The End of Money

by David Wolman

  Because we can hack our behaviors for the better, we shouldn’t underestimate our ability to decipher our biases, work around them, or capitalize on them. It would be a mistake to reject future payment tools or new forms of money out of hand, just because today’s tired old credit cards boost willingness to pay and undergrads at one university don’t steal single dollar bills out of shared refrigerators.

  And as this new generation of technologies cuts into that category of transactions for which we still think cash is useful, another, completely different, pressure on cash is coming from the changing landscape of currencies. If notes and coins represent denominations of national currencies, what will happen to cash in a world in which fewer and fewer countries bother to have one?

  CHAPTER 5

  The Patriot

  Goddam money. It always ends up making you blue as hell.

  —HOLDEN CAULFIELD IN THE CATCHER IN THE RYE

  Helvitis Fökking Fökk! Loosely translated, this Icelandic expression means “Oh, hell fucking fuck.” I’ve seen it emblazoned on T-shirts in a hip Reykjavik clothing shop, local economists and academics told me about it, and even a friend who works at Iceland’s national hospital mentioned it. Now here it is again, on the wall of the café where I’m finishing a plate of soggy French fries.

  It started with a placard carried by a bearded man who, together with several hundred people in this country of just 300,000, spent several chilly autumn days in 2008 protesting outside the country’s central bank. Iceland had just suffered what was the most spectacular banking collapse in the history of the world. The expletive on the man’s placard became something of a catchall pronouncement for everything that went wrong.

  From this spot at Café Paris I can see the Parliament building, as well as the statue of Jón Sigurdsson, the father of Icelandic independence. Sigurdsson is also the face of the 500-króna banknote. Adorning the café wall are fourteen large prints created by a local artist and his son depicting an abbreviated history of Iceland and the recent economic crisis. Each one is painted in a vibrant Dick Tracy-meets-manga style and is accompanied by a small explainer in English.

  They start with warring Vikings striking out from Europe. The fourth panel shows a man in a V-neck sweater, smiling and toasting a glass of red wine with the skyline of a big city behind him. The caption reads: “More than a thousand years passed until we Icelanders returned to Europe. This time, we didn’t bring swords or shields, our arsenal was laced with money. But it wasn’t our own money for we borrowed it from large international banks.”

  The next panels depict the crash, with a man seated on the edge of a skyscraper, smoking a cigarette, and, if not contemplating suicide, certainly at his wits end. Understandably so. Almost overnight, Iceland’s stock market lost 90 percent of its value, and the country as a whole was saddled with debts amounting to roughly ten times the GDP, or all the money of the state.1 For a sense of scale, Iceland’s $12 billion GDP is about $4 billion less than Nike’s annual revenue. The panels after that portray the protests, including the forlorn-looking man wearing a hoodie and carrying his now famous sign.

  The investment bankers blamed for the crisis are known locally as the Viking Raiders, or “the forty, plus two women.” They had embarked on a global shopping spree with borrowed money, gobbling up assets including a power plant in India, part of a European airline, and a pro soccer team in England. How did they do it? With lots of borrowed money denominated in foreign currencies. Those assets hypnotized them into thinking they were earning real money. With appreciation, they were, sort of—provided you don’t mind blurring the definitions of equity and money. One Icelandic economist summarized it this way: “The banks were trying to lift themselves off the ground by grabbing the hair atop their head and pulling up. It doesn’t work.” Yet for several years it did work, at least on paper. Iceland’s banks were hoisting themselves up by their hair, much like a pyramid scheme can create the illusion of viability.

