Motley Fool Hidden Gems Investing - Freakonomics and Naked Money

Episode Date: August 26, 2016

On this week's Labor Day special, Freakonomics co-author Stephen Dubner talks about his new book, When to Rob a Bank: And 131 More Warped Suggestions and Well-Intended Rants. And Charlie Wheelan shares some insights from his book, Naked Money: A Revealing Look at What It Is and Why It Matters.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey Ontario, come on down to BetMGM Casino and see what our newest exclusive, The Price is Right Fortune Pick, has to offer. Don't miss out! Play exciting casino games based on the iconic game show, only at BetMGM. Check out how we've reimagined three of the show's iconic games, like Plinko, Cliffhanger, and The Big Wheel, into fun casino game features. Don't forget to download the BetMGM Casino app for exclusive access and excitement on the Price is Right Fortune Pick. Pull up a seat and experience the Price is Right Fortune Pick

only available at BetMGM Casino. BetMGM and GameSense remind you to play responsibly. 19 plus to wager. Ontario only. Please play responsibly. If you have questions or concerns about your gambling or someone close to you, please contact ConnexOntario at 1-866-531-2600

to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. This episode of Motley Fool Money is supported by Wonder Capital, an investing service that allows individuals to invest in solar projects across the U.S. Earn up to 11% annually while diversifying your portfolio, curbing pollution, and combating global climate change. Create an account for free at wondercapital.com slash fool. Wonder Capital, do well and do good.

Everybody needs money. That's why they call it money. The best things in life are free. But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Chris Hill. Hope you're enjoying your Labor Day weekend.

Got a little something different this week. Two of our favorite interviews. Charlie Whelan talks about his latest book, Naked Money, a revealing look at what it is and why it matters. But we kick things off by revisiting a conversation with Stephen Dubner, co-author of the best-selling Freakonomics books, including the highly entertaining When to Rob a Bank and 131 more warped suggestions and well-intended rants.

Let's just start with the title. When is the best time to rob a bank? I'm asking for a friend. All right, tell your friend, Chris, easily the best time to rob a bank is never. Bank robbery is a crappy crime. Now, this may be because the typical bank robber is a pretty crappy thief. So, you know, the data on this turned out to be pretty interesting. If you look at the most successful time, for instance, to rob a bank, there wasn't that much variance in days of the week. Friday was kind of a bigger day, but there wasn't that much variance in days a week. But time of day, there was a lot of variance.

And so it turns out that you're much more successful robbing a bank if you rob it in the morning. And yet the majority of bank robberies take place in the afternoon. And as it turns out, most bank robbers, a bank robber will get caught on average after three robberies. And since the average take is not very much in this country, you know, let's say maybe $1,000, it's just a stupid crime to do. But the interesting part in there for us then became, well, if mornings are better, why so many in the afternoon? Maybe they just don't know, right? Whenever you're analyzing data, you have to figure out there may just be a lack of knowledge. Or it could be that, you know, the kind of person who gets to bank robbery gets to bank robbery because they can't get up in the morning.

And if they did, they'd have a, you know, regular job like the rest of us. This post about Wenderob Bank actually began was related to this woman that I'd heard about when I was visiting in Iowa. She lived out there and she had embezzled from the bank where she worked. It was actually owned by her father. And the way she did it was basically by keeping two sets of books. And then when she was ultimately arrested and she helped prosecutors figure out how to stop this kind of crime in the future, she realized one insight of hers was that if you're keeping two sets of books like she was, you can never take a vacation because there's the risk that somebody else is going to discover that. And so one great metric to look for, for embezzlement, let's say, or any other kind of crime, is when people are not using up their vacation days. So for those of you out there who are, for whatever reason, not using up your vacation days, you've been put on notice. There are several themes that you explore in the book, and one of them is cheating. You're a sports fan. What do you think it is about cheating that we generally find to be so captivating? Well, I came to a conclusion that's probably a bit counterintuitive for most people and quite possibly totally wrong, which is that maybe cheating is really great for sports.

