Saturday, April 4, 2015

Book Review: Coined

Coined: The Rich Life of Money and How Its History Has Shaped Us
Kabir Sehgal
Economics, history

 Kabir Sehgal commits an absolutely unpardonable sin in this book: he conflates Star Wars and Star Trek.

[Pause for gasps of outrage.]

That's a joke, son, but it's only a sort-of joke. Coined is fast-paced and wide-ranging, but there are too many places where Kabir Sehgal skips stuff, or makes arguments that are at best poorly phrased, or just plain makes little blunders. It's a mile wide and an inch deep (and if you think it's hypocritical for me to complain about that, you're right, but I'm doing it anyway).

To put it another way, I could have written this book myself, given enough time and the right Wikipedia articles.

Actually, that's not true. I would not have done what Kabir Sehgal does, which is to accept the conventional assertion that gold and silver represent a mythical something called "hard money".


The idea that gold has intrinsic value is, prima facie, stupid. Here are some of the many things you can't do with gold:
  • Eat it
  • Drink it
  • Shelter from the rain under it
  • Cure your influenza by injecting it
  • Enjoy carnal pleasures with it (if I'm wrong about this, please do not tell me)
Imagine that you and I are on a desert island. My side has a pirate treasure chest. Your side has coconuts. I offer you a gold coin in exchange for a coconut. If gold has intrinsic value, this is a good trade. Given the relative value of gold and coconuts, you should always accept.

In reality, whether you should take the offer depends not on the market price of coconuts, but on your beliefs about the future.
  1. If you believe we're likely to be rescued soon, sure, take the coin. You can sell it when we get to shore.
  2. If you believe we may never be rescued, and that you may need all the coconuts you can get, you'd be an idiot to accept this offer. Coconuts have actual utility; gold doesn't.
The value of my gold coin, in other words, depends on whether you believe that, at some future point, you can trade it to someone else. If you don't believe this, my dubloons have zero value. In which regard they are no different from green pieces of paper with pictures of Benjamin Franklin on them. If people believe in their future exchangeability, they're money. If people disbelieve, they're not.
End of Digression 

Coined is an easy read, impressive in breadth, and suitable for someone who's never really thought about the subject. For deep reading, however, I'd recommend instead any of the following:


  1. The more I know about money (the concept of money, how it works, the Federal Reserve and how it can create money out of thin air), the more I fear I have in general. Thankfully, I am mostly well-adjusted and don't usually worry too deeply about such hypotheticals. But the world we live in today, and the prosperity we enjoy is dependent on peace. With that peace, you can have a country that only produces 40% of its food (remember your post about The Green Road Into the Trees). The world is interdependent. We _believe_ money has value. That value is higher when you believe it will continue.

    What would happen to our money if there was a major war, not an Iraq, but a WW2? I shudder to think.

    And then I stop shuddering and watch Game of Thrones.

    1. Yeah, you're not the only one. In 1910 a writer named Norman Angell produced a book entitled The Great Illusion, in which he argued that the interdependency of the European economies meant that a long war would be effectively impossible; everyone would go broke in six months.

      He was actually right. WWI was economically futile and everyone did go broke. It just didn't stop them. They printed money, or took on crazy debt loads--or collapsed into revolution. The Lords of Finance, referenced above, is about the consequences.