5.2.3 Participatory governance of money

What is currency? Money is a social construct and thus infinitely plastic, in contrast to the physical cosmos, which follows the laws of physics. Water, electricity, and gold are just a few of the many metaphorical guises that money dons. Money is not any of these things, though, as with any metaphor. Money is increasingly being used to mediate our interactions with other people and the non-human world. On a personal level, money covers a significant percentage of our education costs as well as the majority of our housing, transit, and food costs. Yet, it should be remembered that a sizable portion of the economy exists outside of the financial system; for example, most of us aren’t paid to raise children, learn a new skill, clean up a stream, or complete a marathon.

Money is not a measure of significance. Although corporate lawyers may earn more money than teachers, does it necessarily mean they have more fulfilling lives?

A unit of account, store of value, and medium of exchange are the classic definitions of money. These characteristics are at odds with one another; low inflation improves the currency’s capacity as a means of exchange while impairing its usefulness as a value store, and vice versa. For instance, the Federal Reserve wants to see the dollar being spent rather than being hoarded by aiming for a 2% inflation rate. Gold is a good value store but a poor means of exchange because its value has increased in relation to popular currencies. Money’s value is created by everyone working together. If, for instance, one individual had all of a particular money, it would be completely worthless. On the other hand, a currency gains value when more people start using it.