  In the days after the financial collapse, Icelanders found that everything they needed to buy—gas, prescriptions, clothing, groceries—was three or four times more expensive, while the loans on their homes and cars had suddenly doubled or tripled. After growing grotesquely inflated with lousy assets, the country’s three main banks imploded. But their failure didn’t just leave a discrete mess. Because the banks had amassed debts far exceeding Iceland’s GDP, they pulled down the entire economy, causing the króna to lose more than half its value against other currencies and sending the government to the brink of bankruptcy. Some Norwegian commentators floated the idea that Norway should assume its neighbor’s debts and effectively buy back its former colony.2

  Icelanders are now considering joining the European monetary union, which will mean abandoning the króna in favor of the euro. Many economists and financial journalists say this is inevitable, or were saying it before the sovereign debt crises in Greece, Ireland, Spain, and Portugal rattled the world’s confidence in the euro. That debate will continue, but, sooner or later, Iceland will probably sing the króna’s swansong, joining a growing number of countries and territories that have dumped, or are thinking about dumping, their national currencies.

  One idea for the monetary future of the world is to nuke all but a few of the most influential currencies. It’s not as radical as it sounds. Panama, El Salvador, Ecuador, and East Timor have all officially adopted the U.S. dollar, and in countries from Uruguay to Cambodia, the Caribbean to the Caucuses, the dollar is accepted just as regularly, if not more so, than the local currency. The situation is similar with the euro. Estonia is the most recent addition, at number seventeen, to join the common currency club. Latvia is on deck, and a handful of countries around Europe use, but aren’t technically on, the euro. In other cases, it may come as a surprise that tiny nations or subnations still have their own currencies. On October 10, 2010, the islands of the Dutch Antilles in the Caribbean finally said goodbye to the Dutch Antillean guilder, which had been used locally despite the fact that the Dutch themselves had long since replaced their guilders with euros. Disney Dollars are used by more people than some of the world’s smallest currencies, and, in case you’re itching to know, the dobra, issued by the tiny island nation of São Tomé and Príncipe, is the national currency with the least amount of circulating cash.

  As this process of currency consolidation unfolds, however slowly, it’s a safe bet that the likes of the Malawi kwacha, Azerbaijanian manat, and Icelandic króna will go the way of the wampum. The road to cashlessness will be paved with the banknotes of dead national currencies. For economists and policymakers, the topic of halting national currencies is intertwined with the difficult, if not wrenching, question of relinquishing monetary sovereignty. What I want to know is perhaps less complicated but more elusive: what might it mean for a country and its people to kiss their currency goodbye?

  The final panel in the series at Café Paris ends on a hopeful note. Mimicking the famous photograph of U.S. soldiers raising the Stars and Stripes over Iwo Jima, camouflage-clad soldiers in the painting raise the Icelandic flag on the shore of Reykjavik harbor. The national flag is blue with a red-and-white cross stretched across its length. As flags go, it’s a handsome one. Coins and currency notes are similar symbols of the state, used to make us feel connected to it, and to one another.

  THE NEXT MORNING I step off a yellow city bus in a suburb south of Reykjavik, and walk downhill from a small shopping plaza. It’s a strangely mild winter day with drizzle interrupted by occasional sunbursts. The road curves left, leading into a quiet neighborhood of Lego-like houses with blue and red roofs and lingering Christmas decorations. To the east, the developed environment abruptly ends, minus a few roads weaving out into a dark volcanic landscape dotted with small cinder cones. It looks like the setting of a Mad Max sequel set in the cold.

  A few minutes later, Kristin Thorkelsdottir’s house comes into view. A capsized trapezoid, the house is almost like a bunker, but cheerful. The side facing the
street is covered with light-blue corrugated tin (over a more insulating material, I presume), and the sides are a bright purple. I walk around a handful of stunted evergreen trees and mossy rocks and climb the wooden steps to the door.

  Sipping coffee and eating chocolate cookies in her brightly lit studio, Thorkelsdottir recalls the task she describes as infusing paper with a most usual kind of value. “It was a great privilege when the central bank contacted me about the redesign of the banknotes,” she says. The year was 1977, and the Icelandic government, following an ugly episode of inflation, had secretly decided to issue new banknotes and coins, and revalue the currency in the process.

