The world made up of money
Money is “a social agreement”, according to Frederick kaufman, professor of journalism at the City University of New York. You and the cashier both agree that a $ 20 bill – a piece of green paper that any baby or dog wouldn’t hesitate to tear to shreds – is worth something, and that consensus gives value to the bill. Eventually, babies get on board, being taught the value humans have long placed on different types of currencies; a value that is socially constructed, but so deeply rooted in our society that it is ridiculous to question it.
This consensus led Kaufman to crown money with “the most powerful metaphor”. In his new book, The money plot, Kaufman unveils the myth behind financial transactions, from barter to bitcoin.
Three takeaway dishes:
- When modern scholars deciphered the languages of ancient peoples like the Sumerians, they expected to finally read the history and creation myths of past civilizations. Instead, they found the accounting: tablets showing how many oxen or wives the dignitaries had. Kaufman cites this as an example of how financial transactions are an integral part of corporate stories. Another example? The designs placed on the currency – so, in the case of the US dollar bill, George Washington, a bald eagle, and E Pluribus Unum – are called “legends”.
- According to Kaufman, “the guys on Wall Street are the greatest poets on the planet.” Why? Because they are constantly dealing in the realm of fiction. A dollar is a dollar because we all believe it is a dollar – that’s it. When faith in this premise falters, as it did during the financial crisis of the late 1980s, the economy falters. It is the job of brokers and bankers to keep dollar fiction afloat.
- In 1971, when President Nixon decided to detach the dollar from gold, some speculated that the end of Western civilization had arrived. Instead, production and employment have exploded in the United States. This leap, which increased “the metaphorical quality of money,” opened the floodgates for the development of cryptocurrencies and the monetization of the quantification of market fear.
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