Episode 33: Jacob Goldstein
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Money: The True Story
There is a saying that money makes the world go round. But Jacob Goldstein, journalist, author, and co-host of NPR’s Planet Money, suggests that money only works when we all believe in it. In this episode, he talks about his book, Money: The Story Of A Made-Up Thing. Jacob explains how money became a helpful fiction that shaped societies for thousands of years.
Listen from the beginning till the end to learn about how world leaders and fringe thinkers have changed our perceptions about money. Goldstein and host Greg La Blanc touch on stories about the Lehman Brothers and the 2008 Economic Collapse, Irving Fisher, Nicholas Biddle, and John Law —a professional gambler and convicted murderer who brought modern money to France— eventually destroying the country’s economy. He shares an interesting parallel on Isaac Le Maire and the Game Stop fiasco.
Listen to his exciting thoughts on digital money —cypherpunks, a group of radical libertarian computer programmers, paved the way for bitcoin. Finally, listen to his story about the history and theory of light, how it affects money planning and productivity.
Episode Quotes:
What do you think about the U.S. becoming a goldsmith to the world and enjoying the profits of the money-making?
“Literally, we sell pieces of paper to people for a hundred dollars. Like it's a good business. The fact that the dollar is the reserve currency for the world, it's the money everybody wants. It means everybody wants to buy our treasury bonds. Everybody wants dollars, essentially. It's the tailwind that we have for the economy […] Like nobody's going to want anything else. I mean, they're not going to want Euros anytime soon. And the other obvious one would be the Yuan, right? The Chinese currency, the Renminbi. But, China has pretty significant capital controls, making it hard to move money freely in and out of China.”
Talk about the idea of digital cash as you described in your book. Is paper money vanishing, and how did the Coronavirus affect the movement of paper money?
“Digital currency, to a significant degree, happened so that they could do what people have done for a long time with paper money —which is to move it around without anybody knowing about it. Right? So whether the crime is just tax evasion or moving drug money, paper money is really good. One of the things that happened after the book came out, as California was going into lockdown; there was this series of DEA raids in the spring last year, where they seized millions and millions of dollars. Just because the drug dealers suddenly couldn't launder them.”
What do you think the next source of instability will be?
“The spreads between high-risk debt and safe debt were relatively small, which is a classic sign of the credit boom going on and on. So, that's sort of a traditional thing, making an economic downturn worse. Although not necessarily a financial crisis, right? The financial crisis classically comes from runnable debt. So, is there somebody out there besides money market mutual funds, which we know about, who is taking something like deposits? Letting people borrow short and lend long? Like the classic bank behavior where people come and ask for their money back. Whoever. Is it the FinTech, the intermediator saying, “Oh, sorry, I don't have your money”? That is the financial crisis moment. And so, I don't know who's the next sort of financial intermediary creating some money like deposit. I don't know who that is.”
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