Episode 11 - Money Works Because We Agree It Does

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Money feels solid until you stare at the details. A $1 bill and a $100 bill are made from the same cotton and linen fibers, yet we treat one as 100 times more “real” than the other. Even pennies expose the weirdness: they can cost more to produce than the value we agree they represent. That simple tension opens the door to a bigger question that can change how you see every swipe, tap, and paycheck: what is money really?

We walk through how value gets assigned when the material itself has little intrinsic value, and why “legal tender” only works because people participate in the system. Along the way, I connect today’s US dollar to the gold standard, the historical break from gold convertibility, and what fiat currency actually means in plain language. The goal isn’t to be cynical about economics or personal finance, but to get clearer on the invisible glue holding the money system together: collective trust.

Then we push the thought experiment further. If money is a shared belief, what happens when that belief weakens or shifts? What else in daily life runs on the same kind of agreement? We also compare modern money to Bitcoin and cryptocurrency, where perceived value depends on people buying into the idea, even when it’s ultimately code and consensus. If you like big questions about money, value, and how society works, subscribe, share this with a friend, and leave a review so more curious minds can find the show.

Mundo Mondays

Transcript

SPEAKER_00 0:00

We've all heard the phrase growing up, money doesn't grow on trees. But what if, in a strange way, it actually does? Think about it. Every day we put money out of

What Money Really Is

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our wallets, swipe a card, or send numbers across a screen, and we rarely stop and ask a simple question. What is money really? Is it paper? Is it metal? Is it numbers on a screen? Or is it something almost entirely on belief? Because at one point money was tied to gold. Today it isn't. Yet we still trust it. So in this episode, I want to explore the simple idea that might change the way you look at your next bill or coin in your wallet. Because if money is something we all have a belief in, what exactly are we believing in? And along the way, we might discover that the phrase money doesn't grow on trees might not be as simple as it sounds. So I want to say that in the last episode, we discussed the idea about how time wasn't real. And I want to kind of keep it on the same idea, but this time let's change it with money. So I hope you enjoyed today's episode. So the phrase money doesn't grow on trees, the US bill was not an ordinary paper. Because it's made from cotton

Bills Made From Plant Fibers

SPEAKER_00 1:36

and linen fibers. So technically, cotton is plant base. So you could arguably say that it does grow. So because well, based on that rationale, cotton is a plant base and uh currency, currency metals began without natural plant fibers. Or I'm sorry, it does currents the currency that we have now, the materials begin with the natural plant fibers. Sorry, the materials itself has very little intrinsic value. I intrinsic value, sorry, I can't read my own notes. So a US well we US $1 bill and a 100 US dollar bill use essentially the same materials. Think about that. So a $1 bill and a $100 bill are made out of the same exact fibers, are made from the exact materials. The only difference is one has a $1 amount and the other has 100 times the amount. So think about that for a moment. I I want to have you think about that. Because there's no difference between the two, right? One set of same dimensions, same size, there's no real difference except for the number that's printed. On the other side, same size, same materials, the only thing is what's printed on it. And the idea that it's a hundred times more than the other. So the value is assigned by society. Think about that for a moment because I want you guys to really think about that idea. And let's talk about the penny before we move any further. So coins reveal a different strange side of money. So the modern US pennies are often

The Penny That Costs More

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mostly made of zinc and a thin copper coding. Yet they still represent one cent regardless of the metal value. And that's interesting, right? Because it's made of zinc and you know a codon of copper. But again, it's only it's only one cent. It that's what we say it costs or what its value is. But we don't based it on the value of what's actually there, you know, of zinc and copper. We don't base it on saying, oh, that's at the current rate, that's X amount of cents. No. Society says it's one cent, or the US government says one cent. So let's let's take that same idea. So according to the US Mint, it costs about 3.69 cents to produce one penny. That's one of the reasons why it's kind of going away. Besides, someone said it cost is too much to make, and it does make some arguments of saying yes, it does cost more than what it's worth. So yeah. Again, just to give you some ideas, these are looking at ChatGPT's stats and saying 3.69 cents to produce one penny or one cent. That means producing a penny costs more than its face value. And this is one reason the discussion exists about eliminating the penny and rounding cash transactions to the nearest nickel. So let's let's move on to the first critical question in this discussion. If the material of the money isn't valuable by itself,

