Sunday, 9 October 2011

Hard Earned Cash Versus Digital Money, Any Difference?


I was in Munich, Germany last year and was surprised to learn that some Germans still prefer cash over credit.  There is a famous German restaurant serving typical Munich food that only accepts cash payment in this important industrial city.  

Before going to the restaurant, I was warned that I must have enough cash not credit to settle the bill.  I wonder why? When everyone is talking about credit and liked to have credit over cash and what on earth, this particular restaurant only wants cash.  And this is the first world country and it is one of the most advanced countries in the world.  Electronic money and credit are not uncommon to them.

Why cash not credit?

It reminded me of the meaning of hard earned money. After a full day of hard work, it is really nice to see the takings of the day in cash, the physical money rather than credit in the bank.  It makes a feel good feeling and it stimulates you to work harder the next day for more cash.

It means you see the result in notes and coins, the real results of your hard work.

However, there is no emotional value for credit, electronic or digital money, or virtual banking.  You don’t feel it so much as these are numbers and sometimes you will take it for granted.

Very often, you see traders in the big banks lost billion of money.  These are figures to them, in a touch of button, they are gone or it may increase with a bigger number.  You don’t feel pain when you lose the numbers.  While when these are in cash and in billion of money and you really earn them through a hard way, before you place the button to transfer the money for a transaction, you will have emotional feeling.  You feel the pain when this money is no more with you and it is a lost of many days of your hard work.

These numbers are, of course, not the traders’ hard earned money. They just help to push the button on behalf of their clients and so they feel they have no responsibility to protect them.  Or may be they forget they have the responsibility to protect them.

When Temasek Holdings and GIC invest our hard earned CPF money, will they do it likes the traders or the German restaurant owner? Will they appreciate that their opportunity to invest in the world is given by CPF members?   

Technology is good and it makes work more efficient.  However, it also creates more problems, especially, the lack of human touch. Because this electronic money is numbers, investment bankers, fund managers, and relationship managers all are engaged in the number game. They build the financial products and portfolios on different numbers, adding numbers on top of the numbers. At the end of the day, they lose their way in the number game and missed their way out.

The numbers are like colours, music, flavours, and hunting that make a person loses his senses.

This perhaps is what Laozi’s saying of the lost of senses:

Chapter 12 of Laozi

12.  The Senses
The five colors blind the eyes of man;
The five musical notes deafen the ears of man;
The five flavors dull the taste of man;
Horse-racing, hunting and chasing madden the minds of man;
Rare, valuable goods keep their owners awake at night.
Therefore the Sage:
   Provides for the belly and not the eye.
   Hence, he rejects the one and accepts the other.
(Transalted by Lin YuTang) 

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