cashless society

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pages: 361 words: 97,787

The Curse of Cash by Kenneth S Rogoff

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Andrei Shleifer, Asian financial crisis, bank run, Ben Bernanke: helicopter money, Berlin Wall, bitcoin, blockchain, Bretton Woods, capital controls, Carmen Reinhart, cashless society, central bank independence, cryptocurrency, debt deflation, distributed ledger, Edward Snowden, ethereum blockchain, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial intermediation, financial repression, forward guidance, frictionless, full employment, George Akerlof, German hyperinflation, illegal immigration, inflation targeting, informal economy, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, money: store of value / unit of account / medium of exchange, moral hazard, moveable type in China, New Economic Geography, offshore financial centre, oil shock, open economy, payday loans, price stability, purchasing power parity, quantitative easing, RAND corporation, RFID, savings glut, secular stagnation, seigniorage, The Great Moderation, the payments system, transaction costs, unbanked and underbanked, unconventional monetary instruments, underbanked, unorthodox policies, Y2K, yield curve

Indeed, most modern macroeconomic models either ignore paper currency or assign it an extremely minor role—it is almost superfluous.9 In such a world, money remains a unit of account but loses its status as a means for transactions. In fact, monetary policy could be conducted in much the same way as today, with the government setting the overnight interest rate on nominal debt with the aim of stabilizing output and inflation. Electronic money (at present, bank reserves held at the central bank) can perfectly well serve as the unit of account; there would not be a problem. This is because in the limit of a cashless economy, the government—through its control of the size of bank reserves—would still be able to control the price level via the overnight nominal interest rate. The essence of the argument is that the government is a very large player and can use its size and massive taxation potential to credibly set the short-term rate. Assuming some level of price stickiness—so that some component of the price level cannot jump—then command of the short-term rate is enough to give the government enormous influence over the current and expected path of inflation, and complete power to achieve any desired average inflation rate over the long run.

It is thoroughly impractical. After all, how can people be expected to keep track of all the losing numbers over time? To Mankiw’s surprise, he too was immediately subjected to a barrage of hostile emails and commentary, including letters to the president of Harvard demanding that he be fired on the spot. Not all those who seek to protect paper currency represent End of Days cults or see a connection between a cashless society and the Mark of the Beast. (Although as someone who has long written on sharply reducing the role of paper currency, I can attest that some of those types are in the mix.) Most people who want to protect paper currency have perfectly legitimate reasons for hoping to preserve the status quo. After a lecture I gave at Munich University in 2014, former European Central Bank board member and chief economist Otmar Issing strongly took issue with my views and commented that paper currency is “coined liberty” (a nod to Dostoyevsky’s House of the Dead)9 that must never in any way be compromised or surrendered.

By making the transition at a slow and deliberate pace, it should be possible to address various issues as they come up, much as the Swedes and Danes appear to be doing successfully. Technological limitations, such as how to make P2P payments electronically and how to achieve real-time clearing, are melting away with advances in telephony. All in all, the case for going to a less-cash society if not quite yet a cashless society seems pretty compelling, with most of the various and sundry objections being easily handled, given enough lead time. Facilitating negative interest rate policy is not the main reason for phasing out paper currency, especially large-denomination notes. But it is an important collateral benefit that we turn to in part II. PART II Negative Interest Rates CHAPTER 8 The Cost of the Zero Bound Constraint Central bankers trapped in today’s zero bound environment must feel like they are living in an alternative reality, an episode from the Twilight Zone.


pages: 275 words: 77,017

The End of Money: Counterfeiters, Preachers, Techies, Dreamers--And the Coming Cashless Society by David Wolman

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Bay Area Rapid Transit, Berlin Wall, Bernie Madoff, bitcoin, Bretton Woods, carbon footprint, cashless society, central bank independence, collateralized debt obligation, corporate social responsibility, credit crunch, cross-subsidies, Diane Coyle, fiat currency, financial innovation, floating exchange rates, German hyperinflation, greed is good, Isaac Newton, M-Pesa, Mahatma Gandhi, mental accounting, mobile money, money: store of value / unit of account / medium of exchange, offshore financial centre, Peter Thiel, place-making, placebo effect, Ponzi scheme, Ronald Reagan, seigniorage, Silicon Valley, special drawing rights, Steven Levy, the payments system, transaction costs

For the 2008 part, see Biography of the Dollar; also see http://www.slate.com/id/2277404/. 35 “The Government’s $110 Billion Currency Goof,” The Week, December 8, 2010. 36 http://www.bos.frb.org/economic/ppdp/2009/ppdp0910.pdf. 37 http://digitaldebateblogs.typepad.com/digital_money/2010/08/by-cash-we-mean-cash-and-not-cash.html. 38 From Review of Network Economics, 2003, as cited in “The Future of Money,” Wired, March 2010. 39 “A Penny Saved... ” Time, August 9, 1999. 40 Swartz, Hahn, and Layne-Farrar, “The Economics of a Cashless Society,” p. 24. 41 “New York Restaurant Loses Its Appetite for Cash,” Wall Street Journal, September 11, 2009. 42 http://www.paymentscouncil.org.uk/media_centre/press_releases_new/-/page/855/. 43 Swartz, Hahn, and Layne-Farrar, “The Economics of a Cashless Society,” p. 6; and http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6968143/Is-a-cashless-society-on-the-cards.html. 44 “Who Will Speak up for Cash?” Currency News, October 2009, p. 2. 45 http://www.bis.org/review/r060427a.pdf. 46 Currency News, August 2009, p. 3. 47 http://digitaldebateblogs.typepad.com/digital_money/2009/10/the-swedish-experiment.html. 48 “Sweden Weighs Benefits of Ditching Cash,” BBC News, July 17, 2010. 49 http://www.washingtontimes.com/news/2009/dec/09/new-underground-economy/; and “As Plastic Reigns, the Treasury Slows Its Printing Presses,” New York Times, July 6, 2011. 50 Currency News, December 2009, p. 16. 51 http://www.americanbanker.com/bulletins/consumers-turn-on-cards-1015107-1.html. 52 Digital Money Forum Blog, “Anti-Anti Money Laundering,” July 6, 2009. 53 Bender, The Moneymakers, p. 261. 54 http://www.moneyfactory.gov/uscurrency/smalldenominations.html; and “Turning Paper Into Cash,” Bloomberg BusinessWeek, December 20, 2010 (citing U.S.

With clasped hands resting on the edge of the diner’s fold-up table, he recites Scripture’s most forceful and instructive passage connecting the money in our pockets to Satan’s grand plan:And he causeth all, both small and great, rich and poor, free and bond, to receive a mark on their right hand, or on their foreheads; And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name. (Revelation 13: 16–17) A few years ago, Guest wrote a book called Steps Toward the Mark of the Beast. When I found Guest’s book online, I figured that he might be able to help me understand why so many people loathe the prospect of a cashless society. “I didn’t want to write the book,” he says. “I really didn’t. But the Lord wanted me to, and so I prayed that he help me write it in a way that would be easy for people to understand.” In the book, Guest explains that one of the ways the devil will try to supplant God in the days before judgment will be to control commerce. Cash transactions are anonymous and untraceable, which means putting an end to them will help the Beast seize the reigns of the economy.

But the forum proved to be just too conferencey, with its drip, drip, drip of PowerPoint presentations, impenetrable corporate jargon, and technical speak. There were a few high points, but by the tea-and-cakes break on the first afternoon, I was already feeling fidgety and uneasy. I’d lost sight of why I was here—whether it even matters, really, what form of money we use. To get back on the cashless society track, the next morning in nearby Covent Gardens I meet technologist, ubiquitous future-of-money commentator, and self-described “anti-cash maniac” Dave Birch. Birch is the spiritual guru, organizer, and emcee of the forum. I had invited him to accompany me to the Bank of England so that I could hear him make the case against cash on its home turf. With a gray beard and round glasses, the fifty-year-old Birch looks more like a theology professor than an electronic money and digital security expert.


pages: 528 words: 146,459

Computer: A History of the Information Machine by Martin Campbell-Kelly, William Aspray, Nathan L. Ensmenger, Jeffrey R. Yost

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Ada Lovelace, air freight, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Apple's 1984 Super Bowl advert, barriers to entry, Bill Gates: Altair 8800, borderless world, Buckminster Fuller, Build a better mousetrap, Byte Shop, card file, cashless society, cloud computing, combinatorial explosion, computer age, deskilling, don't be evil, Douglas Engelbart, Dynabook, fault tolerance, Fellow of the Royal Society, financial independence, Frederick Winslow Taylor, game design, garden city movement, Grace Hopper, informal economy, interchangeable parts, invention of the wheel, Jacquard loom, Jacquard loom, Jeff Bezos, jimmy wales, John von Neumann, linked data, Mark Zuckerberg, Marshall McLuhan, Menlo Park, natural language processing, Network effects, New Journalism, Norbert Wiener, Occupy movement, optical character recognition, packet switching, PageRank, pattern recognition, pirate software, popular electronics, prediction markets, pre–internet, QWERTY keyboard, RAND corporation, Robert X Cringely, Silicon Valley, Silicon Valley startup, Steve Jobs, Steven Levy, Stewart Brand, Ted Nelson, the market place, Turing machine, Vannevar Bush, Von Neumann architecture, Whole Earth Catalog, William Shockley: the traitorous eight, women in the workforce, young professional

