Cryptocurrencies and their adherents’ lack of faith in the traditional financial system is the end of money in the same way that the fall of the Berlin Wall was, to historian Frances Fukuyama, the end of history. And a China-sized canary is signalling that something hideous lurks in the shadows of the world’s largest banking system.
When you look around you and observe the rising distrust in the Washington Consensus and the Friedman model of economic growth, liberty and freedom from big government, one has a triumvirate of forces that are exerting incredible pressure on an increasingly fragile world order.
Why are these things happening now, at this time in history? What is the real underlying cause of this wave of discontent and disruption? And what is the logical conclusion of these significant social and economic trends?
These are the questions that have preoccupied the authors of a fascinating page-turner of a new book entitled The End of Money: The Great Erosion of Trust in Banking, China’s Minsky Moment and the Fallacy of Cryptocurrency, which I found difficult to put down after the first few pages.
The book is written by David Buckham, the founder and CEO of Monocle, a respected management consulting firm specialising in banking and insurance, and professional writers and financial researchers Robyn Wilkinson and Christiaan Straeuli.
The fact that all three authors hold master’s degrees in English literature and are regular industry commentary writers lends the book to the sort of easy read that is rare when covering such technically challenging and dense subject matter as global banking regulations and blockchain technology.
Interviewing Buckham recently, he revealed that the book was conceived over many years but fully germinated in the middle of 2020 when the Banker Magazine reminded him of the Chinese banking sector’s enormous and highly unusual growth.
Red flags had been popping up for some time before that and, with years of professional scepticism under their belts, the authors sought to detail what was going on and its potential impacts on the global economy.
My mind was drawn to the central alarming theme running through the book that democracy is slipping away at a record rate globally. It’s an observation confirmed recently by a Swedish-based research monitoring and research body.
The International Institute for Democracy and Electoral Assistance (IDEA) recently published that it found a greater number of countries are sliding towards authoritarianism, while the number of democracies under threat has never been so high.
Populist politics, the use of Covid-19 pandemic restrictions to silence critics, a tendency of countries to mimic the anti-democratic behaviour of other nations, and disinformation used to divide societies – are among the factors mainly to blame, the Stockholm-based international organisation observes.
Among the poor-performing countries listed by the group are Russia, Hungary, Poland, Slovenia, Serbia, Turkey, Myanmar, Belarus and Venezuela – to mention only a few. There was also no evidence, says the study, that authoritarian regimes were better at fighting the Covid-19 pandemic, despite Chinese state media reports to the contrary.
As Foreign Affairs recently pointed out, Chinese President Xi Jinping proclaimed in 2016 that the Chinese “are fully confident in offering a China solution to humanity’s search for better social systems.” A year later, he declared that China was “blazing a new trail for other developing countries to achieve modernisation.”
Such claims come as the Chinese Communist Party (CCP) has been extending its reach overseas and reverting to a more repressive dictatorship under Xi after experimenting with a somewhat more pluralistic, responsive mode of authoritarianism. According to the authors, this is a threat to the world that is being somewhat underplayed and misunderstood for its significance.
It’s a theme that I recently found expertly explored in Pulitzer Prize winner Daniel Yergin’s most recent book, The New Map. And reading that in conjunction with The End of Money helps join some crucial dots.
Consider for a moment what the subtext of the End of Money is trying to point to: Bitcoin is an exit from the Fed. DeFi is an exit from Wall Street. Social media is an exit from mass media. Homeschooling is an exit from industrial education. Remote work is an exit from 9-5. The creator economy is an exit from employment.
If individuals are leaving institutions, what does that portend for the social fabric in the face of these global forces? What does that mean for democracy, once thought to be the inalienable and inevitable framework to structure and organise society?
The End of Money doesn’t answer these questions directly but offers you enough insight and research for you to connect the dots yourself and view a frighteningly dystopian picture of the future.
The authors go on to write that:
“The original sin ironically, and somewhat tragically, can be accurately pinpointed to a particular time and place – the Nixon shock – and tracked from there.
It is in the imposition of extreme free-market ideology that the true fault lies, in its rewarding of psychopathically self-serving behaviour, both within individuals and within organisations, and in its infection of Western free-market ideology as it was practically exercised towards the end of the 20th century.
This extreme ideology was authenticated by the veneer of scientific rigour in complex mathematical economics papers, and sanctified by Nobel prizes and its near-total adoption by the leaders of the free world.”
We are indeed living in interesting times as the old Chinese curse goes. Following the global financial crisis, trust in the financial system has waned, spawning political movements that have birthed Trump and Brexit and delivered shots across the bows of the established financial system in the form of cryptocurrencies.
And the End of Money is an indispensable guide to this new world.
Michael Avery is the host of Business Talk on BusinessTech. He is the anchor of the HOT Business show on HOT1027, and also the host of Business Watch on BDTV.