The Death of Money: How the Electronic Economy Has Destabilized the World's Markets and Created Financial Chaos

by Joel Kurtzman

Ever wonder why today's corporate leaders can't seem to plan for the long term? Why government can't control inflation? Why the stock market is more volatile than ever? Why interest rates rise and fall like the tides? Why economic forecasts never seem to be right? In The Death of Money, Joel Kurtzman, an economist and business columnist for The New York Times, brilliantly and convincingly argues that economic stability and a rapid rate of growth, once America's hallmarks, have been lost because the fundamental nature of money has changed. Money - in the traditional sense - died two decades ago with a single stroke of Richard Nixon's presidential pen. What followed was twenty years of a new economic disorder that began with soaring oil, gold, and real estate prices and continued with an unprecedented consumption binge by government agencies and the citizenry alike. In the twenty years of chaos, we've seen the savings and loan industry collapse, the banking system become weaker, eclipsed by the economy of finance, and an entirely new global medium of exchange created that Kurtzman calls "megabyte money." Most economists, Kurtzman argues, still don't know what - or how - it all happened. Megabyte money is different from anything that has preceded it - and from the money jingling in your pocket or purse. It is part of an intricate and fragile electronic system of truly global dimensions and of amazing complexity. It is a nonstop, seven-day-a-week, 24-hour network that links tens of thousands of computers in places as lofty as the Federal Reserve and the Tokyo Stock Exchange and as lowly as the automated gasoline pump that accepts credit cards. Megabyte money has created an entirely new global economy, one which, Kurtzman warns, is still largely unregulated, where government agencies, including the Federal Reserve and the Treasury, have ceded much power to the world's bankers, speculators, corporate treasurers, financiers, and computer programmers. In The Death of M

Genres: Economics

256 pages, Hardcover

First published April 1, 1993

Reviews

[Beth Barnett · Rating 5 out of 5]

Very interesting discussion of the workings of the stock market and its various money "products." Kurtzman also discusses the change from gold-standard-linked money to electronic money based on faith alone, and its effects, good and bad.

[RevFile News]

At the time he wrote this book in 1993, JOEL KURTZMAN was Executive Editor of the Harvard Business Review. For anyone tracking global trends toward a global electronic monetary system, this book is a "must read."

Excerpts:
"Money now is different. It is no longer a thing; it is a system. Money is a network. It is connected to the huge number-crunching supercomputers at Morgan Stanley & Company and to the PCs of individual investors ...

"Few people realize that money, in the traditional sense, has met its demise. Fewer still have paused to reflect on the implications of that fact.

"Tangible money, old-fashioned money ... is a phantom from the past, an anachronism. In its place is an entirely new form of money based not on metal or paper, but on technology, mathematics, and science. This new 'megabyte' money is creating a new and different world wherever it proceeds.

"Money is now an image."

[Reader · Rating 3 out of 5]

Written soon after the Wall Street crash of 1987, the book explores the new economy which may have brought it on. The author begins with Nixon's decision to abandon the gold standard. That lead to the creation of an economy based on debt. I get $100 and put it in a bank. The bank keeps 10% and loans 90% to builder A, who deposits his $90 in his bank, which keeps 10% and loans 90%, etc. Suddenly a $100 check become worth so many more times its original value. The author also discusses how, thanks to computers and algorithms, the economy now runs almost on automatic. There are few investors making knowledgeable decisions on individual risks, but instead relying on software to monitor the market has a whole then suggest transactions based on the whims of the day. It's a dated book, but applicable to today, especially in relation to the housing debt bubble's collapse.

[Lauren Sheil · Rating 4 out of 5]

Some of the best quotes from this book...

Economics, far from being just a science, also reflects our values and sensitivities. It is one of the ways in which we, as a society, organize and define ourselves. – Joel Kurtzman; The Death of Money

In spite of all its fervid activity, money remains a naked symbol with no intrinsic value of its own and no direct linkage to anything specific. It is, as the French economists like to say, merely a “token,” a simple game-board piece moved from one file to another in the world’s vast computerized database. – Joel Kurtzman; The Death of Money

If companies were run just for the shareholder, it would be as disastrous to the country as if everyone saved during a depression. Perhaps more. – Joel Kurtzman; The Death of Money

[Larry Johnson · Rating 5 out of 5]

I read this for an Economics class back in 1996. The way the economy continues to change and with online payment sites such as Paypal the book is a must read for current economic students or those interested in the economy. It will only be a matter of time before some of the concerns on how "money" will change will actually exist and the question will be how will it affect the global economy.

[Noric Dilanchian · Rating 3 out of 5]

Remarkably ahead of its time. Kurtzman foretold so much that has followed.