The History of Money: The Long Story
A Complicated Story About How Money Went from Serving Us to Controlling Us
Act 1: When Money Was Real
The conventional story about money’s origins is wrong. For decades, economics textbooks told students that ancient people bartered goods directly until the inefficiency drove them to invent money. You’d trade your cow for someone’s grain, but first you’d need to find someone who had grain and wanted a cow. Money supposedly solved this matching problem.1
Archaeologists destroyed that neat little fable when they translated Mesopotamian cuneiform tablets from 3500 BCE. These clay records revealed something unexpected. Credit systems existed thousands of years before anyone minted a coin. The Mesopotamian economy centered on massive temple and palace complexes staffed by thousands of people. Temple administrators created what we’d call money by establishing fixed exchange rates between silver and barley. They’d calculate debts in silver, but people rarely used actual silver for transactions. They paid with barley or whatever else worked. The major debts got recorded on cuneiform tablets. Money began as accounting, not as physical stuff.1
This matters because it shows money emerged from systems of obligation and debt, not from people swapping chickens.1 The ancient world ran on relationships and records, with the physical tokens coming later. But once those tokens arrived, they transformed everything.
Around 640 to 630 BCE, someone in Lydia (modern western Turkey) had a breakthrough idea. The Lydians had access to electrum, a natural alloy of gold and silver that washed down from the Pactolus River. Instead of just weighing out chunks of metal for each transaction, the Lydian kings started stamping these pieces with royal symbols. King Alyattes put confronted lion heads on his coins. His son Croesus, who became so wealthy his name is still synonymous with riches, went further. He figured out how to refine electrum into pure gold and silver, then issued the world’s first bimetallic currency system around 550 BCE. His gold staters and silver sigloi carried the image of a lion attacking a bull.2
These weren’t just pretty metal pieces. They were guarantees. The stamp meant the king vouched for the weight and purity. You didn’t need to drag out scales for every transaction. The coin itself became the promise. Archaeologists found nine of Croesus’s silver coins in the rubble of his palace, buried there when the Persians conquered Sardis in 547 BCE.2 Those coins are frozen moments of trust turned into metal.
The Greeks took the Lydian invention and made it philosophical. Athens started minting silver tetradrachms around 510 BCE, stamping them with Athena’s helmeted head on one side and her sacred owl on the other. These “owls” became the ancient world’s international currency. A single tetradrachm was roughly four days’ pay for a skilled worker or a hoplite soldier. The coins poured out of Athens in millions, backed by the Laurium silver mines where enslaved workers extracted the metal that funded the Athenian empire.3
But the Greeks also thought deeply about what money actually was. Aristotle wrote that money existed “not by nature but by law,” using the term nomisma from nomos, meaning law or custom. Money wasn’t a natural object like a rock. It was a social creation, a shared agreement. That insight would get forgotten and rediscovered repeatedly over the next 2,500 years.4
The Romans built on Greek precedent when they introduced the silver denarius around 211 BCE. It started as a well-made coin of about 95% silver, and it became the currency of the Mediterranean world. Roman merchants could use the same coins whether they were buying grain in Alexandria or paying mercenaries in Cappadocia. The denarius represented not just economic power but imperial reach. Every coin bore the emperor’s face on one side and images of military victories or monuments on the other. Coinage became mass communication.3
But here’s where the physical limits of metal-based money showed themselves clearly. As the Roman Empire expanded and costs mounted, emperors faced a problem. They needed more money but had limited silver. So, they started what we now call debasement. The emperor Nero reduced silver content by about 20% in the mid-first century CE. By the third century, the “silver” denarius was actually only about 2% silver, essentially worthless bronze pretending to be something valuable. Inflation ravaged the economy. The government demanded taxes in real gold or silver while paying its soldiers and suppliers in debased coins. This helped trigger the Crisis of the Third Century, when the empire nearly collapsed and over 20 emperors ruled in roughly 50 years.3
Meanwhile, on the other side of Eurasia, the Chinese were running into similar constraints. They’d been using bronze coins since around 1000 BCE, standardized into round shapes with square holes so you could string them together. By 1085 CE, Chinese mints were producing more than six billion coins a year, a tenfold increase from Tang dynasty levels. But bronze coins were heavy. Long-distance merchants found them cumbersome. So private money dealers in Sichuan province started issuing receipts called jiaozi for coin deposits around 900 CE.5 You’d leave your heavy coins with them and get a piece of paper you could carry instead.
