We often think of “money” as a stack of bills with a bunch of dead presidents on them, right? That’s money as a concept. But when was the last time you carried cash on you? If you don’t see it or touch it, does it actually exist? 

Yes. And no. Maybe?

Dustin and Joseph do a deep dive into the concept of money in our latest episode. They also cover how financial systems evolved from thousands of years ago into what it is now to support a global economy. Tune in to learn about the power of money, how it can be used as a weapon, and how the world seems to revolve around the American dollar.

WHAT YOU’LL LEARN

• [03:41] What the heck even is money? 
• [04:39] The early barter system 
• [07:33] Money is based on our shared beliefs 
• [09:39] Why the American dollar is the currency of power 
• [11:40] An example of how the reserve currency system works 
• [1:530] The alternative to a global economy 
• [18:09] Power (and consequences) of printing money 
• [21:35] The weaponization of finance  
• [24:50] Trust the system 

What is money?

So, is money real or not? If we only see numbers on a statement or on a banking app, that’s not really money… is it? This is where Dustin and Joseph have a bit of a back and forth about what money is and what it means. As Dustin says, you may not be physically handling money, but it still exists. Dollar bills don’t actually have intrinsic value. What they do is represent our money system. They hold value because we all agree that they do. 

We’ve evolved into this system using paper money because… well, our previous barter system wasn’t really built to last, nor was it the most efficient. People in ancient civilizations used to trade livestock for building materials, or one food for other types of food, for example. 

Instead of “carrying all your commodities around with you,” as Joseph put it, we turned to trading precious metals, coins, and eventually, bits of paper. And over hundreds of thousands of years, we’ve continued evolving into our current system, where the American dollar is used around the world.

The reserve currency system and a global economy

America is what’s called the “reserve currency,” which means that basically the entire world revolves around one dollar. Our dollar.

This reserve currency system supports a global economy. Dustin further explained it in this way: imagine that someone in one country wants to buy a product from another country. Both countries, however, use a different currency. What’s the point of selling that product if you can’t use the money you’d receive?

Think of the United States as the middleman in this situation. We’d buy the product from one country and sell it to the other. Because the American dollar is the single currency used for exchange, we allow the global economy to keep going. Having that power is one of the perks to the reserve currency system, but it’s also a burden. That’s why you hear about America being in debt to so many nations in the news.

But the alternative is: we go back a thousand years to how it was before a global economy, or someone else has to be the reserve currency instead of us. 

What’s the alternative?

Understandably, the idea of having only a few entities with so much power can make many feel uneasy. Dustin points out though, that this system we have has been adjusted and tweaked over thousands and thousands of years. Something about the system is working, because it hasn’t all crashed and burned just yet.

If you’re not down with this global financial system, there aren’t very many alternative options for you to explore, unless you want to join a hippie community in India that uses a barter system instead. (Thank you for pointing this out to us, Joseph. Link is in the show notes, if you’re curious.)

The best thing to do is accept and trust how money works in our world today. And you can learn how to make the system work to your advantage from financial planners like us.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

RESOURCES & PEOPLE MENTIONED

• The National Debt, Visualized
• Go back to the barter system in this hippie community in Goa, India
• Check out our new program, Wealth by Design™ DIY!
• Join the Know Your Numbers challenge
• Schedule a free call with us — Are we a good fit for your financial planning needs?
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