Jacob Goldstein > Quotes

“Money feels cold and mathematical and outside the realm of fuzzy human relationships. It isn’t. Money is a made-up thing, a shared fiction. Money is fundamentally, unalterably social. The social part of money—the “shared” in “shared fiction”—is exactly what makes it money. Otherwise, it’s just a chunk of metal, or a piece of paper, or, in the case of most money today, just a number stored on a bank’s computers.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The important question at the time—and, indeed, the question we should always be asking—is: How can we design a monetary system that channels that greed and selfishness and wile toward socially useful ends, and limits the potential harm inherent in finance?”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The thing that makes money money is trust—when we trust that we will be able to buy stuff with this piece of paper, or this lump of metal, tomorrow, and next month, and next year.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The essence of finance is time travel,” the banker-turned-writer Matt Levine wrote. “Saving is about moving resources from the present into the future; financing is about moving resources from the future back into the present.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The solution, Fisher thought, was obvious: redefine the meaning of money. Instead of defining the dollar as a fixed amount of gold, define it as a fixed basket of stuff. “We want a dollar which will always buy the same aggregate quantity of bread, butter, beef, bacon, beans, sugar, clothing, fuel, and the other essential things for which we spend it,” he wrote. Fisher’s idea was brilliant—and very close to the way the dollar works today.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“By 1715, John Law had cooked up a plan to take what the Bank of England had done and push it much, much further. When Law closed his eyes, he could see a whole financial system that linked together all of the hot new things—a bank, a stock market, a trading company, a new way for the government to get money.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Law won because he discovered an intellectual discipline—a way of looking at the world—that was emerging during his lifetime and that would eventually shape the way millions of people thought about God, money, death, and the unknown future. The discipline is probability theory. It’s the basis of much of modern finance and, for that matter, much of modern thought. It was invented by gamblers.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Our dollar is now simply a fixed weight of gold—a unit of weight, masquerading as a unit of value.… What good does it do us to be assured that our dollar weighs just as much as ever? Does this fact help us in the least to bear the high cost of living? What we really want to know is whether the dollar buys as much as ever.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The money changers sat on benches on a busy bridge over the Grand Canal, so they were called banchieri, which translates as “bench-sitters,” and which is the root of our words banker and bank.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“the economists Milton Friedman and Anna Schwartz pieced together an extraordinarily detailed history of money in America. They showed that the Fed’s policy of making money scarcer and raising interest rates—that is to say, following the rules of the gold standard—turned what would have been a nasty but ordinary downturn into a cataclysm. The Fed, and the gold standard it managed, caused the Great Depression.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“By 2007, shadow banking was bigger than traditional banking. And the depositors in the shadow banks—the corporate treasurers and money-market funds and pension funds that had trillions of dollars of cash—were starting to demand their money back. It was the start of the biggest bank run in history.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“This is called fractional-reserve banking, and it’s how the vast majority of money in the world is created.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Eventually, the Chinese government started developing its own digital currency. In other words, a technology originally conceived to “make Big Brother obsolete” was now being advanced by a state built on surveillance of its citizens.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“A pretty good working definition of money is: it’s the thing you pay taxes with.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Roosevelt understood that money is money because we believe it’s money. When people lost confidence in their banks, they ceased to think of their deposits as money, so they withdrew their deposits in the form of paper bills. When they lost confidence in paper, they turned it into gold. These changes weren’t neutral. With each step—from deposits to paper, from paper to gold—America was sliding backward into a world with less money that worked less well. It was this slide that Roosevelt was trying to reverse.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Shadow banking, and the shadow money it created, managed to get all of the safety net, after going decades without paying any of the cost. Shadow money was now real money.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The world did remain on a pseudo gold standard for decades; foreign governments could still trade dollars for gold (at a rate of $35 per ounce, as set by Roosevelt in 1934), but ordinary people could no longer do so. Finally, in 1971, the United States broke the link to gold entirely. It became the job of the Federal Reserve to manage the value of the dollar—not in terms of gold, but in terms of the stuff ordinary Americans buy. In other words, America (and every other country) finally started thinking of money the way Irving Fisher wanted us to.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“What counts as money (and what doesn’t) is the result of choices we make, and those choices have a profound effect on who gets more stuff and who gets less, who gets to take risks when times are good, and who gets screwed when things go bad. Our choices about money gave us the world we live in now: the world where, when a pandemic hit in the spring of 2020, central banks could create trillions of dollars and euros and yen out of thin air in an effort to fight an economic collapse. In the future we’ll make different choices, and money will change again.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“In 2012, a survey asked dozens of US economists from across the political spectrum about the gold standard. Thirty-nine economists opposed returning to the gold standard. Not a single one supported it. Among today’s economists, the gold standard is not a controversial issue. Almost all of them think it’s a terrible idea.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“In May 1720, Law went further. He declared the value of paper money would be gradually cut in half. At this point, France flipped out. People rioted for three days. The bank closed. People threw rocks through the windows”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Scholars describe an “economic revolution” at this moment in China, hundreds of years before Europe’s own industrial revolution. Movable type and the magnetic compass were invented. Farmers figured out new agricultural techniques that allowed them to grow far more rice in the same amount of space. Printed books spread information on these breakthroughs around the country. More and more people moved out of a feudal(-ish) economy that ran on tribute, and into a market economy that ran on money. Now people could specialize in what they and their land were best suited for.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“One of the most important of the gambler-mathematicians was the weirdo genius Blaise Pascal. As a teenager, he had written a treatise on geometry that was good enough to impress Descartes (who was in the midst of inventing a branch of modern geometry).”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Here is a thing that always happens with money: whatever money is at a given moment comes to seem like the natural form money should take, and anything else seems like irresponsible craziness. This myopia peaked with the gold standard. After twenty years on the gold standard, people had already come to believe that the gold standard was obviously the only natural way to do money. Every civilized country does it. Who would ever consider doing money differently?”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Around 995 AD, a merchant in Sichuan’s capital, Chengdu, had an idea. He started letting people leave their iron coins with him. In exchange for coins, he would give people fancy, standardized paper receipts. The receipts were like coat-check tickets for coins. And just like anyone with a coat-check ticket can claim the coat, anyone with a receipt could claim the coins: the receipts were transferable. Pretty soon, rather than go to the trouble of getting their coins every time they wanted to make a purchase, people started using the coat-check receipts to buy stuff: the paper itself turned into money.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Less than a month after the fall of the wall, Mitterrand offered a deal to Helmut Kohl, the German chancellor. If Germany agreed to a common currency, France would support reunification. If Germany didn’t agree, France would oppose reunification—and the UK and the Soviet Union would go along with France, leaving Germany surrounded as it was before World War I. “We will return to the world of 1913,” Mitterrand told Kohl.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The barter story reduces money to something cold and simple and objective: a tool for impersonal exchange. In fact, money is something much deeper and more complex.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Saving is about moving resources from the present into the future; financing is about moving resources from the future back into the present.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“It was a world where the government set a few rules, then got out of the way—a world where there was a free market in money itself. This was by design. “The people… demanded that the right to deal in money should be as free in its exercise as that of dealing in wheat or in cotton bales,” one court wrote, upholding New York’s free banking law. It was the world Jackson’s cronies had dreamed of.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“Law was placed under house arrest. Mobs attacked his house and his coach. His only choice was to flee France, as he had fled England twenty-five years earlier”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing

“The word millionaire was invented to describe the people who were getting rich off their Mississippi Company stock.”
― Jacob Goldstein, Money: The True Story of a Made-Up Thing