I just bought some milk.
Whole milk actually – yummy.
Milk and cookies is where it’s at.
When I bought it I used a green piece of paper with the face of an old white man and some
numbers on it.
Milk – a nutritional beast that will nourish me and complete me – is of much more literal
value to me than some wrinkly green paper.
So how is it that that wrinkly green paper can not only be exchanged for milk, but literally
anything in the world.
Food, cars, even sex.
The answer is simple.
The collective imagination of humans.
Hello everyone.
Thought Monkey here.
Today we’re going to explore how money works.
The common phrase “money is the root of all evil,” is well known and something many
believe.
At the same time however, money is the highpoint of human tolerance.
Money is the one thing in this world that crosses culture, religious beliefs, and social
habits.
In fact it is the only thing that doesn’t discriminate against religion, race, gender,
age, or sexual orientation.
Osama Bin Laden, the guy who hated what America stood for so much, still used and agreed on
the idea of money – in fact his net worth was estimated to be $50 million dollars.
You see even groups around the world – like the KKK that hate other people because of
their religion, skin color, or whatever it is – still agree with those that they hate
the most – they agree on the value of money.
The question is then, how has money become the ultimate uniter of humans across the globe?
Well before money was used people traded.
For example, Bob may be great at making shoes and Joanna might have an amazing plum tree
farm.
Maybe Joanna needs a pair of new shoes to help her pick plums in the summer heat.
Joanna might trade her plums for Bob’s shoes.
The problem here is that Bob has to want or need plums.
Maybe he already has a deal with another plum farmer.
So what now?
Joanna has to figure out what Bob wants in return for a pair of new shoes.
Maybe his wife is ill and needs medical attention from a doctor.
So Joanna then needs to find a doctor who wants plums in return for his services.
Joanna gives the doctor plums, the doctor gives Bob’s wife medical attention, and
Bob makes Joanna a pair of new Nikes.
You can probably already see the problem.
Trading requires that the people you are trading with actually want what you are offering.
At the same time in a bartering economy people have to rethink the value of what they are
trading is every day.
If there are only 100 different commodities being traded in a market, that means buyers
and sellers need to know 4,950 different exchange rates.
Here’s where money comes in to play.
Money was created all around the world at different times.
Money was not some kind of technological invention, but instead a revolution of the collective
mindset.
When one thing was agreed upon and trusted by all members of a community as representing
value that could be exchanged for any goods or services, money was invented.
Money in a way became magic.
With money you can convert anything into anything else.
Sell your cow, and buy tuition to a school and learn.
Work for a few hours and use the money given to you for your time to buy a joint so you
can waste your time.
If you have enough money you can even change your biological sex.
How is this possible?
It’s all about collective trust.
The first known form of money was used 5000 years ago in ancient Sumer and was barley.
People agreed that a certain weight of barley was worth a certain amount – the most common
measurement being one sila or about 1 liter.
So people would head to market with barley in hand and use it to buy goods or services.
Eventually this gave way to the silver shekel or 8.33 grams of silver.
The shekel eventually gave way to the coin – a standardized weight of metal – usually
silver or gold – with an imprint of the kingdom it came from.
The coin was first developed in 640 BC by Lydians in what is now modern day Turkey and
is a monetary system that we still use today.
Some may think that money is simply coins and banknotes, but it’s not.
It is anything that humans agree to represent the value of goods and services.
Today most of our money is not even in the form of coins and banknotes.
The total sum of today’s money is $60 trillion dollars, but only $6 trillion of that money
is in the form of coins and banknotes.
The rest?
It is stored as 0s and 1s on the world’s banks computer servers.
But how does such an immaterial thing like digital information maintain its value?
Simple - you and I both trust it.
If one day we woke up and half the world’s population no longer believed in the servers
that store our money – the current world’s monetary system would collapse.
Money isn’t a material thing – it’s a psychological construct that most humans
have agreed on and trust.
The historian Yuval Noah Harari says that it is “the most universal and most efficient
system of mutual trust ever devised.”
Of course money has a dark side.
Since the invention of money it has outweighed local traditions in favor of the laws of supply
and demand.
Throughout human history stories have been told to us in order to teacher us the basic
principles of what makes a good person – don’t steal, don’t kill, don’t betray your loved
ones.
But money has always seemed to cross the barriers of principle as well.
We have and continue to buy and sell humans for money and for sex.
We still kill and go to war because of money, we steal and betray because of money.
And while money has brought the world a universal and unifying belief - that belief is not found
in people, but in the money that they have - the belief that the numbers in your bank
account and the little pieces of green paper in your wallet are valuable.
But it’s not money that is evil – it has only allowed our evil tendencies to emerge
more easily.
Now the next time you look at your bank account or the dollar bills in your wallet you know
that you are looking at the one thing that people in nearly every culture around the
world put their trust in – money.
So now you can rest assure that when you go on your next vacation into the jungles of
Africa with a dollar, you can trust that it will buy you an ice cold Coca Cola.
Thank you for watching!
If you liked the video please give it a thumbs up below and if you made it this far be sure
to check out my Facebook and Instagram pages and subscribe to stay updated with my latest
Thought Monkey content.