And what I mean by that is cheating is really, you know, one step over the line. Sometimes. Maybe it's five steps sometimes. But it's one step over the line of really, really wanting to win within the rules. But you want to win so badly that you go beyond. Right. So what cheating really is, is a manifestation of desire to win, which is what sports is about. Now, the reason that the, you know, the ninth circle of hell is reserved for people who cheat to lose, right, who throw games. And why does that upset us so much is because it goes against the nature of sport. You don't cheat to lose. You don't throw a game to make money for yourself. You cheat to win. And so when you look at when I look at the obsession we have, I mean, if you read the sports pages on a given day, it could be like half the articles are about some form of cheating, depending on what season you're in. And so right now, my son, Solomon, he's 14. He's a soccer nut. He won't let me call it soccer, so I'll say a football nut. And when you just look at the different, you know, the whole play site, the way football is played on the pitch, you know, flopping would be one of the most drastic forms of it. You know, trying to get away with a foul, trying to pump up a foul, trying to deke and create an offsides or avoid one.

And, you know, cheating to trying to get an advantage, even if it's not quite within the rules, I think we'd love it. And then it goes up the ladder all the way to performance enhancing drugs. And, you know, we kind of wring our hands and ask our teeth, say that's terrible. It's setting a bad example for kids. On the other hand, you say, first of all, we're fascinated by it. And second of all, you say, man, here's a guy or a gal who so badly wants to kick somebody else's ass that he's willing to put some crazy medicine in him that's going to shrink his testicles and probably, you know, end his life prematurely. I can get behind that. I love how badly he wants to win.

I wouldn't want to do it. So I think that there's I think that we kind of secretly applaud cheating. You're listening to Motley Fool Money, talking with Stephen Dubner. One half of the Freakonomics team, the new book is When to Rob a Bank and 131 More Warped Suggestions and Well-Intended Rants. Now that Freakonomics is 10 years old, I'm curious, what's been the biggest shift in your thinking when it comes to thinking like a freak? Is there something that you very firmly believed 10 years ago that you no longer subscribe to?

You know, I like that question. And I like to ask that question to people when I'm interviewing them. I think it's, first of all, I think it's a hallmark of a healthy mind is to be able to change your mind when you're confronted with facts that contradict a long-held belief. But I think it's a very hard thing to do. The idea that lately I've really, really, really changed a lot on is not so much a freakish idea. It's a much more mainstream one.

That's what we generally call income inequality. And, you know, for many years, I've thought that, and I guess I still do think this part, I've thought that capitalism is obviously imperfect, sometimes wildly imperfect, but it sure beats every other system, economic system we've had before it. Maybe that's not as defensible anymore, but it still feels to be ultimately, ultimately truthful that capitalism has done a lot of things in a lot of dimensions that have lifted more people out of poverty and into prosperity and wealth and on and on. And that said, it's not so much the gap between someone who has a whole, whole, whole, whole lot and someone who has a lot less. See, that's what bothers us. It's the gap. It's our marginal relation to other people around us that we don't like. So, like, if you're making 50 grand in a job and I'm making 52, you know, I'm happy.

If you offer me 53 when everybody else around me is making 55, I'm less happy even though I'm making $1,000 more. We are really relative animals in that way, not as much absolute animals as we'd like to think. That said, when you look what's going on around the world and around this country, it just seems like the mechanism for people to work hard and live well is a lot stickier than it used to be. It's a lot harder than it used to be for a lot of people to find jobs and or careers or professions that are going to guarantee them and their families a secure life. And that, you know, maybe looking back, maybe there was just a kind of brief golden era of a few decades in our history where that was true and that it wasn't before that. But I used to really be more of an advocate or more of a defender of our form of capitalism as it exists now. And I think that now I give a lot more credit to the people who have been amplifying the flaws because I think those flaws are substantial and I think they'll hurt us all in the long run. Coming up, Stephen Dubner weighs in on the future of professional football. Stay right here. This is Motley Fool Month. On a greenback, greenback dollar bill, just a little piece of paper coated with chlorophyll.