Where Money’s Value Comes From

SPEAKER_00 5:23

where does it where does its value actually come from? Think about that for a moment. As I said before, you know, I said it's the US government or it's what society believes in. So which one do you think it is? Is it society or is it what people in the government say? And this this conversation, I know I'm supposed to be thinking about this as well. And for me, I think as a majority of both, the idea of what we think it's worth is kind of almost kind of funny to think about, because if it's not worth what's actually print on, then how can we actually put value on it? And that's kind of bringing up a really interesting topic a little later on, and I want you to pay attention to this part right here. Again, the the question is if the material of the money isn't valuable by itself, where does the value actually come from? ISIS society, and I also said the US government. So I want you to think about that part for a moment. The reason why I say that is because it's gonna lead into a really interesting discussion a little later on. So that's why I want you guys to think about that for a moment. Moving on to question two. Why can two pieces of the same material, like a $1 bill and a $100 bill, have completely different value? See, this is kind of going on the same question, and this is the part that I want you guys can kind of like have the critical thinking behind about money. About is it real? Because the history lesson I'm about to give very shortly is gonna explain a little bit further about the concept, about the idea. Because you could have a one dollar bill and you can have a hundred dollar bill, they're made of the same material, it's just one is printed with a one on it, and the one the other has a hundred times its value. So, how can two pieces of the same material be completely different values? Interesting concept, huh? Question three. If a penny costs more to make than it's worth, why do we treat it as money? Now that's a really interesting concept right there. If a penny costs more to make than it's worth, why do we still treat it as as treat it as money? See this one's even stumping me. I I think part of the conversation with that is that

Barter And The Birth Of Value

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you know, humans have always used something to you know build a system, a category of things. As I mentioned in the last episode about time, you know, humans need something to kind of kind of get something for another. In the Stone Age, you know, we use rocks, you know, colorful rocks to barter, you know, shells. You know, we had different things that we used to kind of trade with different people. If you were a hunter, you could hunt animals and you could sell the meat to your neighbor, and they might have something that you need, let's just say uh crops, corn, wheat, whatever it may be. Or let's just say you know how to deal with metal, and you know how to make certain things, so you're able to kind of trade things, and let's just say you're uh you make different crafts, let's just say you make you know, bowls, pottery, you know, jars, then you can store things in. As you can see, you can see how money starts to kind of develop on the idea, why you know it becomes important, why we need some kind of system. So you can see how it slowly starts off in a way. So I I know that you really didn't answer that last question, and I do apologize. But I think this one I want you guys to do a lot of critical thinking on this part because part of the concept for Mundo Perspectus is for you guys to think use your critical thoughts behind that. So, you know, if money starts off from a physical material, but its real value comes from the collective agreement of what we like. I said, you know, you agree that it's worth this much. Let's just say, you know, going back to the hunter and farmer, you're saying it's worth this much, and you want this much from it. So you can see how value is starting to develop in that concept. So when money was tied to gold, and this is the history part of it, the second part of this section is so I'm

Gold Standard To Nixon Shock

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gonna give you a crude history lesson, and I had to do my research on this too, so I'm not just sticking numbers out of the way. So there's this thing called the gold standard. The gold standard era was roughly from the late 1800s to 1933, and the US currency was tied to US gold reserves, and dollars could be exchanged for that gold. Therefore, money represented a physical stored value. So let's take that part again. So during this time period from the late 1800s to 1933, gold was used in and it was exchanged for dollars. So you had this much on the goal, and they gave you this much paper money, and you could actually, you know, it had value. So you can see that it was based on the value of trading and saying that, hey, this is how much this is worth, so we're giving you this much, and you can trade for back and forth, and it had it was actually tied to a physical stored value, and you know, things kind of slightly change. So from 1933 to 1971, it's kind of changes kind of rapidly. So President Rosev Franklin Roosevelt ended the gold temporary for American citizens. This is around the the f the second world war, and that's kind of an important part of the conversation. So gold was converted remain remained between governments, it was kind of used only for that section time, and you know, this is kind of tied to the war of the second world war. So you can see how some of this is kind of tied with history. Again, this is the crude history lesson, so I'm not a teacher, I'm just trying to explain the idea. So let me move on to the idea. So the shift in 1971, President Richard Nixon ended international go convertibility, it's also known as the Nixon shock. And the US dollar for the first time was a fully fiat currency, and that is kind of an interesting concept because a lot of you are gonna say, okay, you're throwing out a word that I'm not familiar with. What does fiat mean? And I was like you guys, I I will be completely honest. I've heard the concept before, but here's the actual definition. So fiat currency comes from the Latin meaning let it be done. But a fiat money has value because a government declares it to have value and people trust it, not because it's backed by goal. So that's what it means specifically that the fiat money has value because the government says it has value and people trust it, and it's no longer backed by goal. That's the most important part of this history lesson, it's no longer backed by goal. Gold. So here's the interesting part of this discussion. Next critical question of this section. So if money was used to represent goal, but no longer does, why do we

