Money Is Not Real

America was founded on independence and freedom, and America grew because of this independence and freedom.  The rise and success of capitalism as an economic system was and is due in part because it is a natural fit for a free and independent people.  The “American dream” reflects the history of success that people can achieve when they are independent and free: free to work, free to innovate, and free to follow their ambitions.

America was also founded on the idea of equality, that everyone shares basic rights which lead to opportunities for success being open to all people.  That is the heart of the American dream: the idea that anyone -- regardless of who they are, who their family is, where they live -- that anyone can succeed if they work hard, compete hard, and work smart.

We have not always succeeded, but we have always worked towards this goal.  American freedom and independence can be messy and chaotic.  That is a strength.  It allows us to adapt our society for the betterment of all, to right the wrongs we are confronted with, to find compromise when we disagree.  Capitalism can be messy and chaotic.  That is a strength, it allows us to adapt our economy to the needs of the people, to embrace innovation and change, to demand what we want, and supply what others want.

Americans have a strong attachment to these ideals.  It is reflected in our mottos -- “America is the home of the free”, “America is the land of opportunity”.  We are justified.  America has succeeded because our governmental system together with our economic system clear a path that lets the strength and genius of our people propel them to reach their unfettered potential.

But we are not done.  We have not reached our greatest potential.  America is leaving talent on the table.  

Why are we leaving talent on the table?  Because we don’t understand how our government works and we don’t understand how our economy works.  We have a 19th century understanding of freedom, independence, and opportunity and how they lead to success, but we live in a 21st century world where those with power can exploit our ignorance to accumulate more power and money at the expense of the people who make that even possible.  Our reverence and respect for our history has blinded us to the shortcomings of our present.

The claim of the title of this post, that money is not real, is emblematic of our ignorance because as obviously wrong as it may seem, that statement is true.  Money is something everyone understands.  We use it every day, we work for it, we save it, we spend it, we depend on it.  It’s effect on our lives is as concrete as anything in the realm of government and economics will ever get.  

Yet, money is not real.  It has no value on its own.  You can’t do anything with it all by yourself (except whatever value it might have to you as a kind of paper).  It is simply an agreement.  It is an agreement between people that it can be exchanged for other things of value.  It merely represents value, work done, value created.  Nothing else.  But even if you want to call that real, it is not.  Why does it have a certain value?  Why is some work worth $1 but other work worth $10?  Why should $1 worth of work today be worth the same tomorrow? (It is not.)  Money is not real, but the work it represents is real.  

Understanding money in this way is key to understanding wealth, power, and opportunity in America today.  Once we raise the question of what money is, other questions pop up, too -- questions that themselves may seem as absurd as asking what money is.  These are questions that we may think we know the answer to, but which are actually not as simple as they may seem.  Other questions are ones which may seem unanswerable, but can be understood when the basic mechanisms of our political and economic systems are understood.

Our ignorance is holding us back.  Our ignorance is letting others take power from us.  But we can level the playing field by digging in and asking the questions.  These are important questions and some people spend their lives studying them and looking for answers. 

We as citizens cannot expect to become experts in monetary theory, or the economy, or even in politics.  If it were easy there would be no academic research, no college courses on these subjects, no high school classes on political science.  But by being able to ask the questions we can start to ask for answers, and as our understanding grows we can better evaluate the answers and decide whether the answers are ones that can continue leading us towards the American dream.