In 1023 CE, the Song government took over the system and issued the world’s first government paper money in 1024. This wasn’t just a convenience. It was a fundamental shift in what money was. The paper had no intrinsic value. It was pure promise. The Song government backed these promises with silver reserves and required people to pay half their taxes in paper money. They forced the notes into circulation and maintained strict control over how many they issued. For a while, it worked.6
What held all these ancient systems together was their physical limits. You could only debase a coin so much before people refused it. You could only carry so many bronze coins before your cart broke. You could only mine so much silver before the veins ran out. Money’s tangible nature imposed natural boundaries. Those boundaries were frustrating to emperors and merchants, but they prevented certain kinds of excess. When money was real, physical weight equaled power limits.
The ancient world also developed monetary systems well beyond the Mediterranean and China. Cowrie shells served as currency across vast regions of Africa and Asia from at least 1200 BCE. The Chinese character for money (bèi) began as a drawing of a Maldivian cowrie shell. These shells moved along trade networks from the Maldive Islands to Bengal to China to West Africa. Between 1500 and 1875, at least 30 billion cowries were imported to the Bight of Benin, accounting for 44% of the total value of trade. When Ghana introduced modern currency in 1965, they named it the cedi after cowrie shells.7
In southern Africa, the people of Great Zimbabwe were producing and using gold between 1000 and 1600 CE. Archaeological excavations in 2016 found over 100 gold processing vessels at the site, with radiocarbon dates between 1295 and 1450 CE. The gold wasn’t just for export to Indian Ocean traders. It was made into beads, bangles, wire, and decorative sheets for local use. One burial at Mundie contained 762 ounces (21 kilograms) of gold objects.8 This shows that gold had social and religious meaning beyond its role in trade.
The thread connecting all these systems was their physicality. Money existed in the world as object. You could see it, touch it, weigh it. That tangibility created constraints that would slowly dissolve over the next thousand years.
Act 2: The Paper Revolution
Paper money died in China before it really lived. After the Song government’s initial success with jiaozi in the 1020s, things spiraled out of control. By 1246, an estimated 650 million strings of cash worth of paper money flooded the market, causing severe inflation. The system collapsed in 1264.6 The Mongol Yuan dynasty under Kublai Khan tried again, issuing silver-backed paper money in October 1260. They made it the sole legal tender, banning bronze coins and silver bullion. Marco Polo witnessed the system in the 1270s and marveled that the Khan could make people accept paper printed with official seals.9
But the Yuan made the same mistake. Military expenses drove them to print too much. The paper became fiat currency with no backing, and people rejected it.9 Fiat money gets its name from the Latin for “let it be done.” The government says this is money, and therefore it is.
By the early fifteenth century, Ming dynasty paper money was defunct.6 The Chinese experiment with paper showed both its potential and its danger. Paper money required trust. Break that trust through overissuance, and the whole system collapsed.
Europe took a different path. Medieval European merchants couldn’t just print money, so they got creative with credit instruments. The bill of exchange emerged in thirteenth-century Italy as a way to move funds without moving precious metals. A merchant in Venice could give money to a banker who would write a bill. The merchant’s partner in Bruges could present that bill and receive payment there. This solved multiple problems. It was safer than carrying coins across dangerous roads. It allowed merchants to extend credit to each other. Most cleverly, it let them charge interest without violating the Catholic Church’s prohibition on usury, by hiding the interest in the exchange rate spreads.10
Analysis of nearly 2,000 bills from the Borromei bank ledgers between 1436 and 1439 shows how flexible these instruments became. Bills weren’t just for simple transfers. They functioned as international loans, speculation instruments, and payment guarantees. People made payments by installments to extend loan periods.10 Money was becoming abstract. The actual coins mattered less than the bookkeeping entries.
The Medici family mastered this system. Giovanni di Bicci de’ Medici founded the Medici Bank in 1397. By 1420, the Medici had become the Depositor of the Apostolic Chamber, essentially the pope’s bankers. This gave them enormous power. They established branches across Europe: Rome, Venice, Geneva, Bruges, London, Avignon. The bank operated mainly with depositor funds rather than the partners’ capital.11 This was early fractional reserve banking, where the bank loaned out more money than it actually had in vaults.
Banking families like the Medici concentrated power through their control of government finance. Between 1434 and 1471, the Medici family spent 663,755 florins on buildings, charities, subsidies, and taxes, funded through banking profits.11 The bank became what one historian called “the great engine of state.” Control of public debt and commercial privileges turned financial power into political power.12 The Medici produced popes and ruled Florence, all based on ledgers and promissory notes rather than armies.
The next major step toward abstract money came with the Bank of Amsterdam in 1609. The Dutch Republic faced a chaos of currency. Fourteen different mints produced coins, foreign coins circulated freely, and incremental debasement meant nobody trusted coin values. The municipal authorities of Amsterdam established the bank to fix this mess. Deposits were accepted at their intrinsic metal value (the actual weight of gold or silver), not their face value.13 The bank then created “bank money,” a uniform unit of account.
