Thursday, October 13, 2011

Keeping Faith With Currency

Paige Baker on Facebook told how a professor of hers held up a dollar bill before his students and asked, "What do you see?" "Money, a dollar" they all replied. "No," replied the professor, "you see a piece of paper with a picture of a dead president on it."

I wonder what would happen to the very idea of currency if some vein was struck in the earth, or some rich asteroid was found that made gold as abundant as tin foil? It seems to me that all currencies are acts of faith whether they are Federal Reserve Notes or gold coins. The value we attribute to currency is ultimately arbitrary.

One of my favorite pieces of blasphemy was a very clever academic comparing a dollar bill to the Eucharistic Host. Each in and of themselves is worthless, a piece of paper, a flavorless cracker. What made each of them valuable, he said, was what they could be exchanged for; goods and services for one, salvation for the other. The dollar could be "transformed" by faith just as surely as the wafer could be turned into Jesus.


Tristan Alexander said...

Totally not related to your post except for the fact that your line;
"...or some rich asteroid was found that made gold as abundant as tin foil?" made me recall an obscure fact. Aluminum (sometimes called tin foil)was worth more than gold in the middle ages because all that existed was meteoric. One King in Europe has a dinner set made of Aluminum that was his most priceless posetion.
So yes, what is valuable or not is arbitrary and can change radicaly!

Counterlight said...

Excellent example. I think I read somewhere that the pyramidion that tops out the Washington Monument is made out of aluminum, and dates from that time when aluminum was rare and precious.

MarkBrunson said...

Tristan makes the point I've been trying to make - much better than I made it, Tristan, thank you - that there is no absolute value, here. Economies are entirely based on what is valued by the society functioning in that economy.

Those who see themselves as standing against "socialism" believe that money, or at least American money, is an absolute value, a real thing, rather than a symbol. The more paranoid believe that gold, good ol' Au, is an absolute value. If, however, the greater society were to decide that wealth was a matter of how much land you had - as in feudalism - or how many slaves you owned, or how much food, or intelligence, or age, or . . . on and on . . . the gold would be reduced to no more than a curiosity.