat and survive, some of them likely had too much of the meat for themselves. Their fellow cavemen, who did not have any food, came up with some hard-to-find piece of stone or something to give in exchange for a piece of the meat. Everybody in the cave then accepted this form of exchange or barter for the sake of convenience.
Over the centuries, pre-historic people began to ascribe value not only on pieces of smooth and shaped stone but on pieces bark, leaf or other items, then on some type of metal that was scarce and difficult to obtain from the ground. Over time, and through recorded history, the means of exchange became gold and silver. Paper currency followed due to easier handling, but it was first backed up with the gold and silver monarchs owned.
Money today, as a form of exchange of value among people, continues to be represented in hundreds of colorful, printed rectangular pieces of paper (not backed up by gold) or on round or other shapes of metals with some value shown on them, in hundreds of countries around the world.
So when I came across this book The End of Money, I figured that the author David Wolman most likely wanted to write that the end of paper money is coming, and not the end of money as a means of exchange of value. I believe the end of money will probably never come, unless people decide to give away physical products or intangible services and get nothing of value in exchange for them.
I believe the predominant means of exchanging value in physical form continues to be printed paper and round pieces of metal, mostly made of gold and silver, even as paperless and non-metal transactions have grown tremendously in the last few decades in the United States, Europe and some developed countries.
I also believe that the exchange of these physical items, in return for goods and services, will continue for a long, long time more, as long as some portion of mankind – and today it still happens to be a very large portion of the world’s population – continue to accept these physical forms of value.
In China and in India, as in much of the rest of Asia and in the Middle East where more than half of the population of the earth lives, public exchange of physical money – printed paper and metal pieces – is predominant over electronic exchange and will likely continue to be the No.1 means of exchanging value for decades.
David Wolman cannot wait until a “cashless paradise” exists on earth, or at least in the United States. He gives several reasons why a cashless society is a desirable alternative. He writes that among other benefits, criminal activities can be reduced, hygiene can be improved, money and time costs for governments, banks and people can reduced, poor people can be empowered to lift themselves out of poverty (by being able to receive and send money via their cell phones), and citizens of some countries whose currencies have collapsed due to incompetent leaders can be protected from losing their cash savings.
He writes that with a cashless society, the printing of counterfeit bills (fake money) could be reduced or even eliminated, helping reduce crime and inflation; they ability of criminals to rob banks can be curtailed (when there is no longer a need for banks to store large amounts of physical printed paper currency and coins); bank notes are often dirty and spread germs; and the storage and transportation costs of physical money for governments, banks, companies and individuals can be reduced.
On a globe-trotting tour, David discovered for himself that one does not need physical money to live, eat and purchase needed goods and services, with some exceptions. Through eight chapters in this 200-plus page book, he presents the pro and con positions of different groups of people who are either in favor of, or opposed to eliminating physical money.
Among them are victims of national currency collapse (he cites the recent case of Iceland); counterfeiters; companies that take payments only electronically versus consumers who want a cash payment option; financial advisers who tell you to get rid of your debt by cutting up and throwing away all your credit cards, and pay only with cash; people who have less in life but can quickly have more if they can receive payments through their mobile devices; and collectors of rare coins who make money ranging from a few hundred dollars to a few hundred million dollars a year.
If, how long from now, and when a totally cashless world is going to become a reality, is just about anybody’s guess. Opinions and views on whether a cashless world (and many variations thereof) is preferable over the current situation prevailing worldwide will vary as much as the number of people you survey. In any given situation, decisions are made – consciously or unconsciously – based on costs versus benefits, formally known as a cost-benefit analysis.
The telex machine is gone. What are the reasons for its demise? I can cite some reasons and so can you. Is the fax machine now on its way out, now that you can print, sign, scan and email a piece of paper? You guess as to whether or when it will go the way of other things may be better than mine if you have some survey data that I don’t have.
I was hoping to see results of a survey and compiled data in David Wolman’s book on whether a majority of a particular city or a state in a country – in the United Sates for example – want to do away with physical money, and why. And reasons for those opposed to it.
I believe more and more places on earth are evolving towards electronic means of paying for and receiving goods and services. But progress does not come in tandem all over the globe. A mixed cash and cashless system as it exists today will continue for a while. How long, is anybody’s guess.
The reasons David Wolman cites why a purely cashless society is preferable to the current mixed situation are no doubt good, but here are some concerns and counter arguments:
Counterfeiting can be reduced or even eliminated, but criminals have been no doubt successful in stealing money electronically in other ways, such as through identity theft. As long as criminals and criminal intent is present, crime will continue in some form. Evil continues to exist no matter what form of value exchange exists.
Criminals have and will continue to rob banks electronically, if they cannot get a hold of physical bank notes and precious metals such as gold and silver coins.
The elimination or reduction of the spread of germs through physical money, I grant, is possible and no doubt desirable.
The reduction of costs of storage and transportation of physical money need to be compared and counterbalanced. We need to find out what the additional cost of electronic transmission of money would be, as more people reduce use of physical money and increase electronic transmission of money.
One major concern is continued increase in U.S. government debt and the resulting inflation. Creating electronic money simply with the touch of a few keys on the keyboard is a quick and easy way to create debt and inflation.
The actual easy addition of a gigantic amount of $4.7 trillion to US debt, created electronically “out of thin air” to pay for government deficit-spending in the last three years since Obama took his oath as president on January 20, 2009 has imposed huge burdens on the next generations of Americans.
Do we really want a totally cashless United States that makes it very easy to add to the financial obligations of its government? Having physical gold and silver as required bases for the creation of currency either electronically or through printing, coupled with a balanced-budget amendment to the U.S. Constitution are two must-have requirements to prevent the imminent collapse of the U.S. dollar.
Many are in favor of having a cashless society, but there are many opposed to it for the reasons we stated above, as well as those the author Wolman gathered through his travels and encounters with various people. This debate will continue for decades. But we tip our hats off to David Wolman for his pioneering efforts on this subject and for presenting his findings in this valuable book.