Money not root of evil, It is source of all worldly power

We often say, “money is the root of all evil” or “money is dirt in the hand.” In such ways we tend to belittle money. But in the light of reality it must be admitted that money is in no way the root of evil. Rather, money is the source of all worldly power. In today’s age it is impossible to survive even for a moment without money. Materialists say, “money is the second god.” Though there may be some exaggeration in this statement, it is not entirely false. To obtain anything, money is needed. Even to give something, money is required. A Mercedes or BMW car costs several crores of taka. Yet however valuable the car may be, without low-priced fuel it is useless.

In the same way, no matter how important or talented a person may be, if he cannot earn enough to survive, he has no value. Such a person is neglected in society and ignored in the family. There are many talented people in society who, simply because they could not earn enough to run a household, broke family ties and chose the path of suicide.

The money about which we are so anxious has no intrinsic power of its own. It is important only because it is used as a medium of exchange. In very ancient times there was no circulation of money. People believed in barter. They went to the market and exchanged one product for another. For example, one man might have had a cow, and wanted to buy rice with it. Then he had to find another person in the market who wanted to buy a cow in exchange for rice. Only when the needs of two people matched could they trade. The greatest problem in this barter system was the coordination of demands.

Often, even after wandering in the market and wasting much time, a suitable match could not be found. As a result, the exchange failed. This problem continued for a long time, until people eventually discovered a solution. They adopted gold and silver as mediums of exchange. Gold is the most widely used and desired metal in the world. There is hardly any country in the world without demand for gold. Gold, silver and bronze were once used as mediums of exchange. But there were inconveniences in using such metals directly. With wide circulation and frequent handling, the metals would wear down and lose value. Moreover, carrying gold was risky due to the fear of theft. Considering these disadvantages, alternative methods of exchange appeared. At one time, cowries were used for trade in the subcontinent.

As far as is known, symbolic paper currency was introduced in the subcontinent during the reign of the talented medieval emperor Muhammad bin Tughluq. The mention of Muhammad bin Tughluq’s name immediately evokes the image of a mad king. Just as when the name of commander Mir Jafar is uttered, the word traitor is unnecessary, because Mir Jafar is synonymous with treachery. In the same way, the word Tughluq has become synonymous with madness. But if we analyse carefully, we will understand that Muhammad bin Tughluq was by no means insane or unstable. He was one of the most talented and farsighted rulers of medieval India. The plans he adopted during his rule were advanced and astonishing for his time. But due to non-cooperation from officials, his plans failed.

How could a man in the Middle Ages even think of introducing paper currency instead of gold? Fearing that gold might wear away due to repeated handling, Muhammad bin Tughluq kept gold in the state treasury and released an equivalent amount of paper money into the market. This greatly simplified financial transactions. But soon a rogue group began counterfeiting notes in various ways. The spread of counterfeit currency became so great that traders refused to accept paper notes. Thus paper currency lost credibility. Ordinary people were made to believe that the emperor was cheating them by giving paper instead of gold. But Muhammad bin Tughluq never imagined counterfeiters would ruin his brilliant initiative in this way. He was, in fact, the first introducer of paper currency in the subcontinent. Therefore, to call him mad is nothing but sheer ignorance.

Today symbolic currency in the form of paper money circulates globally. Different countries have different names for their currencies. Domestic transactions are carried out through these currencies. But for trade or investment with other countries, sometimes other currencies are needed. There is no official international currency. Yet the United States dollar, due to its wide acceptance, has almost become the global currency. Most countries accept it. Around 60 per cent of the world’s foreign exchange reserves are stored in US dollars. There are other currencies used elsewhere, but none has been able to challenge the dominance of the dollar. Some currencies even have higher exchange rates than the dollar. Yet the acceptance of the dollar has not declined.

The exchange rate of a currency does not determine its acceptance or strength. The economic power of the country concerned, stability of exchange rates, and wide acceptability are the main factors that determine the strength of a currency. When the European Union introduced a single currency, the Euro, in 2000 across its 27 member countries, many said that the dominance of the dollar would surely be diminished. But in reality that did not happen. Nor is there any sign that the dominance of the US dollar will weaken in the future.

Now the question is, how does currency influence people’s daily lives? Or how important is currency in people’s lives? Since currency is the government-recognised medium of exchange, its importance cannot be denied. Different countries issue currency in different names. These currencies facilitate undisputed exchange within domestic markets. Even by exchanging local currency with foreign currency, people can meet their needs. In other words, if a person has currency, he can use it globally through various means. After independence, Bangladesh introduced its own currency, the Taka. For some time foreign exchange reserves were kept in British pounds. Later they were maintained in US dollars. The quality of Bangladeshi currency is quite good. Bangladesh has coins and notes ranging from one taka to one thousand taka.

At one time, one-taka silver-coloured coins circulated in the domestic market. These white coins were quite popular. But eventually it was found that they were being smuggled abroad on a large scale. At that time, through a news agency, I published a report stating that if the intrinsic value of a coin is higher than its face value, it will be smuggled. But if the intrinsic value is lower, then there is less risk of smuggling. Bangladesh later introduced bronze-coloured one-taka coins instead of silver ones. Money laundering is still considered a serious problem in the country. It cannot be stopped. Those who earn money illegally fear difficulties in using it domestically, so they smuggle it abroad. Money laundering is extremely harmful for a country’s economy. It increases the suffering of its people.

However much we may despise or belittle money, the reality is that we cannot live even a moment without it. The present truth is that a person’s social value is measured by money. A person without money, however talented, has little value in society. Poor people without money constantly have to go to the doors of the rich for small amounts. In both society and family, the penniless are subject to neglect.

A private research organisation recently reported that 29 per cent of people in the country are poor. In 80 per cent of households, expenses exceed income. As a result, families are gradually falling into financial distress. If a family’s monthly income is higher than its expenses, then its financial capacity or real income increases. However much inflation rises, such a family will not face problems. But if family income is lower than expenses, then it will certainly face crisis. That is why developed countries design wage structures in such a way that wages always outpace inflation.

If a family’s monthly income is 200 US dollars and expenses are 100 dollars, then the family can live comfortably. Even if inflation rises by 20 per cent, the family will not suffer if wages also rise by 20 per cent. But in Bangladesh the opposite is happening. For example, in November 2024 the overall inflation rate was 11.38 per cent, while wage growth was 8.10 per cent. That means if a family’s income was 8 taka 10 paisa, then at that time the inflation rate was 11.38 per cent. Thus expenses were 3.28 per cent higher than income. In such a situation the family will inevitably face financial crisis. In December of the same year the inflation rate was 10.89 per cent, while wage growth was 8.14 per cent. So wage growth in no way kept up with inflation. This is the cause of people’s suffering.

We often hear in newspapers that the amount of money outside the banking sector is increasing. This is not true. People are withdrawing savings from banks to meet their daily needs. That is why deposits in banks are falling. Some people are able to increase their income to match inflation. But those with fixed incomes cannot. As a result, they are in trouble.

The people of Bangladesh from different classes and professions are now in a very helpless situation. They are being crushed under high inflation. Many are cutting down on the purchase of essential goods to reduce household expenditure. If this continues for long, economic disaster will be inevitable. We must be alert about this.

MA Khalek: Retired General Manager, Bangladesh Development Bank PLC, and writer on economic issues.