  Governments, especially those of wealthy countries that try to assert their civility and stability, take pride in the condition of their physical money, and part of the mythmaking of being a wealthy and civilized place with a healthy economy is to have sharp new banknotes equipped, of course, with first-rate security features. Switzerland, that bastion of banking and tax-evasion tradition, doesn’t let banknotes circulate more than a few times before shredding them and reprinting new ones.3

  Thorkelsdottir has short-cropped white hair, long silver earrings, and red rectangular glasses. She looks like a gentler version of Dame Judi Dench. To lead Iceland’s paper money overhaul, she was the obvious choice. One of the most famous artists in the country at the time, she had already impressed the governors of the central bank with her design for a commemorative coin marking Iceland’s 1,100-year anniversary in 1974. (If you don’t have one of those commemoratives, I know some people who can hook you up.)

  She started by thinking about the macro vision. “I introduced two themes for the Bank to choose from. The first was about Icelandic scientists and the outdoors. The second was portraiture,” or more specifically, portraits of dead Icelanders who embody the country’s “culture and its tradition of scholarship.” Because the art on past banknotes relied heavily on images of industry, namely cod fishing and sheep farming, and probably because Icelanders were getting a little sick of being known to the rest of the world only for cod fishing and sheep farming, the bank bosses opted for the culture theme.

  But Thorkelsdottir had a minor problem in that she didn’t really know what that culture was, or who might best symbolize it. She spent a week at the tiny National Museum, perusing the portraits gallery and speaking with historians to learn about the individuals who typified what it means to be Icelandic. And so it came to pass that Iceland’s banknotes today include intricate portraits of: Sigurdsson, the grandfather of the country’s independence movement; a famed manuscript collector who went around the countryside gathering texts written on calf skins, which otherwise would have been eaten by mice or turned into shoes; a renowned bishop and architect; and a seventeenth-century woman known as a trailblazing artist and teacher. “I wanted to show that we have these heroes and a rich history,” Thorkelsdottir explains.

  The joy of the project, she says, was in the exactitude, finding just the right artifacts associated with the different individuals and using them to create two-dimensional objects that would portray the character of her homeland. She was given tacit support from the bank governors to spare no expense to get it perfect. They make the money, after all. She took her time finding just the right antique desk to model, and researching period-specific fabric patterns and fonts. She even hired a bearded man as a model and had a costume and wig made for him so that she could better draw the portrait of the chubby bishop featured on the 1,000-króna note. For the image with the manuscript collector, she wanted to have a full bookcase in the background, so she consulted with an expert on book-binding for tips about how the spines of those minuscule books depicted on the bookshelf of her bills should appear.

  “The banknote is like heritage in your hand,” she says. “It lets you read the culture of the country.” It has been this way with physical money for centuries. Struck into coins and embedded in the fibers of that high-tech paper are stories—micro-histories that animate the past, and that provide the bearer with a sense of that place’s identity. Words, a dictionary editor once told me, are a palimpsest. Their etymologies contain the shadows of words and people from ages past. Banknotes are too, I suppose.

  It was only when Thorkelsdottir commented about heritage that I suddenly remembered that for years, without an overt plan to do so, I would often save a banknote or two from a trip abroad as a souvenir for my father. Physical money isn’t just a tactile representation of the currency; it’s also a representation of the place, a snapshot of life there, or at least design taste there, mixed with a kind of cultural highlight reel. Looking back on this habit, perhaps I brought the bills back for my father because I wanted him to know, if only just a little, what everyday life was like in these countries I was visiting, and there’s nothing as everyday as the notes and coins in peoples’ pockets.

  Different cultures value banknotes differently, though, as far as art is concerned. From a designer’s perspective, Thorkelsdottir says, “you even see that some cultures don’t care much about elegant design.” She says this with a nod and a wink toward me and the greenbacks of my homeland. She is not alone in her lackluster opinion of the look of the most coveted currency in the world. Among design buffs, Federal Reserve Notes score low marks for a handful of reasons, one of which is that they are so busy—“a cake that has been decorated to within an inch of its life,” as one designer put it.4 A Gawker critic said the new $100 bill “looks like a god damn child’s crayon scratch pad.”5 And it’s true: So many fonts and swirls and micro-patterns and micro-swirls and drawings and facial hair and borders and textures and codes and now splashes of color—it’s almost enough to make a man long for a simple piece of plastic or a chip implanted in your forearm.