Welcome back to Motley Fool Money. I'm Chris Hill. Let's get back to my conversation with Freakonomics co-author Stephen Dubner. One of the things that comes out in this book, I think a little bit more than the previous Freakonomics books, has to do with your personality, Stephen Levitt's personality, beliefs that you have, interests that you have. And one of the things that comes out

that I did not know about you that comes out loud and clear in this book is, boy, you really hate the penny. I mean, if you get the magic wand, you are eliminating the penny from our monetary system. If I get the magic wand, I will definitely eliminate the penny,

but only if I have like 20 wishes and that's number 20, all right? So I know I sound like an anti-penny zealot, and I am, but only because I don't even know how it got started, Chris. I think I just casually wrote about, you know, throwing away pennies when I get the change because who on earth, you know, the penny is just a ridiculous thing. Inflation has rendered it literally almost valueless, plus which we're paying taxes to our government to make the penny, which costs a lot more than a penny to make. And when you look at who are the biggest defenders of the penny, one of the biggest organizations is a group called Americans for Common Sense, C-E-N-T-S, which tells us how great it is for the penny, how great the penny is that children do penny drives to raise a lot of money, to which I say, why can't they do a dollar drive and raise more money? You know, is the penny some magical thing? They tell us that, you know, if you round up to a nickel, think of how much more expensive things would be for people, which is totally idiotic in my view.

And it turns out that the biggest lobbying group for the penny is basically funded by the zinc industry, which supplies the raw material for the penny. So to me, it's a slam dunk. There's no use. The only reason we still have the penny is because of tradition and inertia. And if you look at other, you know, modern countries, they routinely eliminate their smallest currency that inflation invalidates and why we haven't is beyond me. But I have to say, I've stopped caring because I had it was too. It was just too much. It was to care so much about something so stupid was just a waste of my time. So I give up to anybody out there wants to take up the anti penny baton power to you. You can read everything I've written about. I'll give you some ammunition. But, you know, I'm off that train. But it's nice to know that if I'm behind you in line and there's a take a penny, leave a penny, you're not taking it. You're the guy who's only leaving pennies in the little dish. I'm definitely leaving pennies. I love the leave a penny thing because it's stupid to have them, but I'd much rather leave a penny in a bowl than have to throw them away. But I promise you, if you are behind me in the line and I get pennies, I feel bad about it. It looks un-American. It looks crazy. But what I just do is when I get the change, I will put the receipt, if I use cash, I will get the receipt and the change in my hand and I will just sort it.

and then I will drop the receipt and the pennies in the bag, which doesn't look so bad. And then I'll put the silver change in my pocket. Honestly, I throw away nickels too. So I'll throw the nickels and the pennies. I'll leave them in the bag. And then when I get home and I take out the groceries, the whole bag goes in the trash. But I do put the coins in the recycling because I'm a good citizen, damn it. We have just a couple of minutes left and I want to ask you about a couple of topics that I know are near and dear to your heart. And let's start with football, because I know you are a diehard Pittsburgh Steelers fan. But I'm curious, as someone who looks at the world a little differently for a living, when you look through the lens of

Freakonomics, what do you see in terms of the future of professional football? Yeah. Gosh, I wish I knew the answer to that question. I wonder a lot. I remember Remember when I first started reading about people suggesting that football was going to disappear because of the various problems, most of them having to do with injuries to players. Malcolm Gladwell, whom I know and admire very much, saying, you know, football could go the way of boxing. We happen to be talking, you know, on a week when we have the so-called fight of the century. There's I don't know how many fights of the century there have been this century already a lot. But, you know, Pacquiao, Mayweather. And it's true that boxing was a mass sport. Now, if you're at the very, very, very top of that pyramid, you make a whole lot more money than the rest. But as a real mainstream sport, you know, it absolutely isn't.

