At The Money: Paul Vigna Explains "What is Money?"

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1:04Money. It's a driving factor in our lives. But how often have you thought about those little green pieces of paper in your wallet and the idea that created it? Or the digital zeros and ones in our banks and brokerage accounts that represent your money? Is it real or is money simply a collective delusion? I'm Barry Ritholtz and on today's edition of At The Money, we're going to chat about the concept of what exactly money is. To help us unpack all of this and what it means to you, let's bring in Paul Vigna of the Wall Street Journal. He's published numerous books on money, crypto. His latest book, The All Mightier, How Money Became God, Greed Became Virtue, and Debt Became Sin.

1:53It's out July 2025. So, Paul, let's start with the basics. You define money as a belief system. Explain what that means. Sure. Briefly. So, I mean, look, this is something that I never thought about for the majority of my life. To me, money was just what was in my wallet, what was in my bank account. I could use it. I could buy things. I didn't worry about what it was. It wasn't important to me. That changed over the last 10 years or so. And I started thinking about this question, what is money? And that sent me down this rabbit hole. and where I've come out on that is that money is not a real thing.

2:35You hold money in your hand, you hold paper dollars, you hold coins, and you think it's real. You think that's money. That isn't money. That's a thing that represents money, dollar bills, coins. Money itself, it's a system. It's a system we made up. It's a system human beings invented as a way to help us keep track of resources, of all our stuff. You look at the point of a society, and really the point of a large-scale society is to get a group of people together to combine their efforts and their resources to take care of each other. The way, as societies got much larger and larger, they found an efficient way to do that, and it was basically to have everything represented by money.

3:17And then if you have money, you have a claim on the group's resources. And what has happened over the last 5 ,000 years or so is that we have mythologized money into this real thing. And we have convinced ourselves, we have hypnotized ourselves into believing that it is a real thing to the point where the pursuit of it on its own has taken over most of what we think of as the point of economics in society. But it's not a real thing. It's not a thing that exists on its own. It is a thing that we created. It's a system that we created, and it has become for us a belief system. So I want to stay with that because it's fascinating.

3:55In the book, you write money isn't real. It has no objective existence of its own. Explain how money is really just this agreed upon collective system that everybody accepts, even though it's an abstract concept that is created by people. Right. And the whole point of the book is that not the whole point, but a main point of the book is that money is a product of religion. So I'll explain it. Say that again. Money is a product of religion. Money is a product of religion. And I will I'll explain it in terms of that, because that's how this all becomes very germane. When money first appears in the historical record, it is in these ancient Mesopotamian temples.

4:46Temple officials developed money. They developed money and writing, actually, as a way to keep track of the temple's possessions. And that is where it starts. And what emerged from that, the realization of that actually was that this was an incredibly efficient system. Money is actually a really good product. If you think of terms of things we've invented over our history, we didn't invent fire, but how to use fire, the wheel, bridges, boats, anything. I could sit here all day and do it, right? Money is one of those things we invented. Money was an incredibly efficient way to keep track of resources.

5:30And what I find interesting is that as soon as money emerges, that is when you start to see what we really think of as modern, quote unquote, human beings. Society takes off. It flourishes because money is a valuable product. It's a useful product. The problem has become that money is such a good product that we've started to think of it as this thing on its own, with its own values and its own existence. And a lot of that is tied up in our beliefs in religion. Because as I said, more of its history was it directly a product of religion than it was an independent thing that existed on its own.

6:13So our beliefs in religion and gods and supernatural beings that control what we do and how we live is tied up very, very closely with how we feel about money. Let me stay with the concept of Mesopotamia. You write about a city, and so there's 50 ,000 plus people living within the confines of this walled city with tens of thousands more working in the field, working in the farms and suburbs. But what's fascinating about the description of the city is the single biggest building in the city and perhaps in the world is the temple, which can be seen for miles and miles around, even from outside of the walls of the city.

7:01And the first writing is keeping track of here's how much barley has come into the temple. Here's how much people owe on this. Here's how we create a system of assets and liabilities of credit and debt. it all stems from the fact that the entire city was driven by religion, plus people had to work to survive, and the powers that be had to come up with a methodology of keeping track of all this. Is that the genesis of the close relationship between money and religion, or is it something else. No, it's that exactly. And what I tried to do in talking about Europe was compare it to a modern city, New York City.

7:52That's what Europe was like back 5 ,000 years ago. It's this great cosmopolitan metropolitan city. And you're right, the temple was the largest. This whole city literally revolved around the temple. And I think what's important when we talk about modern and ancient cities is to realize there were a lot of things that were similar, but there was one thing that was massively different. And it is that the city revolved around the temple. In those ancient societies, and I found this very fascinating myself, in these ancient societies, the entire point of life actually was geared around one goal. And that goal was to please the gods.

8:33People in these cities believed that the gods, multiple gods, were real, they existed, and they controlled everything. And whether you lived or died, or how well you lived and then died, and where you went after you died, all of that was determined by these gods, and you wanted to please the gods. There was no separation of church and state. The church was the state, and the state's entire existence was built around trying to please these gods. And that framework is what money emerges from. And that framework, I think, is incredibly important to our understanding of how we feel about money today.

9:10Wealth was seen as a sign of the God's favor. If the God liked the city, if the God liked the ruler, if the God liked the people, they flourished. They had wealth. Money was a representation of that. So money was a representation of the God's favor. And you wanted more of it, of course. I really think that colors a lot about what we think about money today and how we feel about it. But it's something that has just been kind of buried in our collective subconscious, and we just don't see it. So let's talk about confidence and faith, which you emphasize throughout the book. What role did trust play in institutions, be they government or banks or even various religions, in shaping the public's belief about money over time.