This was revolutionary. Bank money wasn’t coins. It was entries in the bank’s ledgers. People could make payments by instructing the bank to debit their account and credit someone else’s. The bank vouched for the value, backed by the city of Amsterdam’s guarantee. For bills of exchange worth 600 guilders or more, payment in bank money became mandatory. Bank money actually traded at a premium of 4 to 6% above physical coins because it was more trustworthy.13
The Bank of Amsterdam initially operated on 100% reserves. Every unit of bank money had actual metal backing it.13 But over time, the bank began lending to favored entities like the Dutch East India Company and municipal governments. The reserve ratio fell. This pattern would repeat across history. Banks start with full backing, then realize they can create more money than they have in reserves, and the temptation becomes irresistible.
The Bank of England’s founding in 1694 made this dynamic explicit. England was at war with France and desperately needed money. A group of merchants offered King William III a deal. They’d lend the government £1,200,000 at 8% interest. In exchange, they’d get a royal charter to operate as a bank, with the right to issue notes and accept deposits. The £1.2 million was raised in just eleven days from 1,268 investors.14
This arrangement has been called the “rents for loans” bargain. The government received financing. The bank received monopoly privileges. The bank was the only joint-stock bank allowed in England (Scotland had different rules).14 Being the government’s preferred bank gave it a unique position. Over time, it evolved functions we now associate with central banking, but that wasn’t the original intent. The founders just wanted profitable privileges in exchange for funding wars.
The Bank of England’s notes became increasingly important in the eighteenth and nineteenth centuries. These were paper promises to pay the bearer in gold or silver on demand. The paper itself had no value. The promise had value because people trusted the Bank would honor it. The paper was convertible to metal. That convertibility acted as an anchor. Paper could float, but it was tethered to something real.
This tether got formalized in the 1870s with the international gold standard. Britain had effectively been on a gold standard since 1717 when Isaac Newton, as Master of the Mint, set the silver-to-gold exchange rate wrong. Gold became relatively cheap in Britain, so everyone used gold and silver fled the country (Gresham’s Law at work). Britain formally codified the gold standard in 1816.15
The critical moment came in 1873 when the newly unified German Empire switched from silver to gold. Germany used 4.05 billion gold marks from the indemnity France paid after the Franco-Prussian War to make the switch. France limited silver coinage in September 1873.16 One by one, major economies joined the gold standard. By 1900, all major countries except China were on it.15
Under the gold standard, each country fixed its currency’s value in terms of gold. The U.S. fixed gold at $20.67 per ounce in 1834.15 This made exchange rates automatic. They were just ratios of gold weights. International payments settled in gold. Central banks had to maintain minimum gold reserves. The system imposed discipline. A country running trade deficits would lose gold, forcing it to contract its money supply and lower prices until balance restored.15
The classical gold standard era from the 1870s to 1914 was remarkably stable. Inflation averaged only 0.1% per year between 1880 and 1914. The system worked because everyone believed in it. People had “absolute private-sector credibility” that governments would maintain the fixed gold price.15 The paper promises were still anchored to metal.
The Paper Revolution era showed money becoming increasingly abstract. From bills of exchange to bank ledgers to paper currency, money moved further from physical commodity. But the anchor remained. Whether silver reserves backing Song jiaozi, metal deposits backing Bank of Amsterdam money, or gold backing nineteenth-century currencies, paper promises stayed tethered to something tangible. Banking families and institutions concentrated power through their control of these systems, but limits persisted. You could only issue so much paper before people demanded the underlying metal, and then the system would correct. That correction could be catastrophic for those over-extended, but it couldn’t be endlessly postponed. The rope still held.
Act 3: The Great Untethering
The gold standard died slowly, then all at once. World War I forced European countries off gold to print money for the war effort. Most returned to gold in the 1920s, but the rebuilt system was fragile. When the global economy collapsed into the Great Depression, the gold standard turned from anchor into millstone. Countries that stuck with gold standard rules watched their economies sink deeper. Countries that abandoned gold recovered faster.17
Franklin Delano Roosevelt made the decisive American break in 1933. On March 6, just days after his inauguration, he declared a national bank holiday and forbade the hoarding of gold. On April 5, he issued Executive Order 6102, requiring Americans to surrender their gold coins, gold bullion, and gold certificates to the Federal Reserve by May 1 at the official price of $20.67 per ounce. On April 20, he formally suspended the gold standard. In June, Congress passed a resolution abrogating all gold clauses in contracts, both private and government bonds.18
This was revolutionary. For the first time in American history, the government both confiscated gold and declared it couldn’t pay its debts in gold. The final step came with the Gold Reserve Act of January 30, 1934, which raised the gold price to $35 per ounce, a 69% increase.18 This devalued the dollar relative to gold and gave the government substantial profits on the gold it had just seized.