Could football, you know, follow that route? Not necessarily the business route, but become, you know, much less popular because it's seen as too brutal. I think it could. But I think there are so many more elements to football that make it exciting. It's not the violence of football that I think is a central component. I think it's the playmaking. I think it's the pace. It's the perfect TV sport. I mean, there's a play that takes five seconds and then there's like a reset where you need 30 or 40 seconds to get it going. And that is the perfect time to show the replay from eight angles, which are all awesome to watch while you're eating potato chips and drinking beer. It is fantastic entertainment. So as much as I love watching football, soccer on TV because it's nonstop, the actual stopping of American football is fantastic. So I think, plus, you know, having spent a fair amount of time among some teams and players in the league, these are pretty, it's a very substantial group of people with a very substantial industry and a lot of very, very, very bright people with a sport that a lot of people love, at least in this country. So I don't see it going away, but I do see it changing quite a bit in ways that I can't predict. You worked for the New York Times.

I believe your father was a newspaper man as well. He was indeed, yeah. When you think about the future of newspapers through the lens of Freakonomics, what does it look like? Definitely not as good as it was in the past. No one, I think, would make that argument. It is the fact that collecting and presenting the news in the very labor-intensive, handmade way that an institution like the New York Times did and does is expensive. and if you can't capture the value then it's going to be hard to support that and that's what we're in is now is this cycle you know so look I think the New York Times and Wall Street Journal a lot

of other great newspapers will survive in a very different form probably they will not be on paper like a lot of people predict now but I also know that a lot of predictions you know we've written about this a lot predicting the future is just close to impossible you know I'm a guy who I used to be a musician. I used to be in a band and collected tons and tons of records. And I'm the guy who, when I moved to New York City, gave away my entire record collection, like 2,400 records, because why? Vinyl was gone and the CD was here. You know what? Now I have to go out and buy another turntable and start buying vinyl again. So does it mean that the printed newspaper will disappear? Maybe, maybe not. The one miscalculation I think that the New York Times made, along with

a lot of others. And look, I revere the New York Times, not just because I worked there, but because I think the quality of the paper is still very good and has been often in its past great. The miscalculation they made from a business perspective, I believe, is that for many, many, many, many years, they were essentially a local monopoly in certain kinds of advertising and didn't really understand that the reason they made so much money was through an accident of history of that advertising monopoly in real estate and Help Wanted and a few other things. And then when those things began to go away, it wasn't initially an indictment of their journalism at all. It was just the business model changed and they weren't there

with it. The New York Times was online very early. I was there. I was working as an editor at the Times Magazine. We put one of the first multimedia packages on the web. We did a special issue the magazine on jazz and we put up you know links and clips and audio files and stuff and it was considered revolut we were there pretty early but they made a decision to have it all free all the time thinking that there'd be a great ipo for nyc digital which there never was because the bubble burst and then it took them a lot of years to finally get to the point where they were going to start charging for their content online unlike the new york the wall street journal which charged from the outset and therefore was healthier because of that. So it is not a business I

would like to be, I would not be, I would not like to be charged with, quote, rescuing the business side of newspapers right now, because that's a really uphill battle. But I think that the value provided, especially by the kind of high-end elitist ones, New York Times, Wall Street Journal, The Economist, and so on, I think they do provide value that even if they end up being only niche elite products. So they can still be very profitable. The book is When to Rob a Bank and 131 More Warped Suggestions and Well-Intended Rants. It's available everywhere. So pick up a copy. Stephen Dubner, always so good to talk to you. Thanks for being here.

Ditto, Chris. I really enjoyed it. Thanks. Thanks very much. Coming up, bestselling author Charlie Whelan shares his latest book, Naked Money, a revealing look at what it is and why it matters. Before we go on, got to say a quick word about Wonder Capital, because come on, if you could help combat global climate change and make money at the same time, you might be interested. Wonder Capital is an award-winning online investment platform that allows individuals to invest in solar energy projects across the U.S.

