Money: What the heck is it?

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You know, Today I get why gold as a standard is dumb.  I may not know much about money, but I know that somehow it must reflect the true value in the economy, at least on average over the long term.  But the amount of gold available doesn’t have anything to do with global net value. It has to do with the value of itself, and that it turn means it’s price is primarily concerned with the efficiency that it can be dug out of the ground, the discovery of a more environmentally sound way to extract if from the ore, the economic well being of cultures, such as India’sthat value gold for things like weddings and the subsequent ability to own more in good times, whether another alloy might provide better contact resistance in a data plug, or the seeming all-in desire of Fox news personalities to promote gold as an investment. Fundamentally it is a shiny hunk of metal and doesn’t have any correlation with how hard a factory worker in Viet Nam is working, or whether a grandmother in Shenzhen decided to retire early to make sure her six year old granddaughter gets on  and off the school bus on time, or whether the engineers and sales reps in a startup are able to reach 10 times the customers with their labor saving product because they’ve just been bought out by a company with a global marketing department.

But this is a negative knowledge. I’m clear on what money isn’t.  Which is miles ahead of where I was ten years ago.  And if I am honest I wouldn’t have even gotten this far without a Podcast called “Planet Money”.  This is a 1-2 times a week production, highly professional but fun, that asks the questions many us may fear might be too basic, or naive sounding, but that actually get to the fundamentals of the issue at hand.  I think I would have been at the level of “Gold Standard – some people are for it, some against it, and I don’t know what to think”, if it wasn’t for that Podcast.  I heartily recommend it for everyone who wants to understand how an economy works and isn’t afraid if the answer is that “even professionals disagree” but here’s something important.

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