THE VISA SYSTEM AND AUTOMATED TELLER MACHINES There were two roots to the financial revolutions involving credit cards and ATMs: first, the idea of “cashless” payment cards and, second, the development of cash-dispensing machines. In 1949 two entrepreneurs formed the first independent payment-card organization, Diners Club, signing up restaurants in New York City and soon expanding to travel and entertainment merchants nationwide. Initially, cardholders were affluent businessmen; they could present their Diners Club card (actually a cardboard booklet) as payment for meals, travel tickets, rental cars, and so on. Diners Club users were billed monthly, and full payment was required monthly. Gas station and department store “charge cards” had been around for decades, but Diners Club and the credit and debit cards that followed kick-started a revolution in cashless and checkless payments. Before ATMs, banks developed machines that dispensed cash and nothing more.

In 1971 a subsequent model at Chemical Bank became a true automatic teller machine by allowing customers to make deposits, check balances, and transfer funds between savings and checking accounts. In the late 1960s and early 1970s, management consultants, journalists, and others began to write about a future “checkless and cashless society.” Consultant and entrepreneur John Diebold, who in 1952 popularized the term automation, presciently wrote about electronic fund transfers and the misnomer of the “cashless” society: “[T]he outstanding characteristics of a future system of electronic credit and money transfer will be a great reduction in paper handling of all kinds, and a resulting decrease in transaction times, errors, and costs. To characterize the future system as cashless is about as accurate and meaningful as characterizing our present system as ‘barterless.’”

See Analytical Engine; Difference Engine, Babbage’s; Difference engine, Scheutz’s Calculating machines, 50, 54, 65, 67, 104, 105 See also Accounting machines and systems; Adding machines; Punched-card systems Calculators, electronic, 223–224, 231–232 Cambridge University, 81, 82, 84–85, 94, 167–170 Cameras, digital, 216 Card index systems, 25, 26–27 Card Programmed Calculator (CPC), 104–105 Card readers and punches, 121 Carnot, Lazare, 5 Cary, Frank, 138 Cash registers, 29–32, 33, 161 Cash-dispensing machines, 157–161 Cashless society, 158 Cathode-ray tube (CRT) storage. See Vacuum tubes CBS television network, 110–112 CD-ROM disks and drives, 267–269, 273–274 Cellphones, 216, 304 Census data processing, 13–18, 24–25, 34, 99–100, 102, 109, 114 Central Telegraph Office (UK), 12–13, 88 (photo) Charge cards, 157, 159 Chase, George, 55 Chat rooms, 272 Check processing, 136 Checkless and cashless society, 158 Checks, bank, 9–10, 160, 161 Chemical Bank, 158 Chips, silicon, 194 (photo), 196, 216, 221, 222, 232, 296 See also Integrated circuits Chu, Jeffrey Chuan, 124 Church, Alonzo, 59, 60 Circuit boards, digital, 217 Cirrus ATM network, 161 Civil engineering tables, 4 Clark, Jim, 289 Clearing, check and credit card, 158, 159, 160 Clearing houses, 8–11, 18, 29, 136, 158 Clerks in bank clearing houses, 9–10 as human computers, 3–6, 50–51, 52–54, 65, 67–68, 71 record-keeping duties of, 25 as typewriter operators, 22, 24–25 See also Female clerical labor Cloud computing, 300 COBOL, 174, 183, 185, 191, 192 Code breaking, 61, 69, 80, 81–82, 103 Coding.


pages: 329 words: 95,309

Digital Bank: Strategies for Launching or Becoming a Digital Bank by Chris Skinner

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algorithmic trading, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, bank run, Basel III, bitcoin, business intelligence, business process, business process outsourcing, call centre, cashless society, clean water, cloud computing, corporate social responsibility, credit crunch, crowdsourcing, cryptocurrency, demand response, disintermediation, don't be evil, en.wikipedia.org, fault tolerance, fiat currency, financial innovation, Google Glasses, high net worth, informal economy, Infrastructure as a Service, Internet of things, Jeff Bezos, Kevin Kelly, Kickstarter, M-Pesa, margin call, mass affluent, mobile money, Mohammed Bouazizi, new economy, Northern Rock, Occupy movement, platform as a service, Ponzi scheme, prediction markets, pre–internet, quantitative easing, ransomware, reserve currency, RFID, Satoshi Nakamoto, Silicon Valley, smart cities, software as a service, Steve Jobs, strong AI, Stuxnet, trade route, unbanked and underbanked, underbanked, upwardly mobile, We are the 99%, web application, Y2K

Google Wallet was an industry milestone when it launched in May 2011 Virtual currencies like Bitcoin have been nibbling away at the market and are moving mainstream. PayPal is finding itself under attack from the card firms, as AMEX, Visa, MasterCard and the banks with iDEAL and ePayo targeting their schemes for social payments and more. Square has been the main news story, mainly because of its phenomenal growth and charismatic founder. Square was created by Jack Dorsey, co-founder of Twitter, in 2009 with the idea of offering a simple, cashless payment system for smartphones. The system works by using a square dongle that fits into the earphone jack of a smartphone. The dongle allows a user to swipe a magnetic credit card stripe and take a payment. The payment is made by the buyer using the app that goes with the dongle to sign the smartphone touchscreen with their finger and enter their email, and that’s it. A payment can then be made. In fact, using the Square Wallet app, merchants and customers can then transact wirelessly after that first setup process.

For example, the revolutions in retail through the rise of Amazon and entertainment with Apple have resulted in the death of traditional retailers such as HMV, Jessops, Comet, Blockbuster and more. This is the challenge we now face in banking. In banking, these changes mean a complete rethinking of customer relationships and the method of delivering value to meet customer needs. It has created non-stop debate about whether banks need branches; will there be a cashless society; how do you bulletproof the bank from cyberattacks; can we keep up with customer demands as they move to mobile and tablet banking; and more. In fact, digitisation has meant that banking is no longer about banking money, but about banking data and keeping data secure. All of this is radical change and requires radical action to keep up with such change. Unfortunately, it is this last part where banks are failing, as they are too slow to change and, in some cases, downright resistant to the changes demanded by the digital age.


pages: 323 words: 95,939

Present Shock: When Everything Happens Now by Douglas Rushkoff

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algorithmic trading, Andrew Keen, bank run, Benoit Mandelbrot, big-box store, Black Swan, British Empire, Buckminster Fuller, cashless society, citizen journalism, clockwork universe, cognitive dissonance, Credit Default Swap, crowdsourcing, Danny Hillis, disintermediation, Donald Trump, double helix, East Village, Elliott wave, European colonialism, Extropian, facts on the ground, Flash crash, game design, global supply chain, global village, Howard Rheingold, hypertext link, Inbox Zero, invention of agriculture, invention of hypertext, invisible hand, iterative process, John Nash: game theory, Kevin Kelly, laissez-faire capitalism, Law of Accelerating Returns, loss aversion, mandelbrot fractal, Marshall McLuhan, Merlin Mann, Milgram experiment, mutually assured destruction, Network effects, New Urbanism, Nicholas Carr, Norbert Wiener, Occupy movement, passive investing, pattern recognition, peak oil, price mechanism, prisoner's dilemma, Ralph Nelson Elliott, RAND corporation, Ray Kurzweil, recommendation engine, Silicon Valley, Skype, social graph, South Sea Bubble, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, supply-chain management, the medium is the message, The Wisdom of Crowds, theory of mind, Turing test, upwardly mobile, Whole Earth Catalog, WikiLeaks, Y2K

In Europe, where the leveraging of the long-distance, debt-generating euro currency has proved catastrophic for local industry and commerce, people are turning to alternative currencies that insulate them from the macroeconomic storm around them. In the Greek town of Volos, for example, citizens are experimenting with a favor bank. Mislabeled a barter economy by most journalists, this effort at a cashless economy is actually an exchange network.33 Everyone has an account online that keeps track of how many Local Alternative Units, or tems, they have earned or spent. People offer goods and services to one another, agree to terms, and make the exchange. Then their accounts are credited and debited accordingly. No one is allowed to accumulate more than 1,200 tems, because the object of the system is not to get individuals wealthy by storing currency over time, but to make the community prosperous by encouraging trade, production, and services.

