This writer explains our obsession with cryptocurrency
Frederick Kaufman’s money plot
Source: Other press
What is money Why do we need it?
These are some of the big questions that writer Frederick Kaufman explores in his book The Money Plot: A History of Currency’s Power to Enchant, Control, and Manipulate, published in the middle of the pandemic.
Kaufman, a journalism and English professor, is interested in what we project onto money, from our cravings for abundance and freedom to – most of all – security.
The book comes at a time when our most basic understanding of money is being challenged. (When I hear the word, I still imagine cash, not bitcoin. What do you imagine when you imagine bitcoin?)
One way to get an idea of what’s coming next is to look back. And if you read Kaufman’s book tracing the history of money, you’ll see how Bitcoin isn’t all that different from the pearls that were used as currency 40,000 years ago.
More from Personal Finance:
60,000 stimulus checks on the dead were returned
Make your expenses inflation-proof by avoiding these purchases
54% of Americans support government cuts in unemployment
I recently interviewed Kaufman about his new book. (Disclosure: I was enrolled in one of his courses at the Craig Newmark Graduate School of Journalism at CUNY in 2017.)
The following exchange has been compressed and edited for the sake of clarity.
Annie Nova: How has money changed the most?
FK: Primitive money is very material: it’s a feather, it’s a pearl. Over time, it becomes very metaphorical – a coin, paper money. Finally, of course, there is very little material money in the world. Only about 5 to 10% of the money in the world is in any material form. And then you could say the endgame is cryptocurrency. It has all the properties of primitive money, it is our security, except that it has no material parallel.
Photographer: Anthony Tafuro
AN: Why are we looking for money for security?
FK: In the Middle Ages, Christians begin to define the future and that will be the end of the world and the apocalypse. Everything counts on that. This turns the trading culture into that focus on expiration dates, and think of money: it’s all about expiration dates. It’s about when you get paid. It’s when your quarterly report is due. It’s all retirement planning. And of course a mortgage is based on when it expires? We insure the future and gain some control over it. That is the essence of what money is.
AN: But there is a cost, right? A mortgage is security, but also a 30-year term.
FK: It’s one of the ironies of money. We create this fiction and then we get caught by it.
AN: Is it a coincidence that we are so much more interested in cryptocurrencies during a pandemic?
FK: If you look back on the history of apocalyptic moments, people fly towards safety. And that’s money. Some people see their security blanket as gold, others as crypto. Some see it as cash. We are also seeing increased cash holdings during the pandemic. All of this points to the real essence of money: security, to ensure that we can maintain our status, to ensure that the narratives we have about ourselves can continue into the future.
Why are you using the money the way you are using it? It’s because you define a narrative of what you would like to be in the future.
AN: What if people’s stories are disturbed?
FK: If you really check, why do you have a retirement account? why do you work? Why are you using the money the way you are using it? It’s because you are defining a narrative about what you would like to be in the future, and if that gets cut off for lack of money, it’s traumatic. And we see this country going through an enormous period of trauma right now.
AN: What do cryptocurrencies have in common with the primitive forms of money you write about?
FK: Primitive money was more of a talisman than a store of value or a medium of exchange. The rings and pearls had magical powers to bring the wearer safely into whatever lay in front of them. Likewise, cryptos play the role of primitive amulets, especially those that have no value, like Dogecoin, but still promise luck. It is interesting that when Europeans first settled down, they forgot to bring enough money. So, much like those mining Bitcoin, they started making their own wampum.
AN: Why do you think there is so much skepticism about cryptocurrencies?
FK: Money is a story we all believe in. Wall Street told this story, trying to predict its end before the rest of us know the end. Of course, bankers get embarrassed when a new group of shamans and fortune tellers tell a new story with a new ending.