Jacob Goldstein - Money: The True Story of a Made-Up Thing

In the fall of 2008, I went out to dinner with my aunt Janet. She started life as a poet (the 60s) and wound up with an MBA (the 80s), so shes a good person to talk with about money. In the weeks before our dinner, trillions of dollars in wealth had suddenly vanished. I asked her where all that money went.

Money is fiction, she said. It was never there in the first place. That was the moment I realized money is weirder and more interesting than I thought.

I was working as a reporter at the Wall Street Journal at the time, but I covered health care and didnt know much about finance or economics. As the financial world fell apart, I started looking for anything that would explain what was going on. I discovered a podcast called Planet Money. The hosts didnt use dry, news-story language or voice-of-God anchorman tones. They talked like smart, funny people who were figuring out what was going on in the world and telling stories to explain it. I loved the show so much I went to work there.

By the time I got to Planet Money, the acute phase of the financial collapse was over, and we started looking at less urgent but more fundamental subjects. In 2011, we went on the radio show This American Life to ask the question Id been wrestling with since that dinner with my aunt: What is money?

The host, Ira Glass, called it the most stoner question he had ever posed on his show.

Maybe! But if so, its the good kind of stoner question, the kind that still seems interesting in the sober light of morning. I returned to the idea of money again and again, chipping away little pieces, one episode at a time. Each little piece was interesting, but the more I learned, the more I felt like there was a deeper, richer story to tell. So I started working on this book.

Over time, I came to understand what my aunt meant when she said money is fiction. Money feels cold and mathematical and outside the realm of fuzzy human relationships. It isnt. Money is a made-up thing, a shared fiction. Money is fundamentally, unalterably social. The social part of moneythe shared in shared fictionis exactly what makes it money. Otherwise, its just a chunk of metal, or a piece of paper, or, in the case of most money today, just a number stored on a banks computers.

Like fiction, money has changed profoundly over time, and not in a steady or gentle way. When you look back, you see long periods of relative stability, and then suddenly, in some corner of the world, money goes bananas. Some wild genius has a new idea, or the world changes in some fundamental way that demands a new kind of money, or a financial collapse causes the monetary version of an existential crisis. The outcome is a profound change in the basic idea of moneywhat it is, who gets to create it, what its supposed to do.

What counts as money (and what doesnt) is the result of choices we make, and those choices have a profound effect on who gets more stuff and who gets less, who gets to take risks when times are good, and who gets screwed when things go bad. Our choices about money gave us the world we live in now: the world where, when a pandemic hit in the spring of 2020, central banks could create trillions of dollars and euros and yen out of thin air in an effort to fight an economic collapse. In the future well make different choices, and money will change again.

These origin stories of money are the best way I know to understand what money is, and the power it has, and what we fight about when we fight about money. This book is the story of the momentsfull of surprise and delight and brilliance and insanitythat gave us money as we know it today.