., 48, 54 Bush, Vannevar, 4, 239 business/corporations: big data, 158–59; Black Friday and, 159–61; communication campaigns of, 51; digiphrenia and, 85–86, 99, 107–8, 128; fractalnoia and, 202, 205–17, 220, 222–23; futurism and, 16–17; Great Exhibition and, 164–65; hiring by, 156; in Industrial Age, 87, 161–65; money as time and, 172, 173; narrative collapse and, 66; new “now” and, 4; overwinding and, 7, 134, 159–66, 169, 170–80, 184, 191, 192, 245; stages in human development and, 82; time as money and, 170–80. See also specific business/corporation calendars, 78–79, 81, 83, 262, 264 call waiting, 115 caller ID, 115–16 Campbell, Joseph, 13, 20, 39 Canseco, José, 41 capitalism, 226, 258 captive audiences, 21, 31, 36 car accident, Rushkoff’s, 65–66 Carse, James, 59 Case, Amber, 69 cashless societies, 183–84 catallaxy, 226, 227, 228 cell phones, 95, 116 Chainmail (game), 60n change: apocalypto and, 264–65; as changing, 86–87; chronobiology and, 88–89; consumers and, 167; digiphrenia and, 73, 86–87, 88–89; fractalnoia and, 224, 235–37; management of, 86, 87, 235–36; narrative collapse and, 9–10, 14–16; new “now” and, 4; overwinding and, 141, 167; stages in human evolution and, 76; as steady state of existence, 87.

See also specific topic Disney theme parks, 186–88 DNA, 85, 258 Doctorow, Cory, 217 Domeier, Rick, 94 drone pilots, 7, 120–22 drugs, 92, 98, 99, 103, 124 Dulles, John Foster, 89 Dunbar, Kevin, 204 Duncan Yo-Yo, 108 Dungeons & Dragons (game), 60–61, 60n Dyson, Freeman, 133, 135, 141 Earth, first photographs of, 223–24 Eastern-Westerner comparison, Nisbett’s, 234–35 economy/economics: behavioral, 5–6; cashless societies and, 184; change and, 167; digiphrenia and, 97; expansion of, 170–80; fractalnoia and, 206, 226, 227, 228–29; global, 206; new “now” and, 3, 4, 5–6; overwinding and, 136, 145–49, 161, 163–65, 167–68, 171, 184–85; stages in human development and, 80; storage-based, 184; time and, 80. See also consumers; money/ currency Edelman, Richard, 50 efficiency, 81, 82, 95, 188 Eisner, Michael, 186, 187, 188 elections of 2008, 18 Elliott, Ralph Nelson, 229 Elliott Wave, 229–30 email, 2, 69–70, 99, 117–18, 119–20, 143–45, 264 emergence concept, 227, 262, 263 empathy, 236, 237 end/endings: apocalypto and, 7, 247, 250, 252, 253–54, 261, 262; fractalnoia and, 199; games and, 59, 61–62, 67; hardest part of living in present shock and, 247; narrative collapse and, 34, 56, 59, 61–62, 66, 67; new “now” and, 4; of time, 250, 252, 253–54, 262; traditional storytelling and, 62 Energy Department, U.S., 54 energy, renewable, 189–91 entertainment, 21.


pages: 258 words: 73,109

The (Honest) Truth About Dishonesty: How We Lie to Everyone, Especially Ourselves by Dan Ariely

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accounting loophole / creative accounting, Albert Einstein, Bernie Madoff, Broken windows theory, cashless society, clean water, cognitive dissonance, Credit Default Swap, Donald Trump, fudge factor, new economy, Richard Feynman, Richard Feynman, Schrödinger's Cat, shareholder value, Steve Jobs, Walter Mischel

As it turns out, people are more apt to be dishonest in the presence of nonmonetary objects—such as pencils and tokens—than actual money. From all the research I have done over the years, the idea that worries me the most is that the more cashless our society becomes, the more our moral compass slips. If being just one step removed from money can increase cheating to such a degree, just imagine what can happen as we become an increasingly cashless society. Could it be that stealing a credit card number is much less difficult from a moral perspective than stealing cash from someone’s wallet? Of course, digital money (such as a debit or credit card) has many advantages, but it might also separate us from the reality of our actions to some degree. If being one step removed from money liberates people from their moral shackles, what will happen as more and more banking is done online?

