Understanding cash, and why it isn't really money


My first memories of beginning to understand money was when I had a paper route. Of course I had handled money before that, because my parents gave me money sometimes, and when I helped my older brother with his paper route, he would give me money. I distinctly recall writing "25 cents" on the calendar for the days that I helped.

In a long life I've learned about money, and as a nerdy kid (which I still am) I wanted to understand it as a concept. About the time I got to college I figured that all grownups knew this stuff, and it wasn't until much later that I realized that they don't, and can do just fine without knowing it.

Of course in 1968, when I was ten, the only thing that was money was cash. That is, coins and folding money (pictures of Presidents). My mom had a checking account, which was quite mysterious to me, and when I collected the money for my paper route I would give it to her and she would write a check and mail it to the Minneapolis Star and Tribune, and I got to keep whatever was left. I didn't work for the newspaper company, I worked for profit. I made two cents on every paper that I sold, all of which were through subscriptions.

As I got older, my parents helped me to open a savings account, which was at Farmers and Mechanics bank in downtown Minneapolis. I would hand them the cash, and they would give me a receipt, showing that they were storing my money, which I could have back whenever I wanted. This was quite an abstract concept for me, but I worked on it, and after a while it made sense that my money didn't exist as cash, it was just information that was stored in a little book, called a "passbook". And at some point I got old enough to have my own checking account, which was even more difficult for me to understand. And that's because I was now giving people a piece of paper with my signature on it that assured them that if they went to their bank they could get information written down for them, or coins and pictures of Presidents.

In my college Econ class I learned that there's no intrinsic value in the pictures of the Presidents, and not even the coins. They were simply receipts that were given by the government that assured me that the value of these things (called instruments) was genuine. And since they couldn't be exchanged for silver or gold, I really had to wonder why money was, anyway?

My research took me into trying to understand Capitalism, which is an economy based on money. I learned that governments only print money, they don't create it. Money is created when people agree on the value of goods and services. Yeah, it gets very abstract, but I get a kick out of this.

Of course, for everyday purposes, it doesn't matter if you know about this or not. As far as the store selling something is concerned, coins stamped with value on them from your country, or pieces of paper, will do just fine as money. In the 80s I started paying for everything with a credit card, and then a debit card, and nowadays I buy my coffee at the convenience store with my phone.

We don't spend money, we spend the representation of money. And the system only works if we trust it, which we do.
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