The Lessons School Forgot

Chapter 6Money isn't money

What is money? It's hard to define it in a way that makes sense to all of us, rather than just to economists. Historically it has taken many forms too, from shark's teeth and cowry shells, to physical commodities and grain receipts, to cheques, coins and paper money, to debt and cryptography. In fact, most money in the world doesn't even exist. Less than 10 per cent of the money people own or can make claim to actually exists in a physical form as little pieces of paper or metal discs with important people's heads on them. Most money these days is just a number stored electronically somewhere against which someone can claim at some future point in time. The fact is the stability of the entire modern monetary system relies on people not all wanting it back on the same day.

Delivering against a future promise

In many ways money is a kind of myth based on implied power structures and hierarchies. Which brings us back to the question of a definition of money, a definition that is not about ‘currency' as we know it, a definition that creates meaning and remains true regardless of the currency of the day. I'm also not talking about the elements that make a currency functional (acceptance, medium of exchange, divisibility or stored value). Rather, I'm talking about what it means to people in a human sense. So here it is:

MONEY REPRESENTS THE VALUE AND SECURITY OF A FUTURE PROMISE.

That's all money is. Sure, we set different prices on different promises, but ...