If you are struggling to make ends meet or trying to raise funds for a good cause or just worried about the future and providing for you family, you would laugh at the question. Perhaps a better one would be ‘what is money?’
The question isn’t so silly when you consider what the central banks of the world’s most advanced economies have just done to help us through the pandemic.
Hundreds of billions of dollars have been borrowed, not from worthy private lenders but from governments themselves, acting through those very same central banks. It is what we used to call ‘Printing money’ though these days is done through a few keystrokes in the digital banking world.
The rule used to be, if you print more money you dilute its value which in turn leads to inflation of prices until equilibrium is restored.
Beyond the worries about inflation is the bigger one about the debt mountain itself, trillions of dollars which will one day have to be repaid.
Or will it?
If all countries did the same thing at the same time (they did), then in relative terms, nothing has changed. If everyone agrees to treat this new debt differently, say, by parking it in a global 100 year bond, it could almost disappear!
There are many ifs and buts but the principal obstacle can be summed up in a single word: trust.
If we all agreed to do this, it could actually happen. Money is what we say it is. What we believe it is. How much wheat or oil a dollar buys is determined by markets which are….governments and people acting according to ancient rules of supply and demand.
But all of this is made by humans and can be changed if we all agree.
In Infinite State, the final part of The Infinity Trilogy, the value of money is called into question by a scandal whose effects are every bit as damaging as the pandemic. And the question posed above is put.
With what consequences?