., 243 banks: small misbehaviors of, 240 see also financial services industry Barkan, Racheli, 21, 23, 262 Barlow, John Perry, 1, 2 baseball, steroids in, 156 Bateson, Melissa, 224 Baumeister, Roy, 100, 104, 262–63 Baylor College of Medicine, 75–77 Bazerman, Max, 45, 260 Becker, Gary, 3–4, 14, 26 Be’er Sheva, Israel, farmer’s market in, 23–24 being caught, probability of, 4–5, 13, 14, 27 varying, in matrix task, 20–22 benevolent behavior, 23–24 Bible, as moral reminder, 40, 41, 42 billable hours, overstating of, 35–37 blind customers, benevolent behavior toward, 23–26 brain: higher connectivity in, 170 left-right split in, 164–65 of pathological liars, 169–70 Broken Windows Theory, 214–15, 249 businesspeople, self-monitoring of, 56–57 business schools, 248 group-based projects in, 217–18 cab drivers, benevolent behavior of, toward blind customer, 25–26 CAD/CAM equipment, in dentistry, 67–71 Cain, Daylian, 89 Canada, cheating in, 242 care for customers, in illegal businesses, 138–39 car mechanics, 93 Carnegie Mellon University, 197–207 car recommendation software, “fixing” answers in, 166–67 Cary, Apoth E., 246 cashless society, implications for dishonesty in, 34 Catch Me If You Can (Abagnale), 173 certificates for (false) achievements, 153–54 Chance, Zoë, 145, 264 charitable behavior, 23–24 cheating: aggressive cheaters and, 239 altruistic, 222–23, 225–26, 227–28, 232 being made blatantly aware of, 156–57 being watched and, 223–25, 227 collaborative, see collaborative cheating desire to benefit from, 12–14, 27, 29, 237 ego depletion, 104–6, 111–12 fake products’ impact on, 125–31 in golf, 55–65 honor codes and, 41–45 increasing creativity to increase level of, 184–87 as infection, 191–216; see also infectious nature of cheating infidelity and, 244–45 on IQ-like tests, self-deception and, 145–49, 151, 153–54, 156–57 reducing amount of, 39–51, 248–54 removing oneself from tempting situation and, 108–11 signing forms at top and, 46–51 Ten Commandments and, 39–40, 41, 44 what-the-hell effect and, 127–31, 136 see also dishonesty China, cheating in, 241–42 Chloé accessories, studies with, 123–34 Civil War veterans, 152 classes, infectious nature of cheating in, 195–97 Coca-Cola, stealing money vs., 32–33 cognitive dissonance, 81 cognitive load: ability to resist temptation and, 99–100 judges’ parole rulings and, 102–3 Cognitive Reflection Test (CRT), 173–74 coin logic, 167–68 collaborative cheating, 217–35 altruism and, 222–23, 225–26, 227–28, 232 being watched or monitored and, 223–25, 227–28, 234–35 emphasis on working as group or team and, 217–18 infectious nature of cheating in relation to, 221–22 social utility and, 222–23 companies: being one step removed from money and, 34–37 irrationality of, 51 see also corporate dishonesty compliments, insincere, 159 conflicts of interest, 67–95, 238, 248 in academia, 82, 84–85 in dentistry, 67–71, 93, 94, 230 disclosure and, 88–92 dots task and, 129 eradication of, 92–95 exclusion of experimental data and, 86–88 expert witnesses and, 85–86 in financial services industry, 83–85, 93, 94 governmental lobbyists and, 77–78, 94 honesty threshold and, 130–31 inherent inclination to return favors and, 74–75 medical procedures and, 71–74, 92–94, 229 pharmaceutical companies’ influence in academia and, 82 pharma reps and, 78–82 what-the-hell effect and, 129–31 congressional staffers, cheating among, 243 Congress members, PAC money misused by, 208–10 contractors, 93 Conway, Alan, 150–51 Cooper, Cynthia, 215 Cornell University, 250–51 corpora callosa, 164–65 corporate dishonesty: cheating a little bit and, 239–40 Enron collapse and, 1–3, 192, 207, 215, 234 recent spread of, 192, 207–8 cost-benefit analysis, 4–5, 26–27, 237, 239 infectious nature of cheating and, 201–3, 205 see also Simple Model of Rational Crime counterfeits, see fake products creativity, 88, 163–89, 238 brain structure and, 164–65 dark side of, 187–89 fooling oneself and, 165–67 increasing, to increase level of cheating, 184–87 infidelity and, 244 intelligence vs., as predictor of dishonesty, 172–77 link between dishonesty and, 170–72, 186–89 logical-sounding rationales for choices and, 163–64 measures of, 171 moral flexibility and, 186–87 pathological liars and, 168–70 revenge and, 177–84 credit card companies, 239–40 crime, reducing, 52 cultural differences, 240–43 Danziger, Shai, 102 decision making: creating efficient process for, 167–68 effectiveness of group work in, 217–18 rationalization process and, 163–67 Denfield, George, 75 dentists: continuity of care and, 228–31 treating patients using equipment that they own, 67–68, 93–94 unnecessary work and, 67–71 depletion, see ego depletion dieting, 98, 109, 112–13, 114–15 what-the-hell effect and, 127, 130 “dine-and-dash,” 79 diplomas, lying about, 135–36, 153, 154 disabled person, author’s adoption of role of, 143–44 disclosure, 88–92, 248 study on impact of, 89–92 discounting, fixed vs. probabilistic, 194 dishonesty: causes of, 3–4, 5 collaborative, see collaborative cheating cultural differences and, 240–43 discouraging small and ubiquitous forms of, 239–40 importance of first act of, 137 infectious nature of, 191–216; see also infectious nature of cheating intelligence vs. creativity as predictor of, 172–77 link between creativity and, 170–72, 186–89 opportunities for, passed up by vast majority, 238 of others, fake products and assessing of, 131–34 rational and irrational forces in, 254 reducing amount of, 39–51, 248–54 society’s means for dealing with, 4–5 summary of forces that shape (figure), 245 when traveling, 183n see also cheating dissertation proposals and defenses, 101 distance factors, 238 in golf, 58–59 stealing Coca-Cola vs. money and, 32–33 token experiment and, 33–34 doctors: consulting for or investing in drug companies, 82, 93 continuity of care and, 228–29 lecturing about drugs, 81 pharma reps and, 78–82 treating or testing patients with equipment that they own, 92–94 Dodd-Frank Wall Street Reform and Consumer Protection Act, 234 dots task: conflict of interest and, 129 description of, 127–29 link between creativity and dishonesty and, 171–72, 185–86 what-the-hell effect and, 129–31 downloads, illegal, 137–39 dressing above one’s station, 120–21 Ebbers, Bernie, 13 ego depletion, 100–116, 238, 249 basic idea behind, 101 cheating and, 104–6 in everyday life, 112–16 removing oneself from tempting situations and, 108–11, 115–16 of Sex and the City’s Samantha Jones, 103 sometimes succumbing to temptation and, 114–15 sudden deaths among students’ grandmothers at exam time and, 106–8 ego motivation, 27 England, cheating in, 242 Enron, 1–3, 192, 207, 215, 234 essay mills, 210–13 exams, sudden deaths among students’ grandmothers and, 106–8 exhaustion, 249 consumption of junk food and, 97–98 judges’ parole rulings and, 102–3 see also ego depletion experimental data, exclusion of, 86–88 expert witnesses, 85–86 explanations, logical-sounding, creation of, 163–65 external signaling, 120–22 dressing above one’s station and, 120–21 fake products and, 121–22 failures, tendency to turn blind eye to, 151 “fair,” determination of what is, 57 fake products, 119, 121–40, 238 illegal downloads and, 137–39 misrepresentation of academic credentials and, 135–36 rationalizations and, 134–35 self-signaling and, 123–26, 135 signaling value of authentic version diluted by, 121–22 suspiciousness of others and, 131–34 what-the-hell effect and, 127–31, 135 farmer’s market, benevolent behavior toward blind customer in, 23–24 fashion, 117–26 counterfeit goods and, 119, 121–22, 121–40, 123–26; see also fake products dressing above one’s station and, 120–21 external signaling and, 120–22 self-signaling and, 122–26 Fastow, Andrew, 2 favors, 74–82 aesthetic preferences and, 75–77 governmental lobbyists and, 77–78 inherent inclination to return, 74–75 pharma reps and, 78–82 see also conflicts of interest Fawal-Farah, Freeda, 117, 118 FBI, 215 Fedorikhin, Sasha, 99–100 Feynman, Richard, 165 financial crisis of 2008, 83–85, 192, 207, 234, 246–47 financial favors, aesthetic preferences and, 77 financial services industry: anonymous monitoring and, 234–35 cheating among politicians vs., 243 conflicts of interest in, 83–85, 93, 94 government regulation of, 234 fishing, lying about, 28 Frederick, Shane, 173 friends, invited to join in questionable behavior, 195 fudge factor theory, 27–29, 237 acceptable rate of lying and, 28–29, 91 distance between actions and money and, 34–37 getting people to cheat less and, 39–51 infidelity and, 244 rationalization of selfish desires and, 53 stealing Coca-Cola vs. money and, 32–33 Gazzaniga, Michael, 164–65 Generally Accepted Accounting Principles (GAAP), 219–20 generous behavior, 23–24 Get Rich Cheating (Kreisler), 14 Gilovich, Tom, 250, 263–64 Gino, Francesca, 45, 104, 123, 127, 131, 145, 170, 184, 197, 225, 234–35, 242, 258–59 Glass, Ira, 6 Gneezy, Ayelet, 177, 257–58 golf, 55–65 cheating by “average golfer” vs. study participants and, 63–64 mistallying score in, 61–64 moving location of ball in, 58–59, 63 mulligans in, 60–61, 63–64 self-monitoring in, 56–57 survey on cheating in, 57–64 government regulations, 234 grandmothers, sudden deaths of, at exam time, 106–8 gray matter, 169–70 Green, Jennifer Wideman, 117 grocery shopping, ego depletion and, 109, 112–13 group or team work, 220–23 performance unaffected by, 233 possible benefits of, 223 predominance of, in professional lives, 217–18, 235 social utility and, 222–23 see also collaborative cheating Grüneisen, Aline, 210–11, 257 guilt, self-inflicted pain and, 250–52 Harford, Tim, 3–4 Harper’s Bazaar, 117–18 Harvard Medical School, 82 Harvey, Ann, 75 Henn, Steve, 209 heretics, external signaling of, 120 Hinduism, 25 honesty threshold, 130–31 honor codes, 41–45, 204 ideological organizations, 232n “I knew it all along” feeling, 149 illegal businesses, loyalty and care for customers in, 138–39 impulsive (or emotional) vs. rational (or deliberative) parts of ourselves, 97–106 cognitive load and, 99–100 ego depletion and, 100–106 exhaustion and, 97–98 Inbar, Yoel, 250, 264 infectious nature of cheating, 191–216, 249 bacterial infections compared to, 192–93 in class, 195–97 collaborative cheating in relation to, 221–22 Congress members’ misuse of PAC money and, 208–10 corporate dishonesty and, 192, 207–8 cost-benefit analysis and, 201–3, 205 essay mills and, 210–13 matrix task and, 197–204 positive side of moral contagion and, 215–16 regaining ethical health and, 214–15 slow and subtle process of accretion in, 193–94, 214–15 social norms and, 195, 201–3, 205–7, 209 social outsiders and, 205–7 vending machine experiment and, 194–95 infidelity, 244–45 “in good faith” notion, 219–20 Inside Job, 84–85 insurance claims, 49–51 intelligence: creativity vs., as predictor of dishonesty, 172–77 measures of, 173–75 IQ-like tests, cheating and self-deception on, 145–49 certificates emphasizing (false) achievement and, 153–54 increasing awareness of cheating and, 156–57 individuals’ tendency to turn a blind eye to their own failures and, 151 IRS, 47–49 Islam, 249 Israel, cheating in, 241 Italy, cheating in, 242 Jerome, Jerome K., 28 Jobs, Steve, 184 Jones, Bobby, 56 Jones, Marilee, 136 Judaism, 45, 249 judges, exhausted, parole decisions and, 102–3 junk food, exhaustion and consumption of, 97–98 Keiser, Kenneth, 135 Kelling, George, 214–15 John F.


pages: 299 words: 91,839

What Would Google Do? by Jeff Jarvis

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23andMe, Amazon Mechanical Turk, Amazon Web Services, Anne Wojcicki, barriers to entry, Berlin Wall, business process, call centre, cashless society, citizen journalism, clean water, connected car, credit crunch, crowdsourcing, death of newspapers, disintermediation, diversified portfolio, don't be evil, fear of failure, Firefox, future of journalism, Google Earth, Googley, Howard Rheingold, informal economy, inventory management, Jeff Bezos, jimmy wales, Kevin Kelly, Mark Zuckerberg, moral hazard, Network effects, new economy, Nicholas Carr, PageRank, peer-to-peer lending, post scarcity, prediction markets, pre–internet, Ronald Coase, search inside the book, Silicon Valley, Skype, social graph, social software, social web, spectrum auction, speech recognition, Steve Jobs, the medium is the message, The Nature of the Firm, the payments system, The Wisdom of Crowds, transaction costs, web of trust, Y Combinator, Zipcar

Why are banks still in the business of building so many retail outlets out of bricks and filling them with staff? When the internet arrived, so did some online-only banks, but they never flourished and many were bought up: in the U.K., Egg was acquired by Citi, First Direct by HSBC. They didn’t offer us enough incentive to change our habits. If online banks had passed savings onto us—the internet dividend in cash—maybe we’d have been motivated to go virtual. The cashless society will probably come to the U.S. a day after the paperless office does—that is, never. We keep hearing about people in Finland and Japan buying Cokes and paying for parking with their mobile phones, but we haven’t seen that happen in the States. Microsoft wanted to become the cash register of the web with its Passport service, but I think no one trusted Microsoft to handle our money. Google’s Checkout service has not caught on.

