The real meaning of money

Ankita Rajasekharan

Economics is most commonly understood as the study of how limited resources are most optimally or efficiently used with progress and development of the community as the desired result. Resources could include land, water, human capital, money, and in recent times, even social and cultural capital have come to be thought about in the realm of economics. Amidst all this, monetary capital seems to still be the centre of all economic thought and judgment; the economic progress of a country, eventually, comes down to a number which is representative of a monetary value.

There doesn’t go by a day without one having to exchange printed paper or coins valued against a number that is representative of it’s worth; ranging from a rupee to a thousand rupees. In these daily exchanges, money comes to be a very physical and concrete reality; one can feel, touch and see this ‘money’ and exchange it for real services or goods. If one were, however, to take a step back and think about that piece of paper- what does a 100 rupee note mean? What does it mean when, say, a soap is valued at 15 rupees? What does it mean to have a salary? What does it mean to have a balance of an x amount of money in the bank? What does it mean to have to repay an educational loan? What does it mean to not have money? What does it mean to not be able to afford a given service or product? What really do these printed papers and coins represent?

Paul Grignon engages very deeply and in the most mind boggling way with these questions in his film titled, Money as Debt. He starts with a seemingly simple question – where does money come from? How do we end up with the printed bills and coins? And more importantly, how do we end up having the savings in the banks, the money that we actually don’t see, except for the number that comes printed on our balance receipts? Well, as for the printed receipts we take out of our pockets every day, that comes from the government. The government prints and mints the notes and coins that we carry around. This government printed money, however, accounts only for about 5 percent of the money that actually exists and is circulated in the economy of a country. The rest, i.e., 95 percent, of the money being circulated actually has no physical counterpart to it! It exists only by account of digital numbers fed into the computers at banks and printed on the papers we safeguard as loan documents. We and the bank create money. That’s right! Each time we borrow from the bank, we are, in a sense, creating money. Private banks are not authorized to print their own money to lend out; so then, where does the bank get the money to lend us? For every deposit that we make at the bank, the bank can loan out about 9 times that deposit to other customers in the belief that the loan will be repaid! Which is to say, that for every one part of real money that we deposit with the bank to keep safe, the bank can create 9 parts virtual money to loan out; this ratio varies across countries! A bank will lend one money, only if the bank can trust that one can repay that loan; and hence, without the promise of repayment, there exists no loan; and with no loan, there exists, no money! Each time we swipe our credit cards and make online payments, what we are essentially doing is moving around digital numbers from one account to another; from ours to the seller’s account. If at any point, every account holder were to demand the withdrawal of all of their money, the bank wouldn’t have enough real money to give away! Imagine!! All that money we claim to have and all those goods and services we gain in exchange of this money…it is all really a bunch of digital numbers fed into a computer!

This is just the most basic gist of the idea that Grignon goes on to engage with in a very critical, complex, and mind-boggling manner. It is a wonderful movie to watch and think about. The very core of one’s understanding of what the economy of a country is based on will be left quite shaken. As quoted in the film, Leo Tolstoy gives one enough to stop and take a look at what many of us make our life to be all about – an everlasting process of making more and more money – he says, “Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal, there is no human relation between master and slave.”

Note: The Documentary “Money as Debt” can be watched at the following link – https://freedocumentaries.org/documentary/money-as-debt-international-bankers-own-the-world-and-this-is-how

Ideas for the classroom

The Internet gives you access to several short films that attempt to give you an understanding of money. While the film mentioned in the article, ‘Money as Debt’ is a full length documentary film, there are short films too that you can have your students watch. ‘That film about Money’ is a good one to start. Pick your films on money and then do the following activities:

Discuss and debate: When and why did money originate? What does it mean to be in debt? Is there a difference between a debt and a deficit? How do credit cards work? With all kinds of shops now offering to sell their products at smaller EMIs and zero percent interest, do they think people are spending more than they should?

Research: What are digital currencies? Who uses and accepts them? Bitcoin has been in the news recently. That could be a good place to start.

Game: Very often newspapers carry ads by retailers selling their wares at discounted prices. Collect a few such ads and bring them to class. Help your students learn the advantages of comparative shopping.

  • Let each student decide on something they would like to buy and pick a budget that is not very high.
  • Ask the students to then look through the different advertisements and see which retailer is offering the item at a lower price.
  • Once the students find the lowest price, ask the following questions.
  • Does this store have the lowest prices on most items?
  • Do they have the lowest prices on all items or just high profile items?
  • How far away is the store with the lowest price?
  • How much time and fuel will be spent going to this store?
  • Do you think the quality of this product is better or worse than the quality of higher priced products from other stores?
  • Why are some brands priced higher than others for seemingly identical products?
  • (source: http://www.moneyandstuff.info/activities.htm#changeit)

    Now that we have online stores selling similar things would the students choose to buy from there instead if the prices are lower? Why do they think online stores are able to offer their customers larger discounts? How much sense does it make to have a pair of jeans shipped from a different state altogether? What if they don’t fit or get the colour they ordered for? Is that not waste of time and money?

    The author used to work as a facilitator and is currently on an exploratory break. She can be reached at [email protected].

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