The economic logic was sound. The gold standard had become pro-cyclical, amplifying the Depression’s deflationary spiral. Academic research later demonstrated that countries leaving gold earlier recovered faster.17 The problem wasn’t just economic, though. It was metaphysical. Money had been untethered from anything except government decree. Dollars were no longer promises to deliver gold. They were just pieces of paper the government declared to be money.
The world wasn’t ready to abandon the gold anchor entirely. The Bretton Woods Conference in July 1944 created a compromise system. Forty-four nations met at the Mount Washington Hotel in New Hampshire to redesign international finance. The British economist John Maynard Keynes proposed an International Clearing Union with a new currency called the “bancor.” The American Treasury official Harry Dexter White countered with a plan centered on the dollar. White’s plan won.19
Under Bretton Woods, the dollar was fixed to gold at $35 per ounce. Other currencies were pegged to the dollar, with bands of plus or minus 1%. Foreign governments could convert their dollars to gold at the fixed rate. Ordinary citizens couldn’t, but governments could. This made the dollar the global reserve currency. The International Monetary Fund and World Bank were created to manage the system. The IMF came into formal existence in December 1945.19
This system concentrated extraordinary power in American hands. The U.S. could print dollars that other countries had to accept. As long as foreign governments believed the U.S. would honor gold convertibility, the system functioned. But it contained an inherent contradiction, later called the Triffin dilemma. The world needed dollars for trade and reserves, but supplying those dollars required the U.S. to run deficits, which undermined confidence in dollar convertibility to gold.
By the late 1960s, U.S. gold reserves were draining. The Vietnam War and domestic spending programs meant dollars flowed out faster than gold flowed in. Foreign governments, especially France under Charles de Gaulle, started demanding gold for their dollars. The U.S. gold stock fell from over 20,000 tons after World War II to under 10,000 tons by 1971.
President Richard Nixon faced a choice. He could maintain the gold peg by severely contracting the economy, or he could close the gold window. On the weekend of August 13-15, 1971, he convened advisors at Camp David. The group included Federal Reserve Chair Arthur Burns, Treasury Secretary John Connally, and Undersecretary for International Monetary Affairs Paul Volcker.20 They decided to end gold convertibility.
On the evening of August 15, 1971, Nixon appeared on television to announce a “New Economic Policy.” Buried among wage and price controls and a temporary 10% import surcharge was the crucial sentence. The U.S. would “suspend temporarily” the convertibility of dollars into gold. The suspension would never end.20
Academic analysis reveals Nixon framed this as a crisis response, though the decision was actually politically motivated rather than structurally inevitable.21 The announcement emphasized protecting American competitiveness and jobs. Nixon barely discussed the gold window closure. But its implications were seismic. After August 15, 1971, the dollar was backed by nothing except the U.S. government’s promise. There was no gold, no silver, no commodity. Just faith.
The Smithsonian Agreement in December 1971 tried to maintain fixed exchange rates without gold, but it collapsed by March 1973.20 Since then, major currencies have floated freely. Their values are determined by market forces and central bank interventions, not by metal content or convertibility. We live in a pure fiat currency system. As a reminder fiat money is money because the government says it’s money.
This untethering had profound effects beyond economics. When money was anchored to gold, there was a physical limit to how much could exist. You could only have as much money as you had gold to back it. Once that anchor disappeared, money could multiply with no natural ceiling. As long as people believed in it, central banks could create as much as they wanted.
The writer Marjorie Kelly has observed how this shift enabled infinite wealth extraction. When money exists as pure abstraction rather than physical commodity, it can accumulate without limit. The constraints that used to exist, you can’t mine unlimited gold, you can’t create unlimited coins without debasement becoming obvious, vanished. Money became numbers on balance sheets, expandable at will by those controlling the creation systems.22
Something else shifted too. Money stopped being primarily a tool for exchange and became the primary measure of human worth. Ask someone “How much are you worth?” and they’ll tell you their net worth, not their contribution to their community or their kindness. The measurement changed from what you do to how much you have accumulated. When money was scarce and difficult to accumulate because of physical limits, this might have seemed reasonable. In a fiat system with infinite expansion capacity, it’s revealing. We’re measuring human value with a ruler that has no fixed units.
