The Death of Money

Why do you buy things?

Let’s assume you are a rational consumer. You buy things you value. When you buy a good or service you expect it to retain its value over time. Or else why would you buy it? The money you spend represents the amount of your time and effort you expended to earn that money. You put in X amount of time to earn X amount of money. Granted goods depreciate over time but most do not lose value overnight. Consumerism breakdowns if this happens because you would not spend money on things that immediately become worthless.

Capitalism: The Progress Machine

Progress is difficult to define. It’s an abstraction and it depends on what you value. But lets assume progress is synonymous with the growth of technology. Our current view of technology is associated with the electronic gadgets ubiquitous in daily life. But the first example of technology humans used was most likely a stick or a rock, whichever was picked up first. Technology can be anything that enables us to advance our capabilities and influence our environment.

“Any sufficiently advanced technology is indistinguishable from magic.” — Arthur C. Clarke

Progress is difficult to measure. You sort of know it when you see it. So claiming progress is growing at any specific rate seems irrational. However, consider this thought exercise. Imagine you took a man from 200 years ago and brought him to present day. To him our world would seem run on magic. He would not be able to comprehend much of our environment and daily activities. In his time the light bulb, telephone, and automobile were yet to be invented. Imagine how overwhelmed this man would be to see our crystalline towers, glass books with moving, audible, and lifelike illustrations, or huge flying horseless carriages. To him this is all sorcery. But to us they are buildings, smartphones, and planes. Now imagine you took a man from 200 years before our time traveler and brought him to 1815. Would he be as overwhelmed by the change in the world? To have a similar effect of astonishment, conceivably we would have to go back further than 200 years, maybe a couple 1000 or 10,000 years. Thus, this gap of astonishing progress gets exponentially shorter with the linear passage of time, i.e. Kurzweil’s Law of Accelerating Returns. Intuitively, it works by layering our knowledge and technology on top of each other. We use the technology that we have to create better technology, then use the new to create even better technology. Futurists argue the progress that occurred in the 20th century will be achieved from 2000 to 2020. What took 100 years to accomplish can now happen in 20 years. Even if this estimation is incorrect, it is safe to say based on our thought exercise that it will be less than 100 years barring any catastrophic event.

How does this apply to money?

If the gap of astonishing progress gets shorter and shorter, a 20th century’s worth of progress could eventually happen in a year. Then it could very quickly happen in a month, a week, possibly a day. At this point, why would you buy a good knowing the next day something substantially better will replace it? It would be like spending a week’s paycheck to buy a rotary phone when you know that the iPhone 6 will be available tomorrow. You would not be able to justify buying anything. This concept is similar to hyperinflation, which destroys the real value of local money, only on the other end of the transaction. A hyperinflation of goods and services would destroy the value of global money — brought to you by capitalism and the pursuit of progress.

Thanks for reading.

-Mike