Why Do We Trust Money? (It’s Not What You Think)

On the face of the American one dollar bill there is a public declaration: “This note is legal tender for all debts, public and private”. It is signed by the treasurer of the United States and countersigned by the Secretary of the Treasury. And though few of us have ever met any of those gentlemen all of us are willing to trust that the dollar bills we have in our pockets or for that matter the British pounds or the Japanese yen (which are backed by an equal kind of promise) will work as currency anywhere.

The reason we are willing to accept the face value of what is, in essence, pieces of colored paper lies in the fact that we actually believe that the promissory value that’s printed on the paper is backed by the full institutional might of (in this case) the United States. In order to understand the strength of that belief and the paradox that lies at the very heart of it, consider that dollar bills which are a manifestation of the power held by the United States government are also used to buy the kit used by survivalists, who reject any kind of governmental authority. Dollar bills change hands in the transactions of radicalized extremists purchasing weapons and ammunition that are to be used in their avowed fight against the same country whose currency they have used and whose government and authority they want to destroy. And dollar bills are used by competing nations, like Russia, who are locked in an ideological struggle across geopolitical interests. Dollar bills are also used in everyday transactions by countless US citizens despite the fact that a Pew Research report suggests that social trust rides high with less than half of the population.

Dollar bills can be used by all these actors in all these contradictory contexts where some can reject the authority of the issuing agency and actively work to overthrow it because, at the same time, everyone feels the same amount of trust in the issuing agency’s willingness to keep its word and honor the promissory value that is printed on its currency. The motto of “In God we Trust” printed on the reverse of the one dollar bill is a reference to religion that is no accident. It serves as an additional reminder of the requirement for collective faith in the integrity of the system in order for it to work.

Consider how odd it would be, for instance, if the US Treasury chose to track particular transactions and nullify the currency used because the country’s political wing has a beef with its participants. Or how uncertain things become if I send you $10 over the net for an item I want to purchase but you are only 50% sure that you will be able to use that $10 to buy something you want.

While trust is a commodity that fluctuates within every context and can even fluctuate within the same context if any of the other variables have changed, when it comes to money we all share the same 100% unshakeable trust in the mechanism that underpins it, all the time, regardless.

Now you could say that here we are being hypocritical or disingenuous. On the one hand we say that we reject the values and authority of a country and all it stands for but on the other we willingly accept its currency that is guaranteed by the same values and authority we reject. While this may make us appear two-faced this is not what is actually happening.

Things would get even more complicated if, having decided that I needed a cup of coffee from Starbucks but being unable to determine just how the transaction would go I, addicted to caffeine as I am, was prepared to use violence as a last resort in order to get it.

Money is an abstract representation of value. As such it is a social construct which Edward Fullbrook argues in “An Intersubjective Theory of Value”, is subjective in value but relies upon an intersubjective Boolean reality to make it function. In other words the reason currency works at all is because of our collective trust that it will. This is not the kind of organizational trust we try to develop in a business or the algorithmic trust we program in environments like online search, or even the kind of trust we try to generate so that an online transaction goes smoothly. No, this is the kind of deep, unarticulated sense of trust that we also develop as we move from toddler to young adult and further on. It’s the kind of trust that is unshakeable in its assumptions, leads us on to develop personal belief systems and world views and then, colors everything that is even remotely tangential to it.

Money is a Belief System

Whether we actually acknowledge it to ourselves or not, money then is a belief system. One that accepts specific aspects of the world order and the authority of the state in all its manifestations. Like any belief system money allows us to successfully predict how specific things work in the world (as in the certainty of the exchange of a five dollar bill for a White Chocolate Mocha Venti at Starbucks), understand what motivates some people (like an individual’s willingness to coop himself up in a cubicle 40 hours each week in exchange for a paycheck) and assess specific risks (such as the likelihood of a robbery occurring if we leave money lying around in a box, in plain sight inside a shop).

Should Starbucks suddenly decide to introduce the barter system for their coffee it will create an incredibly complex world where the value of every transaction will fluctuate wildly based upon the perceived value of the commodities used to trade that day.

That belief system enables us to act not just locally but globally. It takes the world’s complexities and reduces them into something we can totally understand. Because the effects of this belief system are reductive it results in the saving of a massive amount of energy. Imagine, for instance, just how tiring it would be if, before paying for my Starbucks coffee in New York I had to mentally assess the likelihood of the transaction being accepted (because Starbucks decided that morning to have no trust in the American government’s legal tender), had to worry that the five bucks on the face of my five dollar bill no longer held the buying value of five bucks (because Starbucks, having lost trust in the American legal tender was accepting it as currency but was discounting its value to offset the potential risks) or had to consider what other forms of currency I may use to pay for my coffee (did the Starbucks baristas need something? What might that be and how could I get hold of it if I did not already have it and would its value be equal to, more than or less than the original $4.75 my coffee should have cost?). The complexity of buying a cup of coffee would have been enough to put even me off and perhaps close down Starbucks outlets everywhere.

Things would get even more complicated if, having decided that I needed a cup of coffee from Starbucks but being unable to determine just how the transaction would go I, addicted to caffeine as I am, was prepared to use violence as a last resort in order to get it. Starbucks, of course would have thought of that in advance, I hope, and made sure its baristas were protected by armed guards which means that I would then have to have planned my act of last resort with some care and perhaps have a crew of gung-ho badass guys, ready to back me up should I need them to.

None of this happens of course. My contactless payment goes through without a hitch and because none of us mistrusts money, the world becomes a safe, more cost-effective place for everyone to live and work in. Because we can feel safe within and get a handle on how it works without being intimidated by its scale, we are then able to plan our next entrepreneurial adventure, the next terrorist strike, the next political play, the next purchase we are going to make. Our trust, then in money, becomes the universal backdrop against which much of the world’s motivation plays out and almost everything we see, good and bad, becomes possible.

David Amerland

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I am the petri dish of my life experiment. https://davidamerland.com

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