See application programming interfaces Apple, 14–15, 93–94, 226–28 advertising and, 150 honesty and, 96 application programming interfaces (APIs), 127 Aptera Motors, 175, 193 Arnold, Bonnie, 84 Arrington, Michael, 107 attention, 240 "&" Worldnet, 30 auction marketplace, 69 automobile industry, 110, 172–77 The Baby Name Wizard (Wattenberg), 233 Baker, Stephen, 159 Ball, James, 205–6 banking, 195–98 Barlow, John Perry, 239 Barton, Rich, 80 Bebo, 49–50 Benioff, Marc, 62 beta versions, 93–95 Betaworks, 193 Bezos, Jeff, 4, 71–72 Biggs, Peter, 146 BlogAds, 50 Blogger, 24–25, 43 Bloglines, 15 Blogpulse, 20 blogs, 22–23 advertising and, 149–50 collaboration and, 25, 99 Comcast and, 168 Dell and, 12–19 interacting with, 23 lawyers and, 222–23 listening to, 15–16 9/11 and, 24–25 profit from, 55–56 restaurants and, 155 search engines, 20 VC and, 190 video, 157 Blurb.com, 73 BMW, 174 Bono, 163 book publishing, 73–74, 104 136–43 Bowling Alone (Putnam), 50 Bracconot, Paula, 142 branding, 45, 149 Brilliant, Larry, 163 Brin, Sergey, 85 on energy, 163–65 on evil, 99 Gore v., 217 Bruzzo, Chris, 61–62 Bubblegeneration.com, 64 Buckmaster, Jim, 116–17 Burda, 29–30, 128, 180 Burnham, Brad, 47 Bush, George W., 92 BusinessWeek, 14 Butterfield, Stewart, 45, 89 Buzzmachine, 55–56 CafePress.com, 180 Calacanis, Jason, 60 Caravan Project, 140 Carlin, George, 70 Carr, Nicholas, 235 cash flow, innovation v., 110 cashless society, 198 censorship, 99–100, 219, 237 centralization, 27–28 Cerf, Vint, 232 certification, 214 Chicago Tribune, 124 China, 99–100, 105–6 Chowhound.com, 155 Chrome browser, 140, 169 CleverCommute, 188 Clickable, 190 clicks, 28, 66 The Cluetrain Manifesto (Locke Searls & Weinberger), 3, 82, 96–97, 149 c, mm, n hydrogen car, 175 CNN, 105, 134–35 Coase, Ronald, 151 Coelho, Paulo, 121, 141–43, 240 colas, 178 The Colbert Report, 96 Colbert, Stephen, 96, 136 Cole, Jeffrey, 125 collaboration, 98–99 Apple and, 226 blogging and, 25 with customers, 3–4 entertainment and, 135 with government, 219 links and, 27 newspapers and, 127–28 ownership v., 28 Comcast, 107, 167–68 Comedy Central, 136 commodification, 67–68 communication, 217 customers with, 16–17 direct, 25 communities on airlines, 183 automobile industry and, 173–74 elegant organization and, 48–53 health care and, 200 restaurants and, 155–56 complaints, 236–37 construction, 225 consumer products, 177–81 consumers focus on, 146 input of, 87–88 content commodification of, 67–68 free, 76–80 Glam and, 29–30 control Apple and, 226 customer, 3, 11–12 trust v., 82–83 conversations, 96–97 Cork’d, 159 corporate value, 27–28 corrections, 91 Covestor, 197 craigslist, 31, 38–39, 116–18 newspaper ads v., 148 Cramer, Jim, 36, 79, 157–58 Cranley, Chris, 205 Crawford, Colin, 70–71 creation, 239–40 credibility, 91 credit crisis, 197 CRM.


pages: 252 words: 75,349

Spam Nation: The Inside Story of Organized Cybercrime-From Global Epidemic to Your Front Door by Brian Krebs

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barriers to entry, bitcoin, Brian Krebs, cashless society, defense in depth, Donald Trump, employer provided health coverage, mutually assured destruction, offshore financial centre, payday loans, pirate software, placebo effect, ransomware, Silicon Valley, Stuxnet, the payments system, transaction costs, web application

Local Russian newspapers suggested that he’d been sprung from jail because his government needed him. In response to U.S. sanctions against Russia for funding and organizing pro-Russian separatists who were causing unrest and armed conflict in Ukraine, Visa and MasterCard in March 2014 stopped servicing payments for clients of at least two top Russian banks. Russian President Vladimir Putin responded by signing into law a bill that required the creation of a homegrown, cashless national payments system to route around the credit card companies. The law also imposed stiff new requirements on international payments providers operating in Russia. In a telephone interview shortly after his release, Vrublevsky told me that his lawyers had strictly forbidden him from discussing his case. He said he had no idea why he was released early, but that he didn’t think it had anything to do with the national payments system.


pages: 251 words: 76,128

Borrow: The American Way of Debt by Louis Hyman

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asset-backed security, barriers to entry, big-box store, cashless society, collateralized debt obligation, credit crunch, deindustrialization, deskilling, diversified portfolio, financial innovation, Ford paid five dollars a day, Home mortgage interest deduction, housing crisis, income inequality, market bubble, McMansion, mortgage debt, mortgage tax deduction, Network effects, new economy, Plutocrats, plutocrats, price stability, Ronald Reagan, statistical model, technology bubble, transaction costs, women in the workforce

Only places that catered to the expense account crowd took American Express, and for everything else there was cash. Yet while Joe could spend $10,000 to live like a millionaire, it would have been nearly impossible for him to spend $10,000 to live like a middle-class person—much less a working-class guy from a Lower East Side tenement. The way we use credit cards today—to pay for groceries, fast food, and coffee—was heralded as futuristic in the 1960s—a hallmark of a wondrous cashless world of tomorrow! It would be a distributed landscape of credit where cards would replace cash. One of the reasons this vision of the future seemed so impossible was because of the very real technological limits on where credit could be used and the moral limits on where it should be. Joe’s story reflected those limits, and the story we are about to examine shows how those limits disappeared. How the credit card changed from a plaything for the rich into an everyday accessory explains a great deal about why so much credit suddenly became available for the average American in the 1980s.


pages: 363 words: 107,817

Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed by Andrew Jackson (economist), Ben Dyson (economist)

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bank run, banking crisis, banks create money, Basel III, Bretton Woods, call centre, capital controls, cashless society, central bank independence, credit crunch, David Graeber, debt deflation, double entry bookkeeping, eurozone crisis, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, Hyman Minsky, inflation targeting, informal economy, land reform, London Interbank Offered Rate, market bubble, market clearing, Martin Wolf, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Northern Rock, price stability, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, risk-adjusted returns, seigniorage, shareholder value, short selling, South Sea Bubble, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, unorthodox policies

Deposit banking was only able to resume in Western Europe in the 12th century following improvements in numeracy, literacy, and financial and trade innovations4 that came about after an increase in available coinage5 led to a resurgence in international trade (Spufford, 2002). In this environment the moneychangers prospered, and adopted the merchant companies' practice of accepting deposits. By also holding deposits with each other, their customers were able to make cashless payments between each other (even when this took accounts into overdraft) (Spufford, 2002). Deposit banking, as it had been practised by the Athenians, was thus rediscovered. Banking in England In mediaeval England, there were no private moneychangers for banks to develop out of, since this was a royal monopoly associated with the mints (Spufford, 2002). The monopoly had however become eroded over time, as Charles I attempted to revive it in 1627, but was left to “fume in vain against the growing power of the goldsmiths who had ‘left off their proper trade and turned [into] exchangers of plate and foreign coins for our English coins, though they had no right.’”