Act 4: The Digital Age
Computerization accelerated money’s abstraction to blinding speed. In 1971, NASDAQ launched as the world’s first electronic stock market. By 1976, the New York Stock Exchange introduced the DOT (Designated Order Turnaround) system for electronic trade transmission. These were baby steps. The real transformation came in the 1980s with program trading, where computers executed large-scale trades automatically based on preset conditions.23
On October 19, 1987, the stock market crashed. The Dow Jones Industrial Average fell 22.6% in a single day. Program trading amplified the decline as computers executed sell orders in cascading waves. For the first time, machines were moving money faster than humans could react. Floor-based trading with humans shouting orders started becoming obsolete.23
By the 1990s and 2000s, high-frequency trading operated in milliseconds. Algorithms generated, routed, and executed hundreds of trades within timeframes too short for human perception. On May 6, 2010, the Flash Crash saw the Dow plunge nearly 1,000 points in minutes before recovering. Algorithms trading with other algorithms created feedback loops nobody understood.24
Money’s velocity had become uncoupled from human timescales. This wasn’t just faster transactions. It was a qualitative change. When trading happened at human speeds, there were natural pauses, moments for reconsideration. Electronic trading removed those pauses. Capital could flow from one side of the planet to the other in seconds. Fear could liquidate billions before anyone understood what was happening.
The financial instruments being traded became equally abstract. Derivatives markets grew 100-fold over 30 years, exceeding $200 trillion in theoretical value by the early 2000s.25 A derivative’s value derives from something else, an underlying asset. But you could create derivatives of derivatives, abstract pyramids of bets stacked on bets.
In 1981, IBM and the World Bank entered the first public swap agreement. By 2010, interest rate and currency swaps exceeded $348 trillion according to Bank for International Settlements data.52 Nobody could hold this money. It existed only as contractual obligations, promises about future exchanges of other promises.
Mortgage-backed securities exemplified this abstraction. The market began expanding significantly in the early 1980s. Until then, nearly all U.S. mortgages were held on the balance sheets of the banks that originated them.26 If you got a mortgage from your local bank, that bank kept the loan and collected your payments. The banker had an incentive to lend wisely because they’d bear the loss if you defaulted.
Securitization severed that relationship. Banks originated mortgages, then immediately sold them to investment banks who bundled them into mortgage-backed securities.26 These securities were sold to investors worldwide. The originating bank no longer cared much if you defaulted. They’d already sold your mortgage. This created moral hazard. Lending standards fell because the people making the loans didn’t bear the risk.
In the 2000s, the market exploded with subprime and “alt-A” mortgages to borrowers with high credit risk. These risky mortgages were securitized and sold as if they were safe. By mid-2007, the market froze as defaults mounted.26 It turned out nobody actually knew what these securities were worth because the underlying assets were thousands of mortgages to people nobody had met, in places nobody had visited.
The 2008 financial crisis revealed how fragile a system built on collective belief could be. Academic postmortems identified multiple causes. Credit default swaps were mispriced because of unrealistic theoretical models.27 Securitization created wrong incentives for lending. Regulatory gaps allowed excessive leverage.28 The system’s interconnected nature meant failures propagated everywhere.29
In September 2008, Lehman Brothers collapsed. Credit markets froze. For a few weeks, the global financial system teetered on the edge of complete collapse. The only thing that prevented total meltdown was governments stepping in with trillions of dollars in bailouts and guarantees. Central banks created money on unprecedented scales to stop the panic.
Researchers later analyzed how academic economists responded to the crisis. Using machine learning on 14,270 NBER working papers, they found scholars were “slow to see” the crisis coming but “fast to act” once it hit.51 The models economists used hadn’t prepared them for a crisis of confidence. Numbers on screens were supposed to follow rational patterns. They didn’t.
The crisis exposed something unsettling. Money in the digital age had no natural limits. Derivatives could expand infinitely. Leverage ratios could reach absurd heights. As long as everyone believed the system was solid, it was solid. When belief cracked, everything could evaporate.
Research on wealth psychology reveals something else disturbing. People who accumulate wealth don’t stop wanting more. A study of 143,461 people found psychological factors like dispositional optimism drove continued accumulation.31 Another rigorous analysis showed differences in “propensity to plan” explained wealth variations. A one standard deviation increase in propensity to plan was associated with roughly 15% increase in net worth.32 Capital gains became more important than saving rates.33
When money was physical, there were natural stopping points. You could only stack so much gold in a room. You could only carry so many coins. Digital money has no such limits. Billionaires chase more billions. The number on the screen can always get bigger. Jakob Fugger, the 16th-century banker sometimes called the richest man in history (with wealth around 2% of European GDP), reputedly died still hungry for more.34 But at least he died surrounded by actual stuff. Chests of florins. Ledgers recording debts from emperors.
