What, if anything, is a dollar?
Revised 2016 01 16 - Errors in understanding how money is created
As noted in a previous post, language is perhaps the most powerful agent of assimilation. People negotiate their relationships with each other and identify with groups using language. The first thing we need when forming a new group is a good name, such as "conservative" or "socialist" or "Christian". Other, more human and "animal" forms of negotiation, such as touch, emotion and personal connection are pushed increasingly into the background as the individual interacts with larger and larger groups. This interaction is largely framed in terms of language. Important ideas are cast in linguistic terms. Terms of central importance are mainly about assimilation and may lack definable reference in the "real world". In fact, I have long claimed that words work best as "group glue" when they lack any meaning at all. People can then claim membership in the group without risking searching discussions about what it is they believe.
It's commonplace to note this phenomenon with terms such as "God" and "Christian". When such terms pop up, the discussion is more about which group the speaker belongs to (or rejects) rather than a reference to something "out there" in the world. People who use "God talk" belong to a certain group and use the talk to signify their membership rather than to convey objective facts about the world. Within the group, "God talk", bounces around the echo chamber while everyone knows that nobody will dare to challenge what it actually means.
Many of us feel intellectually superior to people who talk this way. But almost everyone talks the same way about money. Many of us will spend our entire lives without asking what a dollar really is. Is it possible that both God and the dollar are fictions that are supported entirely by widespread agreement to use the word as though it refers to something, knowing that refusal to use the language will exclude us from the "echo chamber". Without money, how could we survive? How could we even talk about a world without money?
The most obvious thing about a dollar is people trust it. If I pay you a dollar for something, you don't need to trust me that I gave you something of value, you trust the dollar itself. Dollars are units of trust. This comes home in alarming fashion when people wake up one morning and discover that their currency buys 10% less than it did when they went to bed. Suddenly, they are reminded that their trust is misplaced. It's like when an innocent child dies and you suddenly realize that you need to re-think your trust in a merciful God.
More abstract theories of currency will tell you that the dollar is backed by debt. Ultimately, dollar s are created out of thin air by a government assuming debt - borrowing against future prosperity of the country and the ability of governments to tax citizens to pay interest on debt. This all boils down to trust again, but with the important difference is that the government does all this in secret and never needs to ask you to trust it. You trust the government like you trust gravity, without every thinking about it.
On a larger scale, the "dollar word" is rolled up into millions and billions, leading to statements that have less and less connection with the real world. Just what does it mean that Canada is committed to spend 125 billion of these things for some jets we don't need? Does this really matter? There is something queer going on when the average voter cares more about 200 of these things being "saved" from his annual tax bill than 125 billion of them being flushed down the toilet. Are we becoming dollar agnostics?
To me, the biggest problem is that "dollar talk" leads to a political discourse that resembles theology. If politics is all about "economics" and "economics" is all about money, then politics is a discussion about imaginary entities. Running a government to maximize dollars is equivalent to running a government to maximize the pleasure of God. It is not surprising to me that many of our politicians are fluent with both types of discussion.
We need some new words ...
As noted in a previous post, language is perhaps the most powerful agent of assimilation. People negotiate their relationships with each other and identify with groups using language. The first thing we need when forming a new group is a good name, such as "conservative" or "socialist" or "Christian". Other, more human and "animal" forms of negotiation, such as touch, emotion and personal connection are pushed increasingly into the background as the individual interacts with larger and larger groups. This interaction is largely framed in terms of language. Important ideas are cast in linguistic terms. Terms of central importance are mainly about assimilation and may lack definable reference in the "real world". In fact, I have long claimed that words work best as "group glue" when they lack any meaning at all. People can then claim membership in the group without risking searching discussions about what it is they believe.
It's commonplace to note this phenomenon with terms such as "God" and "Christian". When such terms pop up, the discussion is more about which group the speaker belongs to (or rejects) rather than a reference to something "out there" in the world. People who use "God talk" belong to a certain group and use the talk to signify their membership rather than to convey objective facts about the world. Within the group, "God talk", bounces around the echo chamber while everyone knows that nobody will dare to challenge what it actually means.
Many of us feel intellectually superior to people who talk this way. But almost everyone talks the same way about money. Many of us will spend our entire lives without asking what a dollar really is. Is it possible that both God and the dollar are fictions that are supported entirely by widespread agreement to use the word as though it refers to something, knowing that refusal to use the language will exclude us from the "echo chamber". Without money, how could we survive? How could we even talk about a world without money?
The most obvious thing about a dollar is people trust it. If I pay you a dollar for something, you don't need to trust me that I gave you something of value, you trust the dollar itself. Dollars are units of trust. This comes home in alarming fashion when people wake up one morning and discover that their currency buys 10% less than it did when they went to bed. Suddenly, they are reminded that their trust is misplaced. It's like when an innocent child dies and you suddenly realize that you need to re-think your trust in a merciful God.
On a larger scale, the "dollar word" is rolled up into millions and billions, leading to statements that have less and less connection with the real world. Just what does it mean that Canada is committed to spend 125 billion of these things for some jets we don't need? Does this really matter? There is something queer going on when the average voter cares more about 200 of these things being "saved" from his annual tax bill than 125 billion of them being flushed down the toilet. Are we becoming dollar agnostics?
To me, the biggest problem is that "dollar talk" leads to a political discourse that resembles theology. If politics is all about "economics" and "economics" is all about money, then politics is a discussion about imaginary entities. Running a government to maximize dollars is equivalent to running a government to maximize the pleasure of God. It is not surprising to me that many of our politicians are fluent with both types of discussion.
We need some new words ...
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