Future Files: A Brief History of the Next 50 Years by Richard Watson

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Albert Einstein, bank run, banking crisis, battle of ideas, Black Swan, call centre, carbon footprint, cashless society, citizen journalism, computer age, computer vision, congestion charging, corporate governance, corporate social responsibility, deglobalization, digital Maoism, disintermediation, epigenetics, failed state, financial innovation, Firefox, food miles, future of work, global supply chain, global village, hive mind, industrial robot, invention of the telegraph, Jaron Lanier, Jeff Bezos, knowledge economy, linked data, low skilled workers, M-Pesa, Northern Rock, peak oil, pensions crisis, precision agriculture, prediction markets, Ralph Nader, Ray Kurzweil, rent control, RFID, Richard Florida, self-driving car, speech recognition, telepresence, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Turing test, Victor Gruen, white flight, women in the workforce, Zipcar

The rest will be digital, a mixture of micro-payments, contactless payments, storedvalue cards and plastic. This will be good news for governments, because about 25% of all cash in circulation worldwide is used for illegal purposes, so any restriction on its availability will be benefi126 Money and Financial Services 127 cial. Cash is anonymous and difficult to trace; e-payments are not. Equally, a cashless society will appeal to business because it will speed up transactions, saving banks and other organizations a bundle of money. Indeed, the only people who will be against the idea of a cash-free society will be some ordinary, law-abiding citizens who rather like the look and feel of paper money — much in the same way that many people prefer real newspapers and books to their online equivalents. This, in a nutshell, is the future of money.


pages: 383 words: 81,118

Matchmakers: The New Economics of Multisided Platforms by David S. Evans, Richard Schmalensee

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Airbnb, big-box store, business process, cashless society, Deng Xiaoping, if you build it, they will come, Internet Archive, invention of movable type, invention of the printing press, invention of the telegraph, invention of the telephone, Jean Tirole, Lyft, M-Pesa, market friction, market microstructure, mobile money, multi-sided market, Network effects, Productivity paradox, profit maximization, purchasing power parity, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, Steve Jobs, Tim Cook: Apple, transaction costs, two-sided market, Uber for X, Victor Gruen, winner-take-all economy

The ancient Athenian emporion probably was, too, at least in its part of the world. So, when you look at the turbocharged matchmakers of today, whether sharing ones or others, don’t fall into the end-of-history illusion that all the good stuff has already happened. It almost certainly hasn’t. Shortly after the credit card became popular in the late 1950s, pundits started predicting the death of cash. The Economist wrote about “The Cashless Society” on July 9, 1966. A half century later, Americans use cash for about 26 percent of transactions. Many of these are small, so cash accounts for only 10 percent of the money people spend on the sorts of things they could pay for with a card.16 Yet, while cash use has indeed declined over time, even in developed countries, it accounts for a large fraction of transactions.17 Pundits also predicted that e-commerce would kill brick-and-mortar stores.


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

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accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, computer age, conceptual framework, credit crunch, cross-subsidies, David Graeber, debt deflation, dematerialisation, disintermediation, eurozone crisis, fiat currency, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, German hyperinflation, Goldman Sachs: Vampire Squid, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, mobile money, money: store of value / unit of account / medium of exchange, mortgage debt, new economy, Nixon shock, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer lending, Ponzi scheme, post scarcity, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Satoshi Nakamoto, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Wave and Pay, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

“Feel like a regular every time you pay,” the advertising says, conveying a combination of speed and Gemeinschaft that Simmel would surely have found compelling. What we gain in convenience with transactions like this, we lose in the discount the merchant has to pay to the provider of the payment service in question. This is the “cut”—usually between 1 and 4 percent—that is sliced from an increasing number of everyday transactions: not just those involving credit and debit cards but virtually all cashless forms of payment that we make. Those forms of payments that seem to liberate us from the clutches of banks and large corporations base their attractiveness on an underlying sense that they are enabling us to escape from the old vested interests that were present—somewhere in the background—whenever we used money. The classic expression of such interests, of course, is seigniorage, which used to be the difference between the value of money and what it cost to produce.

Buckingham, U.K., Open University Press: 28–40. Wittgenstein, L. (2007). Zettel, Berkeley and Los Angeles, University of California Press. Wolf, M. (2010). Fixing Global Finance, New Haven, CT/London, Yale University Press. Wolff, K. H., Ed. (1950). The Sociology of Georg Simmel, New York, The Free Press. Wolman, D. (2012). The End of Money: Counterfeiters, Preachers, Techies, Dreamers—and the Coming Cashless Society, Philadelphia, Da Capo Press. Wray, L. R. (1998). “Modern Money.” Jerome Levy Economics Institute, Working Paper No. 74, Annandale-on-Hudson, NY, Levy Economics Institute of Bard College. www.levyinstitute.org/pubs/wp252.pdf. Wray, L. R. (2004a). “Conclusion: The Credit Money and State Money Approaches.” Credit and State Theories of Money: The Contributions of A. Mitchell Innes, Cheltenham, U.K., Edward Elgar Publishing: 223–62.


pages: 424 words: 121,425

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran

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access to a mobile phone, affirmative action, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, Kickstarter, M-Pesa, McMansion, microcredit, mobile money, moral hazard, mortgage debt, new economy, Own Your Own Home, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, white flight, working poor

The major contenders so far are prepaid cards, retail banking, mobile banking, and peer-to-peer loans. Others, like virtual currencies, are still in their infancy. PREPAID CARDS One of the most recognizable products on the market, prepaid cards allow the user to load money onto a card and then use the card as if it were a debit card. This provides the unbanked an alternative to checking accounts, with the ability to avoid the threat of overdraft fees and to make cashless payments for goods and services, including online purchases. Unlike a bank account, the funds on the card are not FDIC insured.63 Some banks, as well as companies like Target, Wal-Mart, Western Union, American Express, and H&R Block, offer prepaid cards. MasterCard even issues Suze Orman, Magic Johnson, and Russell Simmons prepaid cards. Fees can vary from $5 to $10 per month to up to $500 per year, with the celebrity-backed cards being the most expensive.64 The average fees are $300 per year.65 Most have an activation fee, and many have monthly maintenance fees, automated teller machine (ATM) fees, and reloading fees.


pages: 898 words: 266,274

The Irrational Bundle by Dan Ariely

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accounting loophole / creative accounting, air freight, Albert Einstein, banking crisis, Bernie Madoff, Black Swan, Broken windows theory, Burning Man, business process, cashless society, Cass Sunstein, clean water, cognitive dissonance, computer vision, corporate governance, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, endowment effect, Exxon Valdez, first-price auction, Frederick Winslow Taylor, fudge factor, George Akerlof, Gordon Gekko, greed is good, happiness index / gross national happiness, Jean Tirole, job satisfaction, knowledge economy, knowledge worker, lake wobegon effect, late fees, loss aversion, Murray Gell-Mann, new economy, Peter Singer: altruism, placebo effect, price anchoring, Richard Feynman, Richard Feynman, Richard Thaler, Saturday Night Live, Schrödinger's Cat, second-price auction, shareholder value, Silicon Valley, Skype, software as a service, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, ultimatum game, Upton Sinclair, Walter Mischel, young professional

As it turns out, people are more apt to be dishonest in the presence of nonmonetary objects—such as pencils and tokens—than actual money. From all the research I have done over the years, the idea that worries me the most is that the more cashless our society becomes, the more our moral compass slips. If being just one step removed from money can increase cheating to such a degree, just imagine what can happen as we become an increasingly cashless society. Could it be that stealing a credit card number is much less difficult from a moral perspective than stealing cash from someone’s wallet? Of course, digital money (such as a debit or credit card) has many advantages, but it might also separate us from the reality of our actions to some degree. If being one step removed from money liberates people from their moral shackles, what will happen as more and more banking is done online?