Today’s wealth is more abstract. It’s stock valuations, which are collective beliefs about future earnings. It’s derivatives positions, which are bets about bets. The addiction isn’t to money as object. It’s to number going up. And when money is just numbers, there’s no natural limit to how high the number can go.
Some people saw the same crisis of faith we just traced. So, they decided to build an alternative.
Act 5: The Rebellion
On January 3, 2009, someone using the name Satoshi Nakamoto created the first block of the Bitcoin blockchain. In the data of that genesis block, Nakamoto embedded a message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” The message referenced a headline from that day’s Times of London about the British government rescuing banks yet again.35
The timing wasn’t coincidental. Bitcoin launched as governments worldwide were printing trillions to save financial institutions that had nearly destroyed the economy through reckless behavior. The genesis block message was both timestamp proof and ideological statement.35 Nakamoto was proposing an alternative.
Bitcoin’s innovation was solving the “double-spending problem” for digital currency. If money is just data, you can copy it infinitely like any other file. How do you prevent someone from spending the same digital token twice? Previous electronic payment systems required a trusted intermediary (like a bank) to prevent double-spending. Bitcoin eliminated the need for that intermediary through a distributed ledger system called blockchain.35
Every Bitcoin transaction is recorded on a public ledger visible to all participants. Thousands of computers around the world maintain copies of this ledger. They compete to validate new transactions by solving computational puzzles, a process called mining. The system is designed so no single entity controls it. The rules are embedded in the protocol.35
Crucially, Bitcoin has a fixed supply. Only 21 million bitcoins will ever exist, encoded into the system’s rules.35 This was a deliberate choice. Nakamoto created digital scarcity.36 Unlike fiat currencies that central banks can print infinitely, Bitcoin’s supply is deterministic. No authority can decide to create more when convenient.
Academic analysis reveals Bitcoin as an attempt to return money to scarcity and limits after decades of fiat expansion.36 When analyzed through Austrian economic theory, Bitcoin aligns with free-market principles and limited supply.37 It emerged during what one scholar called a “legitimacy crisis in the aftermath of the financial market turmoil of 2008.” Bitcoin intended to challenge the monetary and payment system that had failed so spectacularly.38
But the rebellion contains paradoxes. Bitcoin’s fixed supply creates a deflationary environment that most economists consider dangerous for prosperity. When money appreciates over time, people defer investment and spending, potentially causing economic slumps. Few economists believe self-stabilizing market features can counter this tendency. The current monetary system achieves stability through central bank intervention. Bitcoin’s governance architecture includes no such stabilizer.38
More ironically, Bitcoin hasn’t escaped the problems it was designed to solve. A 2022 speech by the Bank for International Settlements’ Economic Adviser noted the “bitter irony” in cryptocurrency turmoil. Crypto was born as backlash against conventional finance’s failings. The Bitcoin whitepaper sold a vision of peer-to-peer transfer without intermediaries. Yet today’s crypto world is dominated by centralized exchanges and intermediaries that bear “all hallmarks of precisely the failings that the industry’s early proponents railed against.”39
When FTX, a major cryptocurrency exchange, collapsed in 2022, it revealed over-leveraged shadow crypto banks operating exactly like the financial institutions Bitcoin was supposed to replace. Pure decentralized cryptocurrency without centralized intermediaries would have a very small footprint. The sector only grew to its current size because centralized entities channeled funds into it, providing the “oxygen that keeps speculative dynamics alive.”39
Trust wasn’t eliminated, just transferred. Instead of trusting banks and governments, Bitcoin users must trust the protocol, the miners, the exchange operators, and each other.37 The system is less transparent than its proponents claim. Most users don’t understand the technical details. They trust others who claim to understand.
The establishment responded to cryptocurrency’s challenge not by opposing it directly but by co-opting the technology. Central Bank Digital Currencies (CBDCs) represent the monetary authorities’ answer. As of 2023, 94% of surveyed central banks were exploring either retail or wholesale CBDCs. By 2024, that number reached 91%, with wholesale CBDC likelihood exceeding retail.40
In 2020, seven major central banks (including the Federal Reserve, Bank of England, European Central Bank, and Bank of Japan) issued a joint report on CBDC foundational principles. They emphasized CBDCs should coexist with cash and other money forms in a flexible system. Introduction should support policy objectives and not harm monetary or financial stability. Features should promote innovation and efficiency.41
The Federal Reserve’s January 2022 discussion paper defined a CBDC as a “digital liability of the central bank widely available to the general public.” Currently, the public can hold physical currency or digital money in bank accounts. A CBDC would be a third option, digital money that is a direct claim on the central bank. The Fed emphasized no decision had been made on issuance.42 They were exploring.
