As part of my usual exploration of towns and cities around the country I wander up and down streets taking photos. I have an inexhaustible supply of pictures of the generic American landscape. But every once in a while someone will come running out of a building demanding to know who I am and why I’m photographing their property. Bank managers are frequent objectors.
I have a standard response. I hand over my drivers license and business card. I scroll through the photos on my camera screen, and I bore them to tears with talk of road standards and zoning regulations. That usually does the trick. But with bank managers there’s that extra layer of concern. Am I casing the joint for a future robbery?
I start with the obvious. It’s broad daylight. I have a big camera. My activities are incredibly obvious. And I know I’m under video surveillance with all the latest facial recognition software. If I were a bank robber I’d be a really bad one. But that doesn’t necessarily calm them. Then I roll out my favorite observation. There isn’t even any money in your bank.
If I really wanted to steal from a bank I’d get a clever fourteen year old to do it with a laptop from Brazil or Ukraine. There’s almost no paper money in circulation anymore. A few years back I took a course in emergency preparedness and the fire marshal instructed everyone to have a few hundred dollars in small bills on hand along with water and shelf stable food. I went to a big bank here in San Francisco and they had to scramble to pull together a small stack of five dollar bills. Banks just don’t handle much cash anymore.
That leads me to my closing comment which circles back to urbanism. How much longer do you think it will be before they shut down this branch as banking migrates entirely to the interwebs? Ever heard of Quicken Loans? PayPal? Square? Venmo? Bitcoin? A lot of businesses don’t even accept cash these days. And you don’t need a human to open an account or get a mortgage anymore. Even plastic cards are losing ground in favor of phone apps and biometric scans. Why would corporate headquarters bother with the expense of maintaining physical buildings and staff beyond a certain point? This is particularly true in third tier markets. I give a game show wave of the hand to indicate their location. Long pause. At this point I stop being a potential thief and transform into a complete prick.
Digital currencies serve well as frictionless mediums of exchange. They’re favored by individual consumers due to ease of use. Large corporations and governments love them because every transaction can be automatically recorded, traced, data mined, and skimmed for fees and taxes. And electronic commerce provides an advantage to law enforcement since paper money can change hands invisibly for illicit purposes. It’s just a matter of time before paper bills are phased out entirely.
But there are serious drawbacks which are underestimated. All of these electronic processes have one thing in common. They’re wholly contingent on overlapping and interdependent hyper complex systems to function properly. They require an uninterrupted supply of electricity, massive server farms in remote locations, attenuated cables, microwave relay stations, satellites, advanced algorithms managed by armies of tech workers, and governments to backstop and oversee the legitimacy of these transactions. It’s a delicate currency with a high metabolism.
A few weeks ago a friend and I stopped by a cafe for lunch and were told we couldn’t be seated because their computer system was down. I looked around. There were people sitting at tables. There were cooks and food in the kitchen. The lights were all still on. I asked if we could have our order taken with a piece of paper and a pencil. We had cash to pay for our meal. The hostess went slack-jawed, then explained that it was more complicated than that. We moved on to the next cafe down the block. The many benefits of technology are counter balanced by the culture of dependence it breeds. This was an insignificant temporary disruption of one small business. But what might happen if some sort of large scale systemic break were to drag on? Digital money is the equivalent of a just-in-time supply chain and it’s vulnerable to disruption.
There’s another problem with digital money. While it’s great as a medium of exchange it isn’t a particularly good store of value. Fiat paper currency is already an abstract representation of real physical value backed solely by faith in the larger system. Electrons suspended in the cloud are an abstraction of that earlier abstraction. No paper currency in history has survived for very long since the issuing governments inevitably abuse this faith in order to meet short term political goals. Electronic versions of cash make it that much easier to manipulate and debase fiat currencies.
There’s also the trouble of institutional amnesia. One of the lessons learned from the Great Depression of the 1930s involved conflicts of interest between savings banks, investment brokerages, and insurance companies. The Glass Steagall Act was one of the safeguards designed to separate these financial entities and re-build social trust in the system. But over time these regulations were deemed onerous and were dismantled or sidestepped in favor of innovation. “It’s different now. It’s different here. We have more advanced tools today. We can manage more leverage with less risk.” Five thousand years of history shows that it’s never different. It’s always exactly the same. And it doesn’t end well. But each generation needs to rediscover that the hard way.