The End of Money

Money Makes the World Go ’Round

Money can take the form of checks, credit cards, computer bits, gift cards and even Disney Dollars. Its most common form is cash: banknotes and coins representing the currency of sovereign nations. Cash has some specific problems. It costs governments money to manufacture money. The US penny and US nickel cost more to manufacture than they are worth. Dollar bills are less expensive to manufacture than coins, but they have a limited shelf life, and thus end up costing more money to produce.

However, because it costs less than $5 to print a five-dollar bill and far less than $20 to print a twenty-dollar bill – this difference between value and manufacturing cost is known as seigniorage – governments profit when they manufacture money. Many coins today are largely useless because inflation devalues them. Some economists and other knowledgeable observers question whether governments should bother minting coins.

Advocates of electronic or digital money would like to get rid of all physical currency. They believe it has outlived its usefulness. Cash critics say hard currency is obsolete for several reasons: Many people do not trust national...