Show Me the Money

Dollars Background

by John Zielinski

Have you ever really thought about money? I don’t mean about having money. I mean about money itself.

My Econ 101 professor noted that you can tell what’s important to a culture by where it spends its money. You can also tell how important money itself is by the number of different words there are for it. You know: benjamins; bread; bucks; cabbage; coin; dead presidents; dinero; dough; folding stuff; green; lettuce; loot; moolah; paper; simoleons; spondulicks; swag. The funny thing, though, is that money isn’t real.

Money is an abstraction. It has value only because of mutual agreement. It has no intrinsic value. You can’t eat it, wear it, or build shelters with it. Even money that’s backed by a commodity like gold is subject to agreement. How much gold equals $1? In the end it’s just data that’s flowing between various entities.

You go to the grocery store. At the checkout you pay with pieces of paper and metal that have pictures and numbers on them. The person behind you pays with a piece of plastic. The guy behind him pays with Apple Pay or Google Pay. At the end of the month credit accounts get settled by a flow of electrons. Aside from the pieces of paper and metal, where’s the money? Cryptocurrencies like Bitcoin take this to the extreme. There are only the electrons. Now let’s consider the difference between priceless and worthless.


Just as money has value by agreement, so do the meanings of “priceless” and “worthless.” A piece of canvas on which a guy smeared paint several hundred years ago is deemed priceless. That priceless painting then sells for $450 million at auction thereby proving that it wasn’t actually priceless. Then there’s worthless. An old toy is packed away in a box and forgotten for decades after being deemed worthless. The toy gets rediscovered, ends up in an antique store, and someone pays $1,200 for it. It turns out that the toy wasn’t worthless after all. So, from whence comes value?

Which has more value – $10 spent on a meal or $1 billion sitting in a bank account? You may be thinking, “What a stupid question! The $1 billion is clearly more valuable.” Is it truly so? Let’s go back to the fact that money is an abstraction. It provides a way to exchange goods and services using an agreed upon standard.

A poulterer has a chicken that he’s willing to let go. You want the chicken. The poulterer doesn’t need or want anything that you have or can do in trade. How do the two of you do business? You use the abstraction. The true value of money comes from its exchange.

Assume that when you were 21 years old you had $1 billion sitting in a mattress where it wouldn’t generate any additional revenue. You’re not a spendthrift, so you decide to limit yourself to spending no more than $1,000 per day. At that rate it would take almost 2,740 years to burn through the money. With an average life expectancy of about 79 years that means that you’d leave behind $978,830,000 when you died. What was the value of all that money that never got spent? One might argue that it was worthless – at least to you. Now reconsider the “stupid” question I asked a bit earlier.


We can trace the existence of money back to at least 5,000 BCE. First there was commodity money. After that came representative money followed by fiat money. Oddly, there was at least one major culture that never used money.

The Inca Empire (~1400 to 1533 CE) managed to function without money. According to various sources, the empire had a centrally planned economy that was one of the most successful in history. “Collective labor was the base for economic productivity and for the creation of social wealth in the Inca society. By working together people in the ayllu (the center of economic productivity) created such wealth that the Spanish were astonished with what they encountered.” Every citizen was required to contribute their labor to the common good under the literal penalty of death. (Tough cookies, those Incas.) After local needs were met, the government collected the surplus and distributed it where it was needed. In exchange for their labor citizens received free clothing, food, health care and education. Maybe why the Incas didn’t need money helps to explain America’s obsession with it.

Imagine for a minute that all the money disappears. What’s that? It can’t happen? It can and it has. Hyperinflation rendered various currencies nearly worthless. These were replaced by new currencies that left the old ones with no value unless converted within a certain period of time. Even without hyperinflation the old abstraction can disappear. Italy converted from the lira to the euro on January 1, 2002. Any coins or banknotes not presented to Italy’s central bank before December 6, 2011 were declared worthless. Consider the value of Confederate money in the US after the Civil War. The way that money is handled today – as data – makes other devaluations possible.

Suppose that a hostile foreign power launches a cyberattack on the US banking and monetary systems. Suppose, too, that it’s successful. That’s not necessarily a stretch. As a result, there’s no record of who’s got money or how much. Everybody, including the government and every company, is suddenly broke. What happens to a society that relies on money when there is none?

This piece has rambled around a bit, but now I want to come back to the beginning. You can tell what’s important to a culture by where it spends its money. In other words, one abstraction (importance) is demonstrated through another abstraction (money).

I’d like to suggest that you take a little time to sit quietly and consider what’s important to you. It’s a topic that I had addressed in the past in a piece with the title What’s Important? The Sequel. How well does what you say is important to you correspond with where you spend your money? How does what’s important to you match up against what’s important to your government and where it spends its – your – money. If the alignment is strong, then good for you. If it’s not, what are you willing to do about it? More importantly, what are you going to do about it?


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