This week’s episode debunks the idea that money is an exchangeable precious metal, or requires some type of mining per many virtual currency systems. Certainly what money is has changed over the centuries, but what it is today is quite clear.
Felix Martin’s in his book, “Money: The Unauthorized Biography” makes a convincing argument that money is purely transferrable credit. A telling example was in Ireland decades ago the banking system shut down for a number of months due to government action. Yet the citizens of the country didn’t stop writing checks. People would simple pass on checks they had received from one party to the next as payment. When the banking system came back up, all the checks were cleared in a few weeks.
Those simple IOUs were money, were currency. If we returned to the 1830s in the US we would find all sorts of currency in circulation; most every bank issued currency of some kind. Our modern memories though don’t remember that the US Government Issued Currencies were simply IOUs, that could at one point be redeemed for a precious metal.