It allows you to earn up to 11% annually while diversifying your portfolio, curbing pollution, and combating global climate change. Your investment in Wunder's fully managed solar investment funds goes directly to helping U.S. small and medium-sized businesses install solar panels. As those businesses repay their loans to Wunder, you receive monthly payments directly deposited into your bank account. Individuals who have previously invested with Wunder Capital have supported the installation and long-term financing

for a high-end storage facility in Florida, a government office building in Minnesota, and many other projects across the country. And best of all, Wonder Capital doesn't take any fees for investing your money. So check it out. Create an account for free at wondercapital.com slash fool. That's Wonder with a U. Wonder Capital. Do well and do good.

Now let's get back to the show. Welcome back to Motley Fool Money. Chris Hill talking with Charlie Whelan, bestselling author of Naked Money, a revealing look at what it is and why it matters. Let's bring things closer to home here in the U.S. In the book, you write about a government agent, not with the CIA or the FBI, instead with the incredibly sexy Bureau of Labor Statistics. Tell me about Dan Dugan. Dan Dugan was a patriotic individual operating undercover. And in fact, if people, if his cover was blown. Everything that he was doing that was so important to our government would have been

blown as well. There are a lot of others like him operating out there in the shadows, most of them underappreciated. His cover was ultimately blown because he was caught fondling lingerie. And it was in the line of duty. And at this point, you're thinking, wait a minute, who is this guy? And it turns out that he is a price inspector for the Bureau of Labor Statistics. And the description of what he does is part of the larger description of how hard it really is to calculate with precision whether prices are going up or down. So every month or so, we'll hear that inflation is 2.1% or 1.3%. It's a very precise number. But I would then step back and ask, okay, well, which prices are going up? Because some prices are going up, some prices are down. And more

important, which prices should we be asking about? Because if the price of caviar goes up, most people don't care. If the price of milk goes up, it makes a much bigger difference. So the Bureau of Labor Statistics has to do really two crucial things. One is they have to define the basket of goods that is relevant for the typical American, because those are the prices we care about, and the goods need to be weighted by how much they make up in that basket. And then they got to go out and measure price changes for those goods. And that too is trickier than it sounds. So if a car is 8% more expensive than it was last year, say a Toyota Camry, but it's got extra airbags and two more speakers, how much of that price increase should be attributed to the fact that it's now a better car, and how much of it should be attributed to inflation? So there's actually a science behind trying to establish what's happening to prices throughout the economy.

You think that story worked with Mrs. Dugan? Honey, I'm fondling lingerie, but it's all for work. My guess is he bored Mrs. Dugan talking about what's happening to oranges and apples and lingerie and the change in the way that the lingerie has been stitched. My guess is that she heard more quality stories over the years that they just kind of bounced off after a while. Well, you know, you mentioned oranges and apples. That was one of the things that was a little eye-opening to me in your book is we use this phrase all the time. Well, it's not an apples-to-apples comparison, but when it comes to the Bureau of Labor Statistics, apples-to-apples comparisons don't even work because they have to get even more specific than that. Right. You've got to be looking at Fuji apples-to-Fuji apples.

Otherwise, you're talking about really fundamentally different products. In a previous life, on a previous version of the Motley Fool radio show, you were the judge on a game we called What Did the Fed Chief Say? it was a game where callers had to decipher the words of Alan Greenspan. He's obviously no longer the Fed chief. But the Fed is still, for all the increased transparency, and there has been increased transparency over the last decade when it comes to the Fed, but the Federal Reserve is really still pretty hard for a lot of people to get their heads around. What is it that the average person should know about the Fed? Well, there are two important things about the money we use, the dollar. The first is somebody's got to look after the purchasing power. Somebody's got to

make sure that that dollar is worth roughly as much next year as it is this year. And the Federal Reserve is there protecting the value of the currency. Back in the 1970s, when we had runaway inflation, it was Paul Volcker's Fed chair who had to step in, raise interest rates, beat inflation, and get back to the point where we could maintain the value of the dollar with some confidence. And the second thing that the Fed needs to do that's really, really important is smooth out the economic fluctuations that have caused most economies throughout history to kind of go through cycles of booms and busts. And they do that by using interest rates to raise interest rates

when they kind of need to slow things down or at risk of overheating. And they cut interest rates, obviously, as we've seen since 2008, to speed things up when the economy needs a boost. So these are both crucial things that underpin everything else that goes on in a modern market economy. What is at the heart of the debate we hear in politics from time to time about the, quote-unquote, the proper role of the Fed? Well, this is a legitimate argument. There are a lot of illegitimate articles. Maybe we should knock that off as well. As you alluded to, the Fed has been a very opaque institution throughout history.

