The Changing Face of Money
25 Pages Posted: 9 Mar 2011
In this essay I argue that widespread failure to comprehend the intrinsic nature of modern money loomed large in the recent financial and economic crisis, and that broader comprehension of its meaning is a precondition for effective post-crisis reforms. First, I provide a brief history of money, emphasizing its gradual divergence from inherent value. I then consider the value of today's dollar in economic, legal, and psychological terms, arguing that each perspective conveys a single over-arching lesson - that better comprehending our money requires better comprehending ourselves. The introspection that this exercise demands reveals with unique clarity some of the critical lessons of the crisis and its aftermath.
Keywords: US dollar, Federal Reserve notes, Federal Reserve System, monetary policy, money supply, quantitative easing, national debt
JEL Classification: A14, E51, E52, G21, H63, K39, N20
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