I stare at the still frame of what I believe was my early indoctrination into the concept of money and wealth. The memory of this photographed moment is rather fuzzy. I was told that I’d have to drop a coin or two every day in this little ‘piggy bank’. (And till date, I never quite understood the significance of this little box shaped as an animal)
And there I stood with a coin almost half-way into the slit of the porcine back, but still held gently between my fingers. It seems like I was hesitant to drop the coin into the box. What I don’t remember is the sound of the coin meeting the base of the metallic bank. It’s like a frozen moment. There’s an air of uncertainty in this monochrome image clicked by my mother, the fear of unknown.
Money has created a world of its own and mankind has made it an integral part of his universe. But the question that many people have asked and to their dismay, have always had to be content with unsatisfactory, and sometimes an abstract answer is – “What is Money?”
Money – the cause of both material pleasure and anxiety. It is the driver of most arguments and the agent of many settlements. We hoard it in case we don’t die, or sometimes, we spend it all knowing that we eventually would. There’s variety in money too, going beyond the usual differences in colours and denominations. There’s good money, black money, blood money, booty money, hush money. It has managed to boost sentiments of the general public, and at the same time has brought their dreams crashing down.
What is it in this instrument of paper – the currency that usually represents money- that has been detrimental in deciding as much as the leadership of nations? What is apart from the complex and often argued irreplicable chemicals in use that gives money some intrinsic value, something of its own to cherish. Is there anything called value that could justify this sensitive relationship we have with money?
We are married to money and we fear to divorce it. The trust we have managed to put into this mysterious lover is insurmountable. Money has never managed to assign itself some value and it has always been at the mercy of individual perceptions and validations. Like the character of Gekko said in the 1987 film ‘Wall Street’ – “Money itself isn’t lost or made, it’s simply transferred – from one perception to another. Like magic. “ So if we tried to define money, it would be something ‘X’ that buys us something ‘Y’, with that something ‘Y’ having an implicit value. So a commodity vouches for the worth of the money that has bought, thus proving its innocence in this quest for merit and a rational assessment.
But think of this – are the stacks of jeans in a Levi’s store or the gleaning MacBooks lined up in an Apple Store devoid of any value till we assign it a monetary backing? The money that exchanges hands for these commodities does little to support the worth of its construction, engineering and labour in its entirety. And to be fair, the fact that pieces of paper adjudge the value of such wonder products is, to put it humbly, a little demeaning of sorts.
This intriguing nature of money elevates in criticality when the entire macro scenario of a country is regulated with a money generating mechanism. The sub-prime crisis, the credit crunch, cash-strapped banks lobbying for bailouts, and today, entire nations demanding for the same altogether has led to a phenomenon called Quantitative Easing, or QE. It is a tool used by Central Banks to increase the influx of money in the market. As arbitrary as it sounds, it is indeed simply printing more currency, and voila, the result of such printing gives us another member to the family of names – Fiat Money. This controversial mechanism pumps billions of dollars into the economy annually. Once created, it dissolves in the market like magic. But it does all this not without entering the realm of sensitive economic variables, like inflation.
So much for being devoid of any implicit value, money fails us on any ornamental worth as well. Pick up a note of any denomination and you read a text “I promise to pay the bearer on demand a sum of (denomination)” It has a historic context and it means that upon producing this currency, the holder is promised to be redeemed Gold of the same value. So that no one is left baffled by this revelation, the previous statement started with the words ‘historic context’.
This scenario of exchanging gold for money would prevail in the Gold Standard System. But after several tries of revival, most importantly through the Bretton Woods Agreement post World War II, the Gold Standard System was abandoned in early 1970s. It now remains inked on the notes as a rhetoric statement that would never make sense. If we took the Gold out of the question, like we rightly should today, an inquiry could sound funny. If the bank promises to pay me a sum of Rs. 100 for a sum that I already have, why do we even need or have this promise? It’s a paradox of its kind – a promise that cannot be kept because it has already been fulfilled.
Citing these very elusive aspects of money and also to combat the pressing problems of the global economy, some economists now argue that a return to the Gold Standard would be a worthy alternative. We couldn’t know if this return is the answer to the pressing problems of the economy, but what we do know is that this would help the Central Banks of all countries make sense of a statement that has lost a direction it was never headed for.
I try to recollect those hazy moments from my past. I probably don’t remember listening to the sound of the chink of coin because it never made any. After all, I was yet to grow up in a world where money quite comprehensively reigned over sentiments, mood, success, failure, celebration and dismay and where money made the loudest noise. I was yet to grow up in a world where the difference between value and materialism would be bridged by money, where people placed their undying faith in an instrument. And in a world where people, apart from carrying their own identities and the pictures of their loved ones, would carry a few inexplicable promises in their pockets.