., 243 banks: small misbehaviors of, 240 see also financial services industry Barkan, Racheli, 21, 23, 262 Barlow, John Perry, 1, 2 baseball, steroids in, 156 Bateson, Melissa, 224 Baumeister, Roy, 100, 104, 262–63 Baylor College of Medicine, 75–77 Bazerman, Max, 45, 260 Becker, Gary, 3–4, 14, 26 Be’er Sheva, Israel, farmer’s market in, 23–24 being caught, probability of, 4–5, 13, 14, 27 varying, in matrix task, 20–22 benevolent behavior, 23–24 Bible, as moral reminder, 40, 41, 42 billable hours, overstating of, 35–37 blind customers, benevolent behavior toward, 23–26 brain: higher connectivity in, 170 left-right split in, 164–65 of pathological liars, 169–70 Broken Windows Theory, 214–15, 249 businesspeople, self-monitoring of, 56–57 business schools, 248 group-based projects in, 217–18 cab drivers, benevolent behavior of, toward blind customer, 25–26 CAD/CAM equipment, in dentistry, 67–71 Cain, Daylian, 89 Canada, cheating in, 242 care for customers, in illegal businesses, 138–39 car mechanics, 93 Carnegie Mellon University, 197–207 car recommendation software, “fixing” answers in, 166–67 Cary, Apoth E., 246 cashless society, implications for dishonesty in, 34 Catch Me If You Can (Abagnale), 173 certificates for (false) achievements, 153–54 Chance, Zoë, 145, 264 charitable behavior, 23–24 cheating: aggressive cheaters and, 239 altruistic, 222–23, 225–26, 227–28, 232 being made blatantly aware of, 156–57 being watched and, 223–25, 227 collaborative, see collaborative cheating desire to benefit from, 12–14, 27, 29, 237 ego depletion, 104–6, 111–12 fake products’ impact on, 125–31 in golf, 55–65 honor codes and, 41–45 increasing creativity to increase level of, 184–87 as infection, 191–216; see also infectious nature of cheating infidelity and, 244–45 on IQ-like tests, self-deception and, 145–49, 151, 153–54, 156–57 reducing amount of, 39–51, 248–54 removing oneself from tempting situation and, 108–11 signing forms at top and, 46–51 Ten Commandments and, 39–40, 41, 44 what-the-hell effect and, 127–31, 136 see also dishonesty China, cheating in, 241–42 Chloé accessories, studies with, 123–34 Civil War veterans, 152 classes, infectious nature of cheating in, 195–97 Coca-Cola, stealing money vs., 32–33 cognitive dissonance, 81 cognitive load: ability to resist temptation and, 99–100 judges’ parole rulings and, 102–3 Cognitive Reflection Test (CRT), 173–74 coin logic, 167–68 collaborative cheating, 217–35 altruism and, 222–23, 225–26, 227–28, 232 being watched or monitored and, 223–25, 227–28, 234–35 emphasis on working as group or team and, 217–18 infectious nature of cheating in relation to, 221–22 social utility and, 222–23 companies: being one step removed from money and, 34–37 irrationality of, 51 see also corporate dishonesty compliments, insincere, 159 conflicts of interest, 67–95, 238, 248 in academia, 82, 84–85 in dentistry, 67–71, 93, 94, 230 disclosure and, 88–92 dots task and, 129 eradication of, 92–95 exclusion of experimental data and, 86–88 expert witnesses and, 85–86 in financial services industry, 83–85, 93, 94 governmental lobbyists and, 77–78, 94 honesty threshold and, 130–31 inherent inclination to return favors and, 74–75 medical procedures and, 71–74, 92–94, 229 pharmaceutical companies’ influence in academia and, 82 pharma reps and, 78–82 what-the-hell effect and, 129–31 congressional staffers, cheating among, 243 Congress members, PAC money misused by, 208–10 contractors, 93 Conway, Alan, 150–51 Cooper, Cynthia, 215 Cornell University, 250–51 corpora callosa, 164–65 corporate dishonesty: cheating a little bit and, 239–40 Enron collapse and, 1–3, 192, 207, 215, 234 recent spread of, 192, 207–8 cost-benefit analysis, 4–5, 26–27, 237, 239 infectious nature of cheating and, 201–3, 205 see also Simple Model of Rational Crime counterfeits, see fake products creativity, 88, 163–89, 238 brain structure and, 164–65 dark side of, 187–89 fooling oneself and, 165–67 increasing, to increase level of cheating, 184–87 infidelity and, 244 intelligence vs., as predictor of dishonesty, 172–77 link between dishonesty and, 170–72, 186–89 logical-sounding rationales for choices and, 163–64 measures of, 171 moral flexibility and, 186–87 pathological liars and, 168–70 revenge and, 177–84 credit card companies, 239–40 crime, reducing, 52 cultural differences, 240–43 Danziger, Shai, 102 decision making: creating efficient process for, 167–68 effectiveness of group work in, 217–18 rationalization process and, 163–67 Denfield, George, 75 dentists: continuity of care and, 228–31 treating patients using equipment that they own, 67–68, 93–94 unnecessary work and, 67–71 depletion, see ego depletion dieting, 98, 109, 112–13, 114–15 what-the-hell effect and, 127, 130 “dine-and-dash,” 79 diplomas, lying about, 135–36, 153, 154 disabled person, author’s adoption of role of, 143–44 disclosure, 88–92, 248 study on impact of, 89–92 discounting, fixed vs. probabilistic, 194 dishonesty: causes of, 3–4, 5 collaborative, see collaborative cheating cultural differences and, 240–43 discouraging small and ubiquitous forms of, 239–40 importance of first act of, 137 infectious nature of, 191–216; see also infectious nature of cheating intelligence vs. creativity as predictor of, 172–77 link between creativity and, 170–72, 186–89 opportunities for, passed up by vast majority, 238 of others, fake products and assessing of, 131–34 rational and irrational forces in, 254 reducing amount of, 39–51, 248–54 society’s means for dealing with, 4–5 summary of forces that shape (figure), 245 when traveling, 183n see also cheating dissertation proposals and defenses, 101 distance factors, 238 in golf, 58–59 stealing Coca-Cola vs. money and, 32–33 token experiment and, 33–34 doctors: consulting for or investing in drug companies, 82, 93 continuity of care and, 228–29 lecturing about drugs, 81 pharma reps and, 78–82 treating or testing patients with equipment that they own, 92–94 Dodd-Frank Wall Street Reform and Consumer Protection Act, 234 dots task: conflict of interest and, 129 description of, 127–29 link between creativity and dishonesty and, 171–72, 185–86 what-the-hell effect and, 129–31 downloads, illegal, 137–39 dressing above one’s station, 120–21 Ebbers, Bernie, 13 ego depletion, 100–116, 238, 249 basic idea behind, 101 cheating and, 104–6 in everyday life, 112–16 removing oneself from tempting situations and, 108–11, 115–16 of Sex and the City’s Samantha Jones, 103 sometimes succumbing to temptation and, 114–15 sudden deaths among students’ grandmothers at exam time and, 106–8 ego motivation, 27 England, cheating in, 242 Enron, 1–3, 192, 207, 215, 234 essay mills, 210–13 exams, sudden deaths among students’ grandmothers and, 106–8 exhaustion, 249 consumption of junk food and, 97–98 judges’ parole rulings and, 102–3 see also ego depletion experimental data, exclusion of, 86–88 expert witnesses, 85–86 explanations, logical-sounding, creation of, 163–65 external signaling, 120–22 dressing above one’s station and, 120–21 fake products and, 121–22 failures, tendency to turn blind eye to, 151 “fair,” determination of what is, 57 fake products, 119, 121–40, 238 illegal downloads and, 137–39 misrepresentation of academic credentials and, 135–36 rationalizations and, 134–35 self-signaling and, 123–26, 135 signaling value of authentic version diluted by, 121–22 suspiciousness of others and, 131–34 what-the-hell effect and, 127–31, 135 farmer’s market, benevolent behavior toward blind customer in, 23–24 fashion, 117–26 counterfeit goods and, 119, 121–22, 121–40, 123–26; see also fake products dressing above one’s station and, 120–21 external signaling and, 120–22 self-signaling and, 122–26 Fastow, Andrew, 2 favors, 74–82 aesthetic preferences and, 75–77 governmental lobbyists and, 77–78 inherent inclination to return, 74–75 pharma reps and, 78–82 see also conflicts of interest Fawal-Farah, Freeda, 117, 118 FBI, 215 Fedorikhin, Sasha, 99–100 Feynman, Richard, 165 financial crisis of 2008, 83–85, 192, 207, 234, 246–47 financial favors, aesthetic preferences and, 77 financial services industry: anonymous monitoring and, 234–35 cheating among politicians vs., 243 conflicts of interest in, 83–85, 93, 94 government regulation of, 234 fishing, lying about, 28 Frederick, Shane, 173 friends, invited to join in questionable behavior, 195 fudge factor theory, 27–29, 237 acceptable rate of lying and, 28–29, 91 distance between actions and money and, 34–37 getting people to cheat less and, 39–51 infidelity and, 244 rationalization of selfish desires and, 53 stealing Coca-Cola vs. money and, 32–33 Gazzaniga, Michael, 164–65 Generally Accepted Accounting Principles (GAAP), 219–20 generous behavior, 23–24 Get Rich Cheating (Kreisler), 14 Gilovich, Tom, 250, 263–64 Gino, Francesca, 45, 104, 123, 127, 131, 145, 170, 184, 197, 225, 234–35, 242, 258–59 Glass, Ira, 6 Gneezy, Ayelet, 177, 257–58 golf, 55–65 cheating by “average golfer” vs. study participants and, 63–64 mistallying score in, 61–64 moving location of ball in, 58–59, 63 mulligans in, 60–61, 63–64 self-monitoring in, 56–57 survey on cheating in, 57–64 government regulations, 234 grandmothers, sudden deaths of, at exam time, 106–8 gray matter, 169–70 Green, Jennifer Wideman, 117 grocery shopping, ego depletion and, 109, 112–13 group or team work, 220–23 performance unaffected by, 233 possible benefits of, 223 predominance of, in professional lives, 217–18, 235 social utility and, 222–23 see also collaborative cheating Grüneisen, Aline, 210–11, 257 guilt, self-inflicted pain and, 250–52 Harford, Tim, 3–4 Harper’s Bazaar, 117–18 Harvard Medical School, 82 Harvey, Ann, 75 Henn, Steve, 209 heretics, external signaling of, 120 Hinduism, 25 honesty threshold, 130–31 honor codes, 41–45, 204 ideological organizations, 232n “I knew it all along” feeling, 149 illegal businesses, loyalty and care for customers in, 138–39 impulsive (or emotional) vs. rational (or deliberative) parts of ourselves, 97–106 cognitive load and, 99–100 ego depletion and, 100–106 exhaustion and, 97–98 Inbar, Yoel, 250, 264 infectious nature of cheating, 191–216, 249 bacterial infections compared to, 192–93 in class, 195–97 collaborative cheating in relation to, 221–22 Congress members’ misuse of PAC money and, 208–10 corporate dishonesty and, 192, 207–8 cost-benefit analysis and, 201–3, 205 essay mills and, 210–13 matrix task and, 197–204 positive side of moral contagion and, 215–16 regaining ethical health and, 214–15 slow and subtle process of accretion in, 193–94, 214–15 social norms and, 195, 201–3, 205–7, 209 social outsiders and, 205–7 vending machine experiment and, 194–95 infidelity, 244–45 “in good faith” notion, 219–20 Inside Job, 84–85 insurance claims, 49–51 intelligence: creativity vs., as predictor of dishonesty, 172–77 measures of, 173–75 IQ-like tests, cheating and self-deception on, 145–49 certificates emphasizing (false) achievement and, 153–54 increasing awareness of cheating and, 156–57 individuals’ tendency to turn a blind eye to their own failures and, 151 IRS, 47–49 Islam, 249 Israel, cheating in, 241 Italy, cheating in, 242 Jerome, Jerome K., 28 Jobs, Steve, 184 Jones, Bobby, 56 Jones, Marilee, 136 Judaism, 45, 249 judges, exhausted, parole decisions and, 102–3 junk food, exhaustion and consumption of, 97–98 Keiser, Kenneth, 135 Kelling, George, 214–15 John F.


