Book Review | Money: The True Story of a Made-Up Thing by Jacob Goldstein

Money: The True Story of a Made-Up Thing

Finished: March 2024
Book Source: Library
Book Publication Date: January 2020

IMoney only works because we all agree to believe in it. In Money, Jacob Goldstein shows how money is a useful fiction that has shaped societies for thousands of years, from the rise of coins in ancient Greece to the first stock market in Amsterdam to the emergence of shadow banking in the 21st century.
At the heart of the story are the fringe thinkers and world leaders who reimagined money. Kublai Khan, the Mongol emperor, created paper money backed by nothing, centuries before it appeared in the west. John Law, a professional gambler and convicted murderer, brought modern money to France (and destroyed the country’s economy). The cypherpunks, a group of radical libertarian computer programmers, paved the way for bitcoin.
One thing they all realized: what counts as money (and what doesn’t) 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.
Lively, accessible, and full of interesting details (like the 43-pound copper coins that 17th-century Swedes carried strapped to their backs), Money is the story of the choices that gave us money as we know it today.

The co-host of the popular NPR podcast Planet Money provides a well-researched, entertaining, somewhat irreverent look at how money is a made-up thing that has evolved over time to suit humanity’s changing needs.

My Review

“A pretty good working definition of money is: it’s the thing you pay taxes with.” I thought this was a fitting quote to read as we’re going into tax season.

This was a captivating journey through the fascinating history and evolution of currency. It was fast-paced and entertaining, making it an engaging read for almost anyone, even if you aren’t normally interested in economics or history.

One of the highlights of the book is Goldstein’s ability to pack a wealth of information into its pages without overwhelming the reader. His exploration of the origins of money and its transformation over time was just deep enough to understand the basics, but not too deep that .

My favorite chapter of the book offered a unique perspective on the value of money by comparing it to the amount of light one could afford based on their daily wage and how that changed over time. It highlighted how far we have come with technologies that we may take for granted, and that looking back on the ‘better times’ isn’t always better.

This was a four-star read that offers a comprehensive and insightful look at the history and impact of money. It’s a book that will leave you with a deeper understanding of the role currency plays in shaping our world (and basically, money is just what we believe it to be).

Interesting Quotes from the Book

• “The thing that makes money money is trust—when we trust that we will be able to buy stuff with this piece of paper, or this lump of metal, tomorrow, and next month, and next year.”
• “In 2012, a survey asked dozens of US economists from across the political spectrum about the gold standard. Thirty-nine economists opposed returning to the gold standard. Not a single one supported it. Among today’s economists, the gold standard is not a controversial issue. Almost all of them think it’s a terrible idea.”
• “Roosevelt understood that money is money because we believe it’s money. When people lost confidence in their banks, they ceased to think of their deposits as money, so they withdrew their deposits in the form of paper bills. When they lost confidence in paper, they turned it into gold. These changes weren’t neutral. With each step—from deposits to paper, from paper to gold—America was sliding backward into a world with less money that worked less well. It was this slide that Roosevelt was trying to reverse.”
• “What counts as money (and what doesn’t) 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 we’ll make different choices, and money will change again.”
• “Remember the first seven words of that last sentence: “Everyone believes that it will hold up.” They are the essence of banking (and, for that matter, of money). If everyone believes a bank will hold up, it will almost certainly hold up. If, on the other hand, people think a bank is going to fail, it will fail—even if its finances are in great shape.”
• “Here is a thing that always happens with money: whatever money is at a given moment comes to seem like the natural form money should take, and anything else seems like irresponsible craziness.
• “The point of patents—which the founders of America thought was so important they put it in the Constitution—is to give people a financial incentive to come up with new ideas, and to share those ideas with the world. A patent is a temporary, government-granted monopoly on new ideas.”
• Interesting on comparing money to how much light you could have based of day’s wages; interested in hearing the stats for how life insurance came to be 
• “Of course banks are greedy! Of course corporations are selfish, and Wall Street is wily! Blaming a financial crisis on these qualities is like blaming a flood on the wetness of water. A twenty-first-century economist pointed out that if Wall Street greed caused financial crises, we’d have a crisis every week. The important question at the time—and, indeed, the question we should always be asking—is: How can we design a monetary system that channels that greed and selfishness and wile toward socially useful ends, and limits the potential harm inherent in finance”
• “the point of the stock market is not to go up. The point of the stock market is to find the right price for stocks—the price that best reflects all available information about the performance of the company and the state of the world. Obviously, stock markets sometimes fail miserably at this task. But the more investors who are in the market—and, crucially, the more information they bring to the market—the better the market will be at finding the right price. Allowing people to profit when the price of a stock falls creates an incentive for investors to root out fraud and spread bad news that might otherwise remain unnoticed. This is a good thing.”