Learning to use money is something we do as we mature, and we make adjustments in how we use it along the way, such as downloading and learning to use Venmo or other money payment apps. Despite this process, we usually take the concept of money for granted and do not spend much time thinking deeply about it.

One person who has thought about it is Jacob Goldstein, the cohost of National Public Radio’s podcast and blog Planet Money, which explain money-related topics in a way that is understandable to a general audience. In his new book Money, Goldstein thinks through what money is, describes how it developed historically and where it stands today, and offers thoughts on what its future holds. He uses the same approach that he does on Planet Money: develop brief, entertaining, and engaging narratives to cover a single or a few money-related topics in a manageable slice of a reader’s or listener’s time (in the case of this book, chapters run about 10–15 pages). Money is Goldstein’s first book.

What is money? / The book’s first challenge is defining money. Economics textbooks often do this by listing a few of its basic properties, such as that it is a store of value. Goldstein, in his “Author’s note,” takes a very different approach, writing that money “is fiction,” “a made-up thing,” “unalterably social,” and that it is something created “out of thin air.” These statements make clear to the reader that his approach will not involve setting forth rote definitions to memorize, but rather will involve giving the reader a continuous stream of historical examples of money. As he explains, “These origin stories of money are the best way I know to understand what money is, and the power it has, and what we fight about when we fight about money.”

It is impossible in a short review to summarize all the individual historical examples Goldstein provides in Money, but I will focus on a few of them and consider how he leverages these cases to introduce key money topics.

What is inflation? / To illustrate the concept of inflation, he does not use the 1970s “stagflation” that many contemporary readers are familiar with, but instead he turns to 18th century France. The central character of this case study is the notorious Scottish economist John Law, who Goldstein weaves through his narrative for much of the first third of the book. He writes that Law “creates a modern economy for an entire nation, becomes the richest non-king in the world, and seizes control of nearly half of what is now the continental United States.”

Law created Banque Générale (BG) in France, loosely modeled after the Bank of England (BoE), and explains how its policies ultimately unleashed inflation on the French economy to disastrous results. Law sold stock in BG to investors, just as BoE shares were sold. He then bought up a quarter of the available stock himself and leveraged his friendship with the Duke of Orléans, who was Regent of France, ruling on behalf of King Louis XV (a minor). The French economy had just suffered a collapse after the government borrowed excessively to fund a series of wars. Orléans made Law the government’s banker and BG printed paper notes that became the official means for paying government taxes:

When the Regent forced people to use paper to pay their taxes, John Law’s paper became money…. People found that they liked Law’s paper money — it was, in fact, easier to use than gold or silver…. By making loans and creating money, Law’s bank did seem to be giving the French economy a useful boost.

Soon, BG took on more of the government’s borrowing business. Its stock rose six-fold and even more BG shares were sold:

France boomed. Money was everywhere…. All that new money floating around was driving up the price of basic staples like wheat, candles and milk.… Prices nearly doubled.

To address the building inflation, Law reversed course and tried a variety of methods to slam the brakes on the supply of money. That crashed the French economy and Law had to flee the country.

What happened during the 2000s financial crisis? / Goldstein gives his take on the 2007–2009 financial crisis in a chapter called “How Two Guys in a Room Invented a New Kind of Money.” He starts off with what he calls the “standard story” of the crisis:

Shady lenders gave ridiculous mortgages to unqualified buyers of overpriced homes. The ridiculous mortgages were then bundled together, sliced up and sold to investors. When housing prices started to fall, the unqualified buyers couldn’t pay back the ridiculous mortgages. The investors who bought the bundles of ridiculous mortgages blew up and took the economy down with them.

I would assign a failing grade to Goldstein for this introduction because he makes no mention of either the government creating multiple incentives (including low-cost money) for the unqualified borrowers to take ridiculous mortgages from shady lenders, or the government authorities responsible for overseeing the financial system being completely blindsided by the entire mess and applying inconsistent and ill-considered measures in response.

The book then turns its attention to the “two guys” mentioned in the chapter title who invented money market mutual funds (MMMFs). Those institutions experienced a run and were the recipients of a bailout in 2008. Frankly, if I were to write just one chapter on the financial crisis, as Goldstein does, I would not have devoted much space to MMMFs. Their potential losses were not at the core of the crisis, although their near failure was a knock-on effect of the uncertainty created by the government’s opaque approach to its plethora of bailouts and other interventions.

Goldstein closes the chapter by bemoaning the repeat of history during the COVID pandemic. He writes that “people once again started frantically pulling billions of dollars out of money-market funds.” He correctly highlights the fact that “the US government once again rushed to protect the funds,” but ignores the broader scope of repeated bailouts of large financial institutions and the backstopping of markets over many decades.

Digital cash and the future of money / The closing chapters address current hot money topics such as the digital cryptocurrency bitcoin and the Modern Monetary Theory (MMT) school of thought.

This section starts with the saga of David Chaum, an expert in cryptography and the inventor during the 1980s of digital anonymous money, who authored an academic article entitled “Security Without Identification: Transaction Systems to Make Big Brother Obsolete.” He was concerned about the privacy implications of then-existing money payment methods. Goldstein sprinkles multiple references to the libertarian “radical programmers” who, along with Chaum, drove this movement: “They realized digital cash could create a stateless libertarian paradise.”

This historical summary inevitably leads to a discussion of the history of bitcoin and its pseudonymous creator, Satoshi Nakamato:

The point of bitcoin is that no one is in charge…. Money is always and everywhere based on trust…. Bitcoin is also based on trust. But the dream of bitcoin is that you don’t have to trust a government, or a bank, or Satoshi Nakamato; you just have to trust the [computer] code.

Goldstein traces a bitcoin’s value from nothing, to one-third of a cent, to $13,000 and beyond, closing with this lesson on the history of the developers of digital money alternatives:

Someone … has a very clever technological breakthrough. Then they climb up to the mountaintop and proclaim to the world: “Here is a new kind of money! And then it doesn’t really become money. Or at least it hasn’t yet.

So much for a stateless libertarian paradise.

Goldstein discusses Modern Monetary Theory (MMT) in the book’s final chapter, titled “A World Where the Government Prints Money and Gives It to Anybody Who Wants a Job.” He rightly refers to MMT as “a weird new way of thinking about money.” Like bitcoin, experimentation with MMT has yet to fully play out, but the recent spike in inflation seems to indicate the naiveté of those advocates of MMT who argued that massive fiscal commitments, combined with a highly accommodative money stance from the Federal Reserve, would lead to stable, non-inflationary prosperity for all.

Needless to say, an 800-year history of money that is shoehorned into a little over 200 pages may leave readers schooled in finance a bit unsatisfied. Goldstein does have about a dozen pages of notes for the benefit of readers who want to dig a bit deeper, but there are evident gaps between the historical topics discussed in the book and the available underlying citations.