What gives money so much power? What makes money so great that even Jesus himself likened it to a master that could be served in Matthew 6:24? While these questions crossed my mind I was led back to my economics 101 class during my research (economists kindly feel free to correct me). As I was doing my research a thought came to my head. The American Dollar is considered one of the most valuable currencies in the world (as most countries have their currency reserves in dollars) from where does it get this value from?? Berkeley professor of economics Hal Varian asked the same question: why are the dollar bills in people’s pockets worth anything? He came up with two conclusions “the dollar bills carry value because the government in power says so or because people are willing to accept it as payment. He concludes that the value of a dollar comes not so much from government mandate as from social convention[ Hal Varian. Why “Is That Dollar Bill in Your Pocket Worth Anything”? The New York Times January 15, 2004.].”
It was his second answer that I was drawn to very strongly. Varian explained it this way “Just as a fax machine is valuable to you only if lots of other people you correspond with also have fax machines, a currency is valuable to you only if a lot of people you transact with are willing to accept it as payment or as a mode of transaction[ Hal Varian].” Varian was on to something but he was unable to drive the point home. You see the more people you have trusting in an idea thing or belief the more traction and power and value it gains. The American dollar gains its value because of the many people that trust in the system that employs it as its mode of currency. The key word here is trust. The oxford dictionary describes trust as a firm belief in the reliability, truth, ability, or strength of someone or something. This is what Varian was trying to explain but could not bring it home.
Let me explain it to you this way what would happen if people lost trust in the dollar or in the American economic system. The sure thing that would follow is people will pull out their money from the economy and the Dollar would begin to loose its value. You see money gains its power from trust. I could even go further and say money is trust. Just like money trust is earned. It is also very difficult to place or spend your money on things or places you are not sure of. Trust is the same. You cannot trust someone or something you are not sure of. Lastly trust just like money once lost is very difficult to gain back. Money relies on trust to keep its value which gives it its power. Without trust money is just as useless as a sheet of burnt toilet paper.
The real value is not in the money but in trust. Money itself is temporary but trust is permanent don’t believe me? 2 Corinthians 4:18 says, “while we look not at the things which are seen, but at the things which are not seen; for the things which are seen are temporal, but the things which are not seen are eternal.” Money is tangible, physical and can be seen trust on the other hand is not a physical object and can neither be seen nor touched .Trust is the reason why governments and corporations are always coming up with measures to make sure that their institutions are stable so as to lure investors who bring you guessed it money. It is because they do not want to loose your trust. You cannot trust something or someone that is unstable. In my next Blog series we will delve deeper into this concept.