The Bank of England proposed a “platform model” where the Bank builds the core technology infrastructure, but private sector Payment Interface Providers handle customer-facing services. Neither the government nor the Bank would have access to personal transaction data, they promised. The digital pound would complement, not replace, cash and bank deposits.43
The International Monetary Fund warned that if crypto assets became the unit of account for most economic activities, central bank monetary policy would become irrelevant. This was analogous to dollarization in developing economies. To forestall this competitive pressure, central banks needed to make fiat currencies better and more stable. 44 CBDCs were part of that strategy.
Academic debate now centers on whether algorithmic money or human-managed money better serves human flourishing. A 2025 paper argued money is a “natural-moral institution that emerged organically from voluntary human exchange” rather than a bureaucratic invention Sound monetary systems enable cooperation across time and space. Fiat regimes rooted in coercion and political control undermine monetary justice.45 Others counter that algorithmic systems lack flexibility to respond to crises and shocks that require discretionary intervention.39
The fundamental tension is between freedom and stability. Bitcoin-style systems promise freedom from government manipulation but deliver instability and deflation. Government fiat systems promise stability through discretionary management but deliver inflation and the concentration of power in central bank hands. CBDCs promise both stability and innovation but require trusting the same institutions that presided over repeated crises.
The rebellion against fiat currency emerged from genuine crisis of confidence. The 2008 collapse showed that a monetary system built on nothing but collective belief could nearly disintegrate. Trillions evaporated overnight. The rescues required creating even more money from nothing, validating the critics’ claims about fiat currency’s fundamental instability.
But the attempted alternatives have recreated the same dynamics on new technical foundations. Cryptocurrency exchanges blow up through leverage and fraud. Stablecoins turn out not to be stable. The promise of decentralization gave way to new forms of centralized control. And now the institutions cryptocurrency sought to displace are adopting the technology to strengthen their own positions.
We’re left with the central question: Can we create a monetary system that serves human flourishing rather than becoming an end in itself? Or have we built a machine we can no longer control? The answer isn’t clear. What’s clear is that money’s journey from tangible tool to pure abstraction has concentrated unprecedented power in the hands of those who control the creation systems, whether they’re central bankers or cryptocurrency exchange operators. We’re still trying to figure out whether money serves us or we serve it.
Living Inside the System
For me, the history of money tells a clear story. We went from controlling it to it controlling us. From tangible commodity to pure abstraction. From natural limits to infinite expansion. From a tool for connection to an engine of separation.
But history is one thing. Living inside that system is another.
When I decided to take a year for this Heart-Strong Adventure, money was the first obstacle that appeared. Not lack of resources. I had savings. I had enough to get by for a year without income. And our retirement account is strong. The money was there. But the fear was there too.
Even now, months into this adventure, the fear still shows up. Am I being stupid? I am at the peak of my earning potential. Shouldn’t I be focused on making money and investing in my future? These questions arrive uninvited, even when the numbers say I am fine.
The strange thing is this. In many ways I feel like what I am doing is investing in my future, and more importantly our collective future. It is just not a financial investment.
Outside of Heart-Strong I am doing quite a bit of “work”. I put work in parenthesis because most of what I am doing is unpaid. And this work I am doing without an exchange of money feels more meaningful than most of the work I have done for money. I help people I want to help. I work on things I believe matter. Money does not get in the way of that. And that freedom has brought a fullness to my life I did not expect.
I have been thinking about why that is. Why does money create such distance between us and what matters?
In reading the book, The Life You Can Save by Peter Singer, I came across some research that helped me understand something I was already feeling. Kathleen Vohs, Nicole Mead, and Miranda Goode, researchers working in marketing and psychology, conducted experiments that revealed something striking about how money changes us. They primed people to think about money in subtle ways. Some unscrambled phrases about money. Some saw piles of Monopoly money nearby. Some looked at screen savers showing different denominations of currency. Then they observed how these people behaved.
The results were interesting, to say the least. Those primed to think about money literally created physical distance from others. They positioned their chairs farther away when told to talk with someone. They took longer to ask for help when they needed it. They were less likely to help others. When asked to donate money, they gave about half as much as the control group. When asked how long they would help someone with a task, they offered 25 minutes compared to 42 minutes from those not primed to think about money.46
The researchers concluded that money enhanced individualism but diminished communal motivations. An effect that is still apparent in how people respond today.
Money was designed to make exchange easier, to help us connect and exchange with people we did not know personally. But over time it has done the opposite. It has become a tool of separation rather than connection. Karl Marx called it the universal agent of separation. He was onto something.
I keep coming back to this idea. Money went from something that was supposed to serve us to something we serve. The servant became the master. And that master runs on fear.