William Grider wrote the book Secrets of the Temple. It described the Federal Reserve as more secretive than the CIA. Alan Greenspan, the reason we had that game show about Alan Greenspan is that he was notorious for going to Congress and saying things that nobody could understand. For a long time, the Federal Reserve, rather than telling the markets what it was trying to do, wouldn't release minutes until long after it had actually done it, therefore kind of defeating the purpose of what it was supposed to be guiding the markets to do and so on. So there was a deliberate sense that the Federal Reserve should remain

mired in secrecy. And I think that was a huge mistake for two reasons. One, practical, which is if you're trying to get the markets to do things, if you're looking to lower interest rates or raise interest rates, telling them ahead of time where you're going is more likely to get the response that you want. I mean, that's a very pragmatic way of looking at things. And the second is that it has spawned all kinds of conspiracy theories. And one of the things I learned while doing the book is there are conspiracy theories of the left, that the bankers use the Fed to kind of run the world. There are conspiracy theories of the right, that the Federal Reserve is printing illicit money

and it's going to take over the world for different reasons. There are anti-Semitic diatribes on the Internet. There's even a conspiracy theory going back to the creation of the Fed, arguing that JP Morgan deliberately built and then sunk the Titanic because the opponents of creating the Federal Reserve were on the ship. So I think there's a lot of misunderstanding, and I think that's quite dangerous in the long run. More legitimately, I think the debates are what are the limits of what monetary policy can do? As I made the metaphor earlier of kind of pushing down on the accelerated economy, that's what low interest rates do. But are we asking the

Fed to do too much? Or are we perhaps just creating the next great inflation? Might there be huge unintended consequences around the world from creating this prolonged near zero interest rate environment? So I think there are a lot of legitimate arguments about the Fed response post 2008, aside from some of the crazier theories that pop up on the internet. You're listening to Motley Fool Money, talking with Charlie Whelan, bestselling author, and his latest book is Naked Money, a revealing look at what it is and why it matters. What surprised you the most when you were working on the book? I think I was surprised by how supportive I became of Bernanke's performance in 2008. So I

was watching from the sidelines like everybody else was. I lived through it, you lived through it, and so on. I think as I delved into the crisis and the post-crisis response, a couple things struck me. One is it was, I think, even worse than we thought. Everybody I spoke to, the closer they were to the crisis, including being in the room when some crucial decisions were made, the worse they thought it might have turned out. And there's an anecdote in the book that comes from Senator Judd Gregg, who was chair of the Senate Budget Committee, ranking Republican. And he tells a story about being summoned to the Capitol on a weeknight from a black tie event, walking in, Mitch McConnell says, look, the Fed chairman is going to be here

soon. Listen to what he has to say. And as Judd Gregg told it to my class at Dartmouth, Bernanke walked in and said, look, if you don't do something in the next 72 hours, the whole global financial system may melt down. And so when I went to write the book, I called up Judd Gregg and said, look, this is how I remember the story. Is that accurate? And Judd Gregg said, yeah, it's all accurate except for the last sentence, what the Fed chair said was, if you don't do something in the next 72 hours, the global financial system will melt down, not may. And so I think there were a series of those kinds of stories. And I think when I then looked at how the Fed and other institutions responded, I think we were very lucky that Ben Bernanke, who happened to be a scholar of the