10:01Trust is a huge part of how we value money. And I'll give you a good example of this. This is what I opened the book with. 1933, the Great Depression, the United States is in just the worst economic shape it's ever been in. The system has largely failed. The banking system has collapsed. The government is barely operating. And the government back then was not nearly as large as it is now. It didn't have as much of a direct impact in people's lives. And I think in large parts of the country, the government just wasn't there. And I think there were real fears that the entire American experiment was going to collapse over what had happened in 1929 and years after.

10:45So FDR comes in, he gets elected. He starts doing, it's a pretty fascinating thing at the time, he utilizes a modern technology called radio. He does these fireside chats. He just talks into the radio and he explains things to people. And they were tremendously successful. They really worked. What's the first fireside chat about? Money and banking. FDR, the president, gets on the radio and just explains to people how the banking system works, how money works, what they plan to do, how it's going to work. And what he says to them is, he says, you have to have faith. You have to have belief in the banks, in the money, and all these things.

11:27And collectively, if we all have faith, we will succeed. It's amazing to think that faith and trust were the things he was really talking about. But if you turn it around and look, every single time you have one of these incidents where a currency fails and a government fails and you have hyperinflation and everything falls apart, the common denominator in all those examples, people lose faith in the money, which if you think about what I was just saying is kind of weird. Why should faith in money matter at all? If money was real, if money had its own existence, if the intrinsic value of a dollar bill was something that was tangible.

12:09For instance, a tree has intrinsic value. Copper, oil, commodity, all these things have intrinsic values, intrinsic uses. They are real. Your faith in them does not matter one bit. Whether or not you believe in copper, copper is still there, and everything you can use it for is still there. Money is different. If you don't have faith in money, and this is what I'm talking about, look about Zimbabwe, Weimar, Germany, Argentina, all these examples. If you don't have faith in money, money is useless. Why? Why should faith matter? And the reason is because money isn't real and money is just the system we agreed upon.

12:47As long as people agree to use the system, the system works. As soon as people stop believing in the value of the system, they distrust it, it collapses. That is the core, core part of everything I'm talking about. So you mentioned in the book that one of the first fireside chats, that FDR did over the radio was to discuss the, quote, loss of confidence in the soundness of banks and his plan to restore faith, to restore confidence, including things like the creation of the Securities and Exchange Commission so we don't have problems on Wall Street and the Federal Deposit Insurance Corporation so we don't have these various runs on banks.

13:30And on and on the list goes, all of this sounds like it was just an attempt to shore up the belief system, the faith in the banking system. Is that what you're saying? Oh, yeah, absolutely. I mean, that's what it was. I'm not accusing FDR of being underhanded, but in a way he was being a little underhanded. He was trying to hypnotize people into believing in money again and U.S. dollars and using them. and he had to go on the radio and he had to talk to them. And he was an incredibly persuasive speaker. So he used that as a tool. All the things you're talking about, the regulatory structures he put in, those were tools to convince people that these assets that they had previously believed in and did not anymore believe in still had some kind of fundamental value that could be useful to society.

14:26So one of the things FDR did was take us off the gold standard. And gold had long been thought of as, if not money, well, certainly money-like. How did the removal of the United States Treasury Department and Central Bank from a gold standard impact our concept of money? Gold had been used, and everyone knows gold has been used throughout history as money. But gold isn't actually money. Gold is a representation of money. Anything can be a representation of money. Gold, dollar bills, coins, cowrie shells, digits, Bitcoin. You know, I mean, you can have a digital ledger that represents money. All of those things can be used as money.

15:11None of them are money. Money is the system. So in the 30s, you have the gold standard. The economy starts collapsing. People start hoarding gold. There's no longer enough circulating currency for the government and for FDR to do anything that he wants to do. So he has to convince people to have faith in the system. And what he does is, you can see this, he maneuvers people over to believing in the system and he maneuvers them away from the faith in gold. That isn't what matters. What matters is the soundness of the banks. What matters is the soundness of the government. Believe in those things, have confidence, have faith in all those things.

15:52And when he did that, once he did that, he got people kind of believing again. Then he went and got rid of the gold standard. So is money a store of value or is it a medium of exchange? Money is both of those things. Money is a store of value. It is a medium of exchange as a unit account. Anything can really be a store of value. Most of what the markets trade in are stores of value. Anything can really be a unit of account. It just so happens that it's dollars, but any currency will work just as well as long as the people who are using it all agree upon it. And all of them can work as a means of exchange.

16:30Anything can work as a means of exchange. Barter can work as a means of exchange. Those are just functions. Those are not the thing itself. The thing itself is nothing more than a shared collective belief in this system. So to wrap up, I guess money is a collective delusion. It's an abstract thing that would not exist without human beings, unlike trees or copper or gold for that matter. But it is part of a collective system of belief. It relies on confidence. It relies on faith. If the system is doubted, it begins to creak and it begins to crack and we end up with circumstances like the Weimar Republic or Zimbabwe, which is why it's so important for a society to maintain a belief that their systems, and this includes banks, debt and credit, are sound and will continue to work.

17:29I'm Barry Ritholtz. This is Bloomberg's At The Money.

17:38As our use of AI expands, how do we make sure it doesn't end up breaking the internet? I'm Hannah Fry, host of The Exponential Era, a series that explores the real-world impact of future network technology. And I sat down with two experts to discover how we can support the massive connectivity needs of AI. Find out what I learned at bloomberg.com forward slash Nokia. Yep.