Look at retirement savings. We accept it as normal and responsible to hoard resources for our future selves. The underlying fear is clear. If I do not save, no one will take care of me. But that fear only makes sense in an individualistic system. In more communal cultures, the orientation is different. You take care of others when you have resources. When you need help, the community takes care of you. That seems like a much more interconnected way of living. It feels more love based.
But can we shift back to that? Are we too far gone? Are we too controlled by money to even see other possibilities?
I think about the power dynamic. We went from controlling money to money controlling us. And I do not think most of us recognize that shift. This inanimate object, whose value only exists because people in power tell us it exists, we let it control us. And by letting it control us, we let a very small number of people maintain control.
As Marjorie Kelly said:
“In a democratic society founded on the truth that all persons are created equal, we have permitted in our midst an economic system based on the directly contrary principle that wealthy persons matter more than others. Deserve greater rights. Justifiably wield greater power. Rightly enjoy greater voice. Are due greater deference. And possess a limitless right to extract from the rest of us.”
We have come to measure human worth by what you extract rather than what you contribute. When money was scarce because of physical limits, maybe that made some twisted sense. But in a fiat system with infinite expansion capacity, it is just a choice. We are choosing to measure value by accumulation rather than contribution.
And I think that choice hits men particularly hard.
There is still a deep societal expectation that men are primary breadwinners. That expectation is changing, but it persists. And mate selection patterns reinforce it.
In 1989, psychologist David Buss studied mate preferences across 37 cultures. Women in 36 of those cultures rated good financial prospects significantly higher than men did. Three quarters of women said economic viability was important in a partner. Only one quarter of men said the same.47
That pattern still holds today. A 2024 study of online dating behavior found that women of all income levels showed more interest in male profiles with higher incomes. Male profiles with the highest incomes received ten times more visits than the lowest.48 Studies from 2022 through 2024 continue to confirm that women place more emphasis on good provider traits than men do when choosing long term mates.49
At the same time, University of Connecticut sociologist Christin Munsch studied 15 years of data from married men and women and found something striking. As men took on more financial responsibility in their marriages, their psychological wellbeing and health declined. Men were at their worst when they were their family’s sole breadwinner. In those years, they had psychological wellbeing scores 5 percent lower and health scores 3.5 percent lower than in years when their partners contributed equally. Munsch attributed this to men approaching breadwinning with a sense of obligation and worry about maintaining that status, rather than as an opportunity or choice.50
Yet many men have not found a deeper purpose beyond provider. Earning money becomes their measure of worth. Their identity gets wrapped up in extraction rather than contribution.
In a recent conversation with Elmer Moore, the CEO of the Wisconsin Housing and Economic Development Authority, he said, “ Unfortunately, men out there have been told that, we’ve been oversold this idea that we all have the same purpose. Which is provider protector, hunter, defender. And all those things are, they’re all positioned in the binary. And they’re all, I won’t say they’re wrong. I’ll just say they’re. Not quite right.”
Later in our conversation, Elmer spoke about his confidence in his purpose. However unsure he might be about information or skills, his confidence in his purpose is unshakable. That kind of groundedness does not come from a number in a bank account. It comes from knowing what you are here to give, not what you can take.
I look at my own situation, and I recognize the complexity. On a global scale, I am among those who have. I benefit from this extraction economy whether I want to or not. That position comes with responsibility. But what does responsible action look like in a system designed for extraction?
I do not have clear answers. This exploration has mostly generated more questions. But I am learning to think about money differently. I am trying to see it as an exchange of energy rather than a measure of worth.
I put energy into work. That work gives me money, which is stored energy. I can then use that stored energy in two ways. I can use it to get more energy for myself, buying food or rest or experiences. Or I can transfer that energy to others, funding work I believe in or supporting people who need it.
When I think about money that way, it feels less like extraction and more like flow. The question becomes not how much can I accumulate, but how can I flow this energy in service of love rather than fear? How can it increase connection rather than separation?
I am still figuring that out. The fear still shows up. But I am learning to notice when it appears and question what it is protecting. Usually, it is protecting some story about my worth being tied to a number. That story feels less true the more I examine it.
So, I hold both things. I hold hope that we can create more love-based relationships with money. And I hold honest uncertainty about whether we are too far captured by the current system to make that shift. I am an optimist at heart, so I cannot help but believe change is possible.
But belief is not enough. We have to practice differently. We have to choose contribution over extraction, connection over separation, generosity over hoarding. We have to measure our worth by what we contribute rather than what we accumulate.
That practice is hard in a system designed to reward the opposite. But maybe that is where the adventure leads. Into the hardest questions. Into the spaces where love and fear both show up, demanding that we have to choose.
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