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Monday, July 26, 2021

Money Makes the World Go Round

A racy entertainer on everything you needed to know about money, except how to make more of it

Updated: April 18, 2015 3:44:41 am
Monte dei Paschi, Siena, the world’s oldest bank Monte dei Paschi, Siena, the world’s oldest bank

Book – Coined: The Rich Life of Money and how its History has Shaped Us

Author: Kabir Sehgal

Publisher: Hachette India

Pages: 336

Price: Rs 499

It is easy to write books about money. It has been around for millennia, hundreds of territorial authorities have issued thousands of currencies in different values, and since the arrival of banks, numerous financial instruments have been based on it. The world of money and finance is complicated; simply describing it can fill thousands of pages. Explaining and simplifying it can fill many more. For someone who is not seeking practical knowledge of what to do with money, Kabir Sehgal’s book is a racy, entertaining, if somewhat superficial, guide.

The author is a banker who presumably helps people invest money. In the course of his work, he has travelled a good deal; everywhere he comes across new mechanisms, institutions, habits and ways of thinking. Out of his observations he has created a story — a host of stories — which are not intended to instruct, but which convey an enormous mass of sundry information without overwhelming the reader. At the end of it, she will not be able to give a name to what she learnt, but he will come away amused and entertained.

Economics of money starts with the observation that money is a medium of exchange. Sehgal starts with exchange, but goes back to exchange between primitive organisms called Zooxanthellae and the corals that they inhabit. This is fascinating, if a bit farfetched. One of the strengths of this book is that Sehgal is not an economist and does not have to earn the respect of his peers, so he can range broadly into areas of knowledge that he does not have to master, and which have nothing to do with money, such as the hip-to-waist ratio of palaeolithic women. It is a bit like a kabaadi bazaar — one does not go there to buy something specific, but to surprise oneself with something odd and unexpected.

From money, Sehgal goes on to debt. In economics, this would lead on to contracts, instruments and laws. But Sehgal turns to the ambiguity between presents, which would normally not create a debt, and the informal obligations and sense of guilt they create — how these work out in gift-intensive societies like those of Japan and Polynesia. Gifts in such societies create complicated customs and confront people with difficult decisions. For instance, a gift should make the receiver feel grateful, but it should not be so trivial as to offend the receiver; nor should the burden of the return gift that she may feel obliged to give be too heavy.

Then Sehgal goes briefly into the history of money, coins and metals. This is pretty standard stuff, except for his digression into alchemy. The art of turning base metals into gold and silver is a fiction, but it was taken seriously in ancient times. Maybe, it would be worth the while of someone to learn ancient Arabic (alchemy is Arabic for chemistry) and find the secret. But today, it would be easier to do a management degree and join a bank which creates money. Sehgal also goes into the controversy of metallism vs chartalism. I thought this was settled long ago: the value of money is what it exchanges for in transactions, which cannot exist without social networks. If Robinson Crusoe had found piles of mohurs on his island, they would have been useless to him.

That takes Sehgal to the origins of fiat money, money that is worthless in itself — for instance, paper — and has value only because a government accepts it and manages its supply. It’s pretty straightforward, but Sehgal’s story of John Law, who sold the idea of fiat money to the king of France, makes it interesting. That takes him to modern money derivatives such as credit cards, PayPal, Bitcoin and so on. The quick survey of this field is not clear, but it is a developing story, so it is, perhaps, too early to make sense of it.

The next chapter connects money with religion. Religions have something to say about economic drive, particularly about self-interest. That gives Sehgal material enough; but it has little to do with money. Islam’s prohibition of interest is the only direct religious reference to money.

The last chapter is the most interesting. It is about the numismatists Sehgal knows and the coins they have found. It begins with a picture of a Bangladeshi archaeologist digging up coins of a janapada from 400-600 BC while Sehgal watches. Then it goes on to the story of the $20 Double Eagle coin issued at the time of President Theodore Roosevelt. There is much more besides. This is an ideal bedside book to open anywhere and read for 10 minutes before dozing off.

Ashok V Desai is an extinguished economist and aspiring wordsmith

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