The Death of Money
Encyclopedia
The Death of Money is a 1993 book (and an article with the same title) by Joel Kurtzman
, a former editor of Harvard Business Review
. Kurtzman uses the "death of money" to refer to a change in the economic nature of money
in the United States following Richard Nixon
's removal of US dollar from the gold standard
(as in the Bretton Woods system
), informally referred to as the Nixon shock
.
The concept of "death of money" also refers to the fundamental change in the nature of business transactions based on a complex, electronically managed system of valuations used for stocks, bonds, insurance policies, and other financial contracts that go beyond the simple, historic notion of money representing physical reserves. A simple view of this concept is that if everyone decides to cash out their bank account on a single day, there is no longer enough paper money to represent it.
Kurtzman discussed how the new electronic financial economy allows for new trends in securitization
(e.g., the inclusion of mortgage-backed securities into compound and complex financial instruments), and warned of possible financial reversals.
Joel Kurtzman
Joel Kurtzman is a Senior Fellow at the Milken Institute, a non-profit, non-partisan think tank. His research focuses on globalization and its risks and has been published widely...
, a former editor of Harvard Business Review
Harvard Business Review
Harvard Business Review is a general management magazine published since 1922 by Harvard Business School Publishing, owned by the Harvard Business School. A monthly research-based magazine written for business practitioners, it claims a high ranking business readership among academics, executives,...
. Kurtzman uses the "death of money" to refer to a change in the economic nature of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
in the United States following Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
's removal of US dollar from the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
(as in the Bretton Woods system
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...
), informally referred to as the Nixon shock
Nixon Shock
The Nixon Shock was a series of economic measures taken by U.S. President Richard Nixon in 1971 including unilaterally cancelling the direct convertibility of the United States dollar to gold that essentially ended the existing Bretton Woods system of international financial exchange.-Background:By...
.
The concept of "death of money" also refers to the fundamental change in the nature of business transactions based on a complex, electronically managed system of valuations used for stocks, bonds, insurance policies, and other financial contracts that go beyond the simple, historic notion of money representing physical reserves. A simple view of this concept is that if everyone decides to cash out their bank account on a single day, there is no longer enough paper money to represent it.
Kurtzman discussed how the new electronic financial economy allows for new trends in securitization
Securitization
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation , to...
(e.g., the inclusion of mortgage-backed securities into compound and complex financial instruments), and warned of possible financial reversals.
Sources
- Joel Kurtzman, The Death of Money, Harvard Business Review 15(16), 1993.
- Joel Kurtzman, 1993 The Death of Money, Simon and Schuster ISBN 0316507377.