Modern Money

a second layer of abstraction

In modern times money is a virtual concept: we have a bank account and it says I have money in there, but where even is it? Who knows! Some of it is imaginary. We'll get back to that.

Banks, in the very beginning, were a secure place to store your money. In the same way a deposit box is a box for your goods, your cold hard cash was kept in a vault because that was better than leaving it under your bed.

Quickly we realized "hey, if all this cash money is the same, why don't we use it for things?" and so banks went from having 100 boxes filled with $100 to having $10,000 in useful cash. Investable cash.

So they started investing it "for you" (for them) and giving you a small piece of the interest as a thank you.

a third layer of abstraction

I don't even have a physical bank. They don't have my cash, they don't have vaults. I get a handful of accounts that insist I have money, but it's digital. I can trade that digital account money for physical cash at an ATM but that's a hassle, and we can do something easier: use plastic cards. A debit card is a handshake from a till at a store to your bank that says "he's taking out $20 here" and the bank says "yeah, he's good for that" and then the 'money' moves from one to the other and they let me leave the store without accusing me of theft. Hooray! It is a direct digital transfer of funds. A credit card is a handshake from a till at a store to your credit card company that says "he's taking out $20 here" and the CC says "yeah, we'll lend him that" and then the 'money' moves from one to the other and I owe the credit card company that amount until I pay them with my bank.

It is an indirect transfer of funds - a credit, if you will. Likewise in the inflow: if I had an employer they can pay directly into the bank account, I am a freelancer so I take money from clients directly into my account, and it's all very digital and very non-cash: just numbers on a screen going up or down.

I get how it's ethereal to say money "doesn't really exist" but it exists because we make it exist. It exists like this website exists, or like books exist even if they're "just made up of the same dumb 26 letters in different orders." It exists because we still need to trade stuff for other stuff in a complex way. So as long as there's apples and wheat and carrots that need moving, we'll have some sort of intermediate method for making that happen, much to the advancement of all our interests as people who like both apples and carrots alike.