Great Depression, and who understands probably better than anyone in the world, the mistakes that were made in 1929, the early 1930s, he's the guy who happened to be at the helm. And I think we were very fortunate for that. Towards the end of your book, you write about the future of money. And one thing that has come up in the last few years that some people point to you and say, this is absolutely the future of money, is Bitcoin. First, before we get to whatever you think of Bitcoin. Do you think Bitcoin is money? I do not. Why? And I spend a fair bit of time disabusing people of the idea that it is. Money traditionally has three attributes. The first is that it's a unit of account. So when you go around doing transactions, you think in terms of

that unit of account. So when you're in the United States, you think in terms of dollars. If someone tells you that something costs $23, you know how much that is worth. If you travel extensively in another country, you start to think in that currency. I'll ask you, you know, how much is 100 bitcoins worth right now? No idea. No idea. Nobody thinks in bitcoins. And even people when they get paid at the Bitcoin Foundation, they get paid, they may get paid in bitcoins, but they're still thinking in dollars. So as a unit of account, it doesn't work. Another function is a currency or money has to be an effective store of value because you may not want to use it right away. So if I pay you $1,000, you want to have some confidence that if you stick it in your

dresser drawer, next week, it's still going to be worth $1,000 and hopefully even next year or something close to it. Well, one of the things about Bitcoin is that its value relative to the dollar and relative to other goods and services has bounced all over the place. And people will often point out excitedly that Bitcoin's rising rapidly in value. Well, that's actually a lousy thing for money to do because if you've contracted to buy something over the long run, let's say you've got a mortgage and you owe 30 years worth of payments in a currency that suddenly appreciates by 40%, that means your mortgage gets 40% more expensive. So the fact that Bitcoin bounces around in value, makes it a terrible store of value. And then last is a medium of exchange. This is

where it actually has a little bit of value. If you want to move a lot of money across an international border anonymously, it works really well. It kind of combines the simplicity of a credit card with the anonymity of cash. But I will ask you, who wants to move lots of money anonymously across international boundaries. And of course, the answer is weapons merchants, kidnappers, drug kingpins, and so on. For the rest of us, it just doesn't have that much value.

I've been told that the technology is remarkably impressive, but as a currency, I just don't see a big future. Coming up, we'll talk with Charlie about the future of the euro and play a round of buy, sell, or hold. Stay right here.

This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill talking with Charlie Whelan, author of Naked Money, a revealing look at what it is and why it matters. The euro's been around a little bit longer than Bitcoin. Do you think that's around 10 years from now? Boy, if I knew that, I'd be a much richer man than I am. I think it's a great question.

I don't know that I know the answer. I think another one of the interesting things that, as I delved into the book, is how many prescient critics there were at the launch of the euro. This is one of those cases where some very smart economists said, as the euro was being designed, here are some problems with the design that are going to cause problems down the road. In the book, I use the analogy of a wedding where some people on both sides, Brian Groom, are saying, you know what, I'm not sure this is a great match. And as things have played out, those fissures have actually grown into the problems that we've seen. The fact that Europe doesn't have a common fiscal policy, so it's harder to ameliorate gaps, economic gaps between regions that are growing fast and regions that are growing more slowly. At the time the euro was launched, there was no common regulator. For countries like Greece and Portugal and Spain that grow more slowly, they're giving

up a tool they used to use to maintain their competitiveness, which is they could always devalue their currency to keep their exports competitive. They'd lose that, of course, once they're sharing a central bank with Germany and the Netherlands and places that are more productive. So I don't think any of the problems that we've seen were huge surprises. They were, for the most part, glossed over at the time of the wedding. All right. Before we wrap up with a round of buy, sell, or hold, one last question.

This is, you can go anywhere with this, but for anyone who wants to impress their friends or maybe even win a bar bet, with all the research you've done about money, what is one fun fact that we can say about money that'll, you know, either turn some heads at a backyard barbecue or maybe even win us a bar bet? I think you can tell the story about the island of Yap, where they, it's not mine, I got it from Planet Money, but I think it's a great story related to what money is about, where they use these giant stone wheels with holes in the middle of them. They look kind of like a washer, only they're six or eight feet in diameter, and they can weigh thousands of pounds. And they're mined on an island that's hundreds of miles away from Yap, which is what creates the scarcity and therefore the value.

