What is Money?

In this video we debunk a few myths about the origin of currency and how currency is used in modern economies.

Money is a currency of exchange. Likely the currency issued by the state.

The common understanding is that ancient markets were structured around bartering and over time an medium of exchange was developed, such as a precious metal. This is an historical myth. There’s no anthropological evidence that any ancient society based an economy on bartering. In fact, quite the opposite. The earliest found writing often records financial transactions and details of debts. The earliest exchanges evolved out of debt.

The government distributes the currency to the people by paying for goods and services rendered to the government and eventually some portion of this currency is then removed from the general economy by taxation. The government creates the currency, the currency is then supplied to the economy and then the government creates demand for that currency by taking it back in taxes. Government spending is the origin point of money. Taxes are the destruction of money. Government spending is limited only by the full employment of available resources, beyond which we would see inflation.

Come discuss this with us on

Sources:

Credits
Written by Andrew Johnson and Jackson Winter

Spoken by Andrew Johnson
Edited by Jackson Winter

All other graphics created by Jackson Winter

Music
Into the Sky and Sunspots by Jeremy Blake

[annamchugh]

That's really interesting. I liked the euphemisms about how the government intervenes in exchanges between entities to 'establish' an economy by mandating the use of their tokens and 'requiring' people to return those tokens in the form of taxes. It seems as if the bit that doesn't get mentioned is the bit where brute force is, or perhaps historically was, used to make people enter that treadmill of exchange and government-supervised deferred debt. It's actually really depressing when you see how much of it is based on intervention and threat. :(

[hindigente]

Great presentation. I'm curious about how the argument would change in the case the state does not issue its own currency.

[valardohaeriz]

You have such a great voice, I hope you succeed in your newly found Youtube career :)

[Gongagoo]

Great stuff! Hope to see more in the future. There's not enough straight-talk about our money these days, even on YouTube. Hope you do a video on national "debt." Drives me mad that we have all the people and resources to be great, but limit our thinking with questions of "how to pay for it." You'd think making the money would be the easy part!

[jessieplexer]

Interesting video, explains quite a lot about why different macroeconomics approaches exist

[Vafa_ev]

One of the best videos on the internet, easy to undrestand and also the visual is at the peak. Would you please tell me what software has been used to create this video?

[PEGSInstitute]

Thanks for watching! Like and subscribe if you enjoyed this video.
We're going to be releasing more videos covering economics and other topics, but the more we do the more work it takes to make sure the information is accurate and videos are always improving so any support or feedback is always welcome.

[manumiu]

You've just explained MMT (modern monetary theory) in this video.
It's not true that we're already using MMT but unfortunately we're getting closer to this model every year. At least that's what all the rent seekers would love to implement, because they would profit from MMT even more.

[annamchugh]

Are we 'allowed' to just go back to bartering? In the UK we used to have Bartercard, but the government got very hot under the collar about that and made efforts to quash it. Are Australians allowed to do something similar or do you HAVE to use currency in all exchanges?

[nsg_kuunda]

Okay. But then why does canada pay so much in debt servicing??

[annamchugh]

Also, I don't understand the circularity of the statement that "by creating a currency the government was creating a promise that they would honour repayment of that debt in exchange for the currency." How could they repay the debt except with more currency? You hand over your debt-sticks, and they just give you more debt-sticks back, unless they actually give you the bullion against which the debt-stick is rated. Except that we don't do that any more - because it's not really tied to anything except bigger debts. So your debt-sticks, and your debt-stick account, is basically a fiction of numbers and, fundamentally speaking, worthless. Or am I wrong?

[Anonymous-mdqp]

The final myth about the government collecting taxes is the one that shocked me the most. On my tax return I receive a breakdown of where my taxes are being spent as a percentage. Are you telling me that is a false statement?

[unuwvro]

Money is what to use to buy what we need

[SeanOCallaghan]

How do Euro countries get money? The ECB buys their bonds correct? How can the ECB decide how much money should it give (or how many bonds should it buy) to Euro countries?

I live in Italy and many economists here are denouncing the 20 year long practice to have a taxation that exceeds the aforementioned money input in the economy. Basically a super austerity. This is leading to the collapse of the public sector and to massive privatisation. What do you guys think about it?

[spm]

I was wondering where the debt comes into play when different states owe each other. Any insight on that?

Great video btw. The visuals helped.

[kingot]

Weird how numbers are more valuable then almost anything in this world

[subbagamingytNl]

What is money????
My ans :-Money is the thing that if you have more than it, then it is far from your own even if you are near it, and the person who is not near, or even if he is near, is away

[leviscurrah]

Apparently tax gets reinvested according to all the sources shown on google 😅

[Joshkie]

Recorded history.... so if it did get written down it just did not happen.?

[chazdouglas]

It's still bartering there was no money