pages: 423 words: 149,033

The fortune at the bottom of the pyramid by C. K. Prahalad

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barriers to entry, business process, call centre, cashless society, clean water, collective bargaining, corporate social responsibility, deskilling, disintermediation, farmers can use mobile phones to check market prices, financial intermediation, Hernando de Soto, hiring and firing, income inequality, late fees, Mahatma Gandhi, market fragmentation, microcredit, new economy, profit motive, purchasing power parity, rent-seeking, shareholder value, The Fortune at the Bottom of the Pyramid, time value of money, transaction costs, working poor

“By combining the features of a handy credit/debit card with the advantages of . . . storage capacity . . . the smart card provides secure identification, a store of value and an ability to function off line while maintaining an audit trail of all the transactions.”35 Smart cards were launched in October 2000 by ICICI at the Infosys Campus in Bangalore and at Manipal Academy of Higher Education (MAHE) to create a cashless economy. However, many problems exist with smart cards, such as high cost and lack of technological infrastructure for widespread adoption. The high cost is especially amplified at the rural level. However, ICICI is watching closely what BASIX is doing currently with smart card technology to see if it is cost-effective and viable. Figure 9 shows how the smart card system would work with Farmer Service Centers or MFIs.


pages: 372 words: 152

The End of Work by Jeremy Rifkin

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banking crisis, Bertrand Russell: In Praise of Idleness, blue-collar work, cashless society, collective bargaining, computer age, deskilling, Dissolution of the Soviet Union, employer provided health coverage, Erik Brynjolfsson, full employment, future of work, general-purpose programming language, George Gilder, global village, hiring and firing, informal economy, interchangeable parts, invention of the telegraph, Jacques de Vaucanson, job automation, John Maynard Keynes: technological unemployment, knowledge economy, knowledge worker, land reform, low skilled workers, means of production, new economy, New Urbanism, pink-collar, post-industrial society, Productivity paradox, Richard Florida, Ronald Reagan, Silicon Valley, speech recognition, strikebreaker, technoutopianism, Thorstein Veblen, Toyota Production System, trade route, trickle-down economics, women in the workforce, working poor, working-age population, Works Progress Administration

Over 100 million pages of addenda and updates costing 4.5 cents a sheet are no longer sent out. Less paperwork means fewer employees. Aetna closed up its warehouse facility where employees "did nothing but update manuals."21 Loewenberg says that Aetna is moving quickly toward a paperless office "because its a more efficient way of delivering and maintaining information."22 Many in the computer software industry compare the paperless office to the cashless society and predict that most companies will convert to the new way of doing business well before the second decade of the next century. Nirex, a UK company, already processes its mail electronically. When paper-based correspondence arrives in the 148 THE DECLINE OF THE GLOBAL LABOR FORCE mailroom, an electronic image of the letter appears on a screen. The postal clerk enters key information about the letter-author, date of delivery, address-into an on-line database.


pages: 725 words: 221,514

Debt: The First 5,000 Years by David Graeber

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Admiral Zheng, anti-communist, back-to-the-land, banks create money, Bretton Woods, British Empire, carried interest, cashless society, central bank independence, colonial rule, corporate governance, David Graeber, delayed gratification, dematerialisation, double entry bookkeeping, financial innovation, full employment, George Gilder, informal economy, invention of writing, invisible hand, Isaac Newton, joint-stock company, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, oil shock, payday loans, place-making, Ponzi scheme, price stability, profit motive, reserve currency, Ronald Reagan, seigniorage, short selling, Silicon Valley, South Sea Bubble, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transatlantic slave trade, transatlantic slave trade, tulip mania, upwardly mobile, urban decay, working poor

Neither has the return to virtual money led to a great return to relations of honor and trust: quite the contrary. By 1971, the change had only just begun. The American Express card, the first general-purpose credit card, had been invented a mere thirteen years before, and the modern national credit-card system had only really come into being with the advent of Visa and MasterCard in 1968. Debit cards were later, creatures of the 1970s, and the current, largely cashless economy only came into being in the 1990s. All of these new credit arrangements were mediated not by interpersonal relations of trust but by profit-seeking corporations, and one of the earliest and greatest political victories of the U.S. credit-card industry was the elimination of all legal restrictions on what they could charge as interest. If history holds true, an age of virtual money should mean a movement away from war, empire-building, slavery, and debt peonage (waged or otherwise), and toward the creation of some sort of overarching institutions, global in scale, to protect debtors.


pages: 515 words: 142,354

The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz, Alex Hyde-White

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bank run, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bretton Woods, capital controls, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, investor state dispute settlement, invisible hand, Kenneth Rogoff, knowledge economy, labour market flexibility, labour mobility, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

The advantages of electronic transactions are, nonetheless, overwhelming, which is why even with monopoly pricing, there has been a shift toward this system. 8 The major exception, for the purchase of goods and services from abroad, is discussed later in this chapter. 9 Indeed, European authorities effectively encouraged the creation of such a system when they imposed restrictions on how much money people in Greece and Cyprus could take out of their accounts. This system goes just a little further: rather than limiting the amount that can be taken out of one’s bank account to a very little amount—say, €50 a day—it puts the limit at zero, forcing the economy to move to a cashless electronic economy. 10 In the preface, we noted the role that this issue played in America’s election in 1896. 11 There are several other “slips between the cup and the lips.” Central banks in Europe, the United States, and Japan have increased their own balance sheet, providing more liquidity to their banks; but their banks have simply put much of the money back in deposit at the central bank, not even creating more private credit.


pages: 470 words: 144,455

Secrets and Lies: Digital Security in a Networked World by Bruce Schneier

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Ayatollah Khomeini, barriers to entry, business process, butterfly effect, cashless society, Columbine, defense in depth, double entry bookkeeping, fault tolerance, game design, IFF: identification friend or foe, John von Neumann, knapsack problem, mutually assured destruction, pez dispenser, pirate software, profit motive, Richard Feynman, Richard Feynman, risk tolerance, Silicon Valley, Simon Singh, slashdot, statistical model, Steve Ballmer, Steven Levy, the payments system, Y2K, Yogi Berra

It’s easier to design a secure pay-for-parking system if you assume that crooks can’t empty the parking meters into their pockets. It’s easier to design a secure library if you assume that people can’t sneak books out of the building inside their overcoats. And it’s easier to design an electronic wallet if you assume that people can’t arbitrarily modify the amount of money they have. Here’s a perfect cashless monetary system: Everyone carries around a piece of paper with a number on it representing the number of ducats in his wallet. When someone spends money, he crosses out the number and writes the lower number. When he receives money, he does the opposite. If everyone is honest, this system works. As soon as someone notices that he can write whatever number he wants on the paper, the system falls apart.