And there's a story of these people who've mined one of these giant stones, and they're bringing it back on a boat in a storm, and it rolls out of the boat and goes to the bottom of the ocean, never to be recovered again. And the funny thing is, they kind of looked at each other and said, well, we know where it is, and we know who owned it, and once we got it back to Yap, we weren't going to move it around anyway, so let's just continue to treat it as money. Because the way the stones were used anyway, people didn't roll them around,

they just said, okay, this used to belong to Charlie, now his kids are going to college so we'll sign over ownership to the university and it stays in the same place and because as you said the very outset of the show all it is is a recording of a transaction that i had something of value now i'm transferring it to you then you're transferring to the guy who sells shoes and so on so if this thing is at the bottom of the ocean and we all agree it's there it still works just fine i i suppose it still works fine i i just don't know that I'd be wild about my employer saying, look, instead of your regular paycheck, we've signed over ownership to this stone wheel that's at the bottom of the ocean.

But this is what's so cool. As long as you're surrounded by people who've bought into the stone wheel at the bottom of the ocean, it works fine. If you're surrounded by a bunch of skeptics like you, it won't. I mean, in some ways, it takes us right back where we began. It's all a confidence game. I don't know if that makes me feel better or worse. It should be both. All right, let's wrap up with buy, sell, or hold. And again, for any new listeners, buy, sell, or hold. This is where I'm going to spot Charlie up with not a stock, but a concept, an idea. And he'll just say that if it were a stock, whether he would be buying, selling, or holding it. The Republican Party has their presumptive nominee for president.

The Democratic Party is getting close. Buy, sell, or hold a surprise third-party candidate running for president in 2016. Sell. I've spent a lot of time in the political domain, and the institutional barriers to running as a third party are brutal. People like to think about it. It's really hard to do. It is the top-grossing film of all time, but only if you adjust for inflation. Buy, sell, or hold the staying power of Gone with the Wind. Buy. Great film, enduring story. We should always adjust box office tickets for inflation. Definitely buy. Canada got rid of theirs, and some, including the current Treasury Secretary, say it's time to get rid of ours. Buy, sell, or hold the U.S. penny.

I'm going to hold. It really should be a sell. It's got no purpose. But I'm from Illinois, land of Lincoln. Even in our Illinois toe booths, they accept pennies. I think it may be the only place that's still true. And finally, three years ago, I asked you about the likelihood that your team, the Chicago Cubs, would win the World Series in your lifetime. And you put an immediate sell rating on that, Charlie. But I'm going to give you another shot because the Cubbies have the best record in baseball

right now in your lifetime, a World Series crown by Sellerhold. I'm going to hold. I'm upgrading from sell because I know what a great team they've got this year. But I also have spent 50 years as a Cubs fan, and part of the illness is that you always think victory is around the corner. The way you're talking about this team is exactly how we've talked about it countless times in the past. They just find new ways to break your heart.

So I'd like it to be a buy, but I emotionally just can't do that to myself. Keep hope alive, Charlie. I'm trying. I upgraded from a sell to a hold. It's already a bestseller on Amazon. The book is Naked Money, a revealing look at what it is and why it matters. By the way, has your publisher already started pushing you on the next one, Naked Business, Naked Politics?

They have to already be bugging you about this. No, no, this is like having a baby. There needs to be a suitable amount of time before you explore having more, and we're in that period right now. This is a tough book to write, I've got to say. Go out and get a copy, Naked Money. It's available everywhere. Charlie Whelan, always good to talk to you.

Oh, it's great to be back on the show. That's going to do it for this week's edition of Motley Fool Money. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. You can check out past episodes of Motley Fool Money just by going to our brand new podcast center. It's podcast.fool.com. That's podcast.fool.com.

past episodes of Motley Fool Money and all of our podcasts. The show is mixed by Anne Henry. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.