Paper currency: Writer David Wolman at a book signing near Harvard University.
The End of Money reads like a late-night walk through the seedier corners of the global economy. There’s the small-town Baptist minister who calls electronic commerce the “Mark of the Beast,” the North Korean printing presses turning out counterfeit $100 supernotes, and the strange German ATM that spits out gold coins. End times are a-coming.
For author David Wolman, it’s paper money that is due for a rethink and possibly a decommissioning. In his book, he assembles some convincing arguments that good old cash is much more expensive to society than anyone realizes. It’s not only the monumental cost of printing money, but also the cheaters who use cash to avoid $130 billion in taxes—in Italy alone.
The alternative is electronic money. To make the case, Wolman presents characters—like the pushy Indian mobile-money entrepreneur who calls himself the “assassin of cash”—who sometimes seem as likely to be charged with treason as they are to reinvent commerce. Yet doubts over paper currency are shared by the mainstream, too, including the Gates Foundation and the U.S. military, for whom the downsides of cash—it pays for insurgents’ bombs, for example, and keeps the poor downtrodden—are increasingly a part of a strategic rethinking of how money should work, or what Wolman calls a “quiet uprising against cash.”
Wolman stops just short of advocating against paper money. Paper bills account for so much economic activity that it’s hard to argue the world is ready to live without them. And because any substitute would need to be electronic, it also raises questions about what would happen if the lights ever went out. It’s precisely such profound, even apocalyptic, questions that The End of Money succeeds at provoking. Technology Review business editor Antonio Regalado spoke with Wolman during his book tour.
TR: What’s the big picture? How much cash is out there?
Wolman: When it comes to U.S. dollars in circulation, the estimate finally broke the $1 trillion mark a year ago. But of course “in circulation” is a bit of a term of art. Most of it is locked away in briefcases, vaults, and safety deposit boxes. Much of it is gathering dust out there and losing value.
In your book, you write, “we may very well be on the brink of a monetary revolution.” What did you mean?
One way to think about the end of cash is the death-by-a-thousand-cuts idea. A lot of people have the false impression that there will be this formal ceremony for the end of cash. But it may be more like the death of payphones, right? They gradually become obsolete. For cash, what is happening is it is just getting attacked from so many sides. One area is innovation in alternative currencies, or virtual currencies, and another is new payment technology, especially involving mobile phones. And maybe there is an emerging third category, which is added attention to the true cost of cash. Although we are programmed to love the stuff, when you look at the back story of that $20 bill in your wallet, in fact it’s not so simple, it’s not so cheap, and it’s not so safe. When you combine all those forces, it’s safe to say that how we think about money is going to be incredibly different five, 10, or 15 years from now.
You spent some time in India and wrote that cash is “crushing” for people in that society. What does India tell us about the problems of cash?
Ignacio Mas calls cash the “enemy of the poor.” You and I have the luxury of toggling between electronic money and cash as we see fit. Electronic money is faster, it’s cheaper, and it’s safer, usually. But the poor are stuck with cash, and that is crushing, because they are trying to climb out of poverty. Cash is not helping when it comes to the climb out. Cash is “turbo liquid” … it’s very slippery. It can get stolen. And that is a problem when it comes to people’s efforts to save, to build security against financial shocks, which when you are teetering on the edge of poverty can be anything from a broken-down moped to a sprained ankle. And you need to be saving for those big-ticket investments—farming equipment, education—that make the climb out of poverty both possible and permanent.
I went to one of your book readings at Harvard, and there was one lady who sounded a little bit angry. Are you being cast as an enemy of cash?
In the book I make an argument: we are in the twilight of cash, and maybe we should welcome that. Maybe it’s time to say good night to it. You can’t be simplistic. Credit cards catalyze a lot of financial problems for people. People are more careful of their budgets when they use cash. That is not something that I can dismiss.
But are people kind of coming after me and seeing me as the enemy? Absolutely. In radio interviews I am doing, most callers do not call in and say, “Wow, this is illuminating, I never really considered the idea that cash is most punitive to the people who have so little of it,” even though that is true. Instead, what they call in to say is, “You are going to have to pry it from my cold dead hands.”
There are a few categories of people who are not that happy with me. One group fears things electronic, and hackers generally. And this is so odd to me, because so much of our financial lives exist in the electronic realm already. Yet when you remind people of that, suggesting that we go from 98 to 100 percent electronic, they freak out. They start to worry about financial crimes in cyberspace. Well, getting rid of cash will get rid of the bank robbers. There were 9,000 bank robberies in 2010. That is a lot. If you didn’t have paper money, those costs would vanish. Instead people say yeah, yeah, yeah, but people are going to still steal from banks electronically.
And then there is a group that are realists, or maybe defeatists, who say, “Look, we can’t even get rid of the penny, and you think that you can get rid of cash?” I actually think we could get rid of the penny and the nickel. And with a little more scrutiny about how $100 bills are being used out there, I think we could get rid of the $100 bill sooner than we suspect. That brings me to another category of people who are not writing in, but by default I assume are not happy with me: mobsters, drug dealers, and tax evaders.