In 1989 as a 17 year old college student I had a childish view of what it took to get by in the world. Foolishly, I thought that $150 (7,500 Rs.) was sufficient to spend a month in Greece (it was my own hard earned money and seemed a lot to me at the time). $150, I found out, is not a lot of money. It worked out to about $5 a day. In purchasing power parity terms it was somewhere below $2 a day in an India. What followed was hardly a sightseeing tour but an exercise in subsistence living. For $1 there were hostels that would let you roll out your sleeping bag on their roof. If it rained they would accommodate you in the corridors by the bathrooms. In Athens I could not afford the entrance fee … Read More »
A couple weeks ago my newly married maid came asking me for a loan to pay the rental deposit on her flat. I knew she had saved up much more than the amount she needed so I asked her what she had done with the money. She told me she had bought gold jewellery with it.
With all of it? I asked her. Why did you do that when you knew full well you had this expense coming up?
I had to she said, without gold they won’t let you get married.
Who is ‘they’? I inquired.
Everyone, she told me. All my relatives in my village
At the time I told her she was foolish. Now I’m not so sure.
Back in the old days money used to be linked to something of physical utility – typically gold. For every note issued, the government … Read More »
Last week I wrote about fiat money, and its fantastical symbolic value based purely on a collective faith in our ability to create value – a faith in the human mind. Without any intrinsic value, money can only realize value by interacting with the human mind. So how can we think about this in a more formal way?
To me money is a kind of meta-energy. In physics, energy is defined as the capacity to do work or effect a change – a change in position or form. This is a fairly simple analogy since money can be used to build, distribute and reshape our environment in so many ways. When we lend or invest money, it is largely for this potential. The key word here though is ‘potential’.
The potential energy of a system is … Read More »
Ever since I found myself unwittingly heading a microfinance institution I have had money on my mind. Not so much how to make more of it, but what it means. It’s such a critical component of so many human interactions, so caught up in so many aspects of our psyche and so baffling in its complexity. It can make and break bonds in human systems, foster marriages, alliances and enterprise, or bring them down. Or it can vanish in slow trickles, dissipating into a vast ocean, leaving behind a pile of random stuff as a reminder that it passed through.
But what is money? Money the way it was first conceived several thousands of years ago is easy to understand. It was a mechanism for simplifying exchange, making it easy for two people who did not have … Read More »
Yesterday my mother called me to say that she is taking my six year old son to see a coin collector since he has been pestering her with questions about money. Motivated by his interest in buying yet another Ben 10 toy that I won’t get for him (jet ray, shake ray, I don’t get it…), he has become a little obsessed with finding ways to get money. Who invented it? Can he invent his own money, he wants to know. Would people take his invented money? Who makes the money? Can’t he just print some out on our printer? Who decides what its worth?
So back to the coin collector. My first reaction was that it seems a little silly and boring. What’s he going to show him, some bunch of coins from around the world? So what? But … Read More »