Review: *The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance* by Eswar S. Prasad 📚
Eswar Prasad, The Future of Money
Reading Eswar Prasad’s The Future of Money was an odd experience. Let’s start by clarifying the author’s starting point. Prasad is the definition of an elite:
- a graduate of some of the world’s most prestigious universities (Madras, Brown, U of Chicago)
- a long stint at the IMF
- an occupant of a endowed chair in economics at an Ivy League school
- a senior fellow at the center-left-think-tank-to-rule-them-all Brookings Institute
- possessor of an advisory appointment as research associate at the National Bureau for Economic Research
I mention all these roles not to impress you, but rather to give you a sense of what to expect from The Future of Money: cryptocurrency filtered through the perspective of someone deeply entrenched in the structures, institutions, and frameworks that define the world as it currently is.
That perspective has some real value: Prasad is a remarkably lucid explicator of those elements of crypto that he cares to understand. For instance, his plain-language explanations of the technical details of Bitcoin and of the distinctions between proof of stake and proof of work are both clear and thorough. They’ve increased my own understanding of the technical details of crypto.
Similarly, and unsurprisingly, Prasad provides an exceptionally interesting overview of the current state of money:
- the exponential increase in non-crypto digital money over the last couple decades
- the rise of the dollar to dominance as global reserve currency (and the resentment most other countries feel at the dollar’s dominance)
- the attempts by governments around the world to create digital currencies, and what we should expect in future attempts
Overall, Prasad’s book shines in explicating how we got to where we are, from a global economic perspective. But Prasad’s perspective has some very obvious and very unsurprising blind spots.
For one, though he refers fairly often to issues relating to privacy, he doesn’t seem to really “get” the degree to which crypto advocates are advocating for *decentralization—*the degree to which crypto is not fundamentally about economics but about politics, governance. He’s skeptical (and rightly so) of claims that Bitcoin and most other cryptos offer privacy and anonymous transactions. But this isn’t what decentralization advocates are getting at. The degree of privacy offered by Bitcoin is still far superior to the degree of privacy offered by the central bank digital currencies (CBDCs) that Prasad thinks are the likely long-term digital-money solution. (To his credit, he’s quick to acknowledge the privacy challenges [quite the euphemism, in this case] that CBDCs present. But he’s certainly nowhere near terrified enough of these challenges for my taste.)
The need for political imagination is also far greater than Prasad acknowledges or seems capable of himself. Prasad wants the global order to remain more or less as it is. But for those less-well-served by this existing order, what are the alternatives? The populist revival? Some sort of web3 or other tech-driven new economic order? Just trudging along trying to survive? Or something even more violent and unsettling? Our economic and social problems need far greater solutions than CBDCs. For all their many flaws, web3 projects do suggest some remarkably creative new economic possibilities.
Do I recommend it? Well, if you have time for 375 pages that ultimately make an inconclusive case for the exisiting global order, sure. But while the economics and history are interesting, Prasad’s political imagination is simply too conventional, too obvious, too elite. The sort of book that tries to convince you that CBDCs are coming, no matter what you do, but don’t worry too much about it.
Everything about central bank digital currency (CBDC) is the stuff of totalitarian nightmare.
Expert ≠ leader (or vice versa):
The pandemic has shown us the dangers of expert rule, and the failures of political and institutional leaders to heed them. It has also demonstrated, through its absence, what good governance might look like.
~Joseph E. Davis in The New Atlantis
Social media & the human heart 🔗
From Mallory Owens’s review of Bruno Maçães’s History Has Begun:
It would be disturbing enough if, as Maçães predicts, the great lords of Silicon Valley left us to amuse ourselves in our virtual sandboxes while they went off to conquer the solar system. With an ever-expanding arsenal of digital tools at their disposal, however, they are unlikely to show such restraint. Their war against reality can never truly be won until they have triumphed over the most stubborn and deceitful of all things, the human heart.
When was the last time I link to a Slate article? Maybe never.
In any case, their “Best Jazz Albums of 2021” is excellent—introduced me to a number of albums I hadn’t yet heard; all the ones I have heard I also loved, especially the Mingus and the Shepp/Moran. 🎵 🔗
Tyler Cowen’s conversation with biographer-historian Ruth Scurr is delightful—bookstores, Cambridge, finding a book’s form, & much more. 🔗🎙
Beautiful light in my office this morning.
A fresh layer of snow overnight + fire-red sunrise.
Incredibly excited for the future of Slant Books. They have some wonderful titles coming in their first year as an indie not-for-profit press. 🔗📚
R.I.P, Robert Bly, one of Minnesota’s great poets. I’ll remember him most for his translations of Thomas Tranströmer; among if not the first translations into English of the incredible Swedish poet. 📚 🔗
A beautiful obituary of Chinese philosopher and aesthetician Li Zehou. 🔗
This sunrise this morning… unreal. 💥 🏡
Alan Jacobs on distributism & the need for new institutions 🔗
In the Hedgehog Review, Alan Jacobs describes the potential for “A New Guild System”:
I envision a world in which the increased fragmentation of our media scene—fragmentation created by institutions that have lost their sense of purpose and individuals who have lost trust in those institutions—leads, over time, to the rise of new institutions that are built on stronger foundations.
Micro.blog is certainly part of this new-institution-building.
And many developments in web3 seem dedicated to the same purposes: distributing political & economic power in new ways; thinking through what institutions could look like if organized differently—in more distributed, bottom-up forms.
Bitcoin & the US fiscal reckoning 🔗
Bitcoin and the U.S. Fiscal Reckoning - National Affairs
Until and unless Congress reduces the trajectory of the federal debt, U.S. monetary policy has entered a vicious cycle from which there is no obvious escape. The rising debt requires the Treasury Department to issue an ever-greater quantity of Treasury bonds, but market demand for these bonds cannot keep up with their increasing supply. In an effort to avoid a spike in interest rates, the Fed will need to print new U.S. dollars to soak up the excess supply of Treasury bonds. The resultant monetary inflation will cause increases in consumer prices.
These “increases in consumer prices” have arrived, and they’re planning to stick around a while.
A first post in my shameless theft of Robert‘s Last/Next notebook category. I’ll enjoy looking back on this in a few years. 📓
Daniel A. Kaufman defends “The Good Old Liberal Consensus” against its foes on both right and left. H/t to my friend Bharat. 🔗
Currently reading: The Future of Money: How the Digital Revolution is Transforming Currencies and Finance by Eswar S. Prasad 📚
"Homeward Bound (for Ana Grace)" 🎵
The title track from Johnathan Blake’s upcoming album Homeward Bound is a beautiful tear-jerker.
“Homeward Bound (for Ana Grace)” was written in memory of Ana Grace Marquez-Greene, the daughter of saxophonist Jimmy Greene & flutist Nelba Marquez-Greene, who died at Sandy Hook, just six years old. 🎵🔗
This is a wonderful appreciation of Norm MacDonald—the best I’ve read so far. 🔗
“Destiny waits in the hands of God, not in the hands of statesmen / Who do, some well, some ill, planning and guessing, / Having their aims which turn in their hands in the pattern of time.”
~T.S. Eliot, Murder in the Cathedral