  Those who emphasize functional design like to point out that U.S. banknotes are all the same size, unlike notes in most other countries. That uniformity puts nearly 4.5 million blind or visually impaired Americans at a disadvantage. A court order following a lawsuit filed by the American Council of the Blind in 2002 has forced the Treasury to remedy the situation. Treasury lawyers actually had the gall to appeal the lower court’s ruling, claiming the costs of accommodating the blind were unreasonable; apparently the purpose of cash is to promote commerce among those who can see it. But in 2008, the U.S. Court of Appeal for the District of Columbia struck down that argument, accused the Treasury of exaggerating its cost estimates, and again ruled that U.S. banknotes aren’t accommodating the needs of all citizens.6 To date, the government is still assessing how to implement this now mandatory fix.

  Yet there is method to the perceived madness of America’s uni-sized and detail-saturated notes. Remember: the goal with banknotes is to get the transacting public using them by convincing people that this worthless paper represents real value. Maintaining the same look of the greenback since 1928, and the same basic coloring since the Civil War, may not appeal to those with an eye for elegant lines or visual balance. It does appeal, however, to those who comprehend just how much rides on confidence in the U.S. dollar, and the necessity of engineering that confidence into the banknotes.

  It’s all about perceived stability, which means protecting the value of banknotes not only against the devaluing influence of counterfeiters, but also by broadcasting a message of the issuer’s stability through time. What you’re really trying to conjure on the banknote is faith in the government. The fact that all U.S. currency ever issued is still acceptable legal tender, coupled with the consistent look of our paper money through the generations, is central to the mission of monetary image-making.

  Still, all the high-minded language in the world isn’t going the make U.S. banknotes any prettier, and the recent design tweaks don’t exactly help. As one designer put it, additions like the purple fives are “as inelegant and clumsy as a denim patch on a satin dress.”7 In 2009 a “creative strategy consultant” in New York named Richard Smith started a contest called the Dollar ReDe$ign Project. (“It’s time to ReBrand
the Buck!”) There’s nothing official about it—it’s just one of those clever ideas born online that went viral. Swift economic recovery, Smith writes on the website, requires “a thorough, in-depth, rebranding scheme—starting with the redesign of the iconic U.S. Dollar.”

  Looking through the collection of different entries to Dollar ReDe$ign is thought-provoking in that it reminds me how thoroughly programmed I am to recognize the greenback as something unique, almost holy. These designs, in contrast, with their variable colors, new images, and celebration of Americana from Martin Luther King and the Grand Canyon, to Amelia Earhart and the moon landing, smack of absurdity. Some of the mock-ups incorporate familiar faces and “legacy features”—the requisite bald eagle, cheerful FDR, pyramids, Franklin’s dimply mug—yet these too just look so . . . off.

  The greenback is one of the most instantly recognizable images in the world. Yet are the machinations of currency and paper money so foreign to Americans today that we can’t conceive of a design overhaul? Why are the Swiss OK with it but Americans, who live in a country born out of currency revolution and self-reinvention, are stubbornly resistant to it? Maybe we reject profound change to our physical money (or government officials reject it for us) because it’s another one of those lines of thinking that could invite unsettling thoughts about conjured value and a global financial system riding on circulating promises.

  It’s a little like how retiring the penny isn’t just about pennies because it gets you thinking about inflation, which can lead to outsized fears of inflation that end up harming the economy. If your job were to keep the economy stable, would you be eager to conduct a dollar redesign? Remember how badly Coca-Cola botched it when the company rolled out New Coke? Rebranding can be risky for a product or a company. Imagine what it could do for the currency that is the backbone of the international monetary system.