Fiat Money And Collective Trust

SPEAKER_00 14:05

still trust it? An interesting concept, isn't it? So this is this part I want you guys to really think about these next questions. Because just like how time doesn't exist, it does, but it doesn't. So if money is used to represent was used to represent gold, but no longer does, why do we still trust it? Seriously. So right now it's just saying that this one dollar has one dollar, is only worth one dollar, and you give it to your neighbor, and you say, I want I would like to trade your bag of rice for this dollar, and I'm giving it to you because the government says it's worth a dollar. And let's just say your neighbor actually sells rice. I know this is a bad example, I'm not trying to be crude or anything, but this is the example I can think of because I haven't eaten yet, so I'm trying to give out an example. So, so your neighbors sells rice, and he is a really good rice trader, I guess, and so he makes a hundred sales, and at the end of the day, he has enough to go to the bank and get a hundred dollar bill. So the government tells him it's worth a hundred dollars, and everyone that he's traded with that he's given his rice for is saying that it's worth this much, and he has a hundred people that believe that it's worth this much. So why do we believe it's worth that much? The same dollar bill, I could say it's actually worth fifty. But then a lot of people will have to believe it's worth fifty. I could even say that same $100 bill is worth $2,000. But then everyone else has to bul buy into that idea it costs, but then the government will also have to say it's worth $2,000 or it's worth you know $500 or whatever. And society has to buy into that concept. Think about that for a moment. We trust it to that point, and there's nothing tied to it, it's just the government says it has it's worth this value, and the society says, okay, it has that value. So the next question What actually changed when the dollar stopped being tied to the dollar? What actually changed? And this is my perspective. This is what I'm thinking. Society believes that you know we trust what people are saying w within the government saying it's worth this much. And we as a society all agree that it's worth this much, and we come to that social agreement saying that yes. So money in a way doesn't seem real at this point. Think about it for a moment. You and I believe it's worth this much because someone else believes in it, and I believe in it, you believe in it, and everyone else believes in it, and the government says it's worth this much, so we take the trust in that, and it's not tied to anything. This is kinda sounding like a really bizarre concept, right? And I want to tie into something a little later on. So think about what I just said right now because it ties into the first part where I told you to remember that part, it's tied to this part, and it's tied to another part. So the next question: Does money have value because the currency itself or because we believe it caught because it does? I'll repeat it again. Does money have value because of the currency itself, or because we believe it does? And I think this is the part of the critical thinking I want you guys to engage in. And I I I hint at it a few times. So we are believing something exists, but does it really exist? And we say that it doesn't grow on trees, but it's actually grown. And we're believing on this idea that it has value, but it doesn't have value and it's not tied to anything. Does this sound familiar like something that's happening right now? Think about it. There there's there is a method to my madness of what I'm trying to say. So so money in a way it shifted from representing something physical to representing that it's a shared trust. So money as a bully system. So the US currency states this note is legal tender, and a lot of you are saying, but it does have this on there, and yes, it does have that. This note is legal tender, meaning it it must be accepted for debts, you know, and money works because everyone agrees it does work, and the system functions through collective belief. Let me go through that chain thought again. So the US government currency states this is legal tender, right? This note is legal tender, and that means that it's it's it can be used for debts, and the money works because everyone agrees it works, and the system functions through a collected belief. Now, the critical notion behind this I want you guys to take away from this is at this point, does money exist? Really? Or is it just that we all believe it does have value? And I'm not saying you stop paying your bills, and I'm not saying you know, tell the government anything. No, I'm I'm not saying anything bad. I'm just saying, as a as a critical thinking exercise, think of it in that sense. If time doesn't exist from the last episode, and if money exists, but it doesn't exist, it's belief on the societal belief of what we think it is. But if we think beyond that about what it actually is, it really blows your mind. So let's look at the examples again of historical currencies. We have the barter system. Like I mentioned, people traded things, and you know, of course, you know, shells were used as money for a long time. Even livestocks, you know, can be seen as currency. Trade goods, you know, like I said, with indigenous economic economies, like you know, there's a lot of artisans that traded their different crafts for other types of things. And you know, you have some of your potters that could collect you know your valuables of storing your your wheat, your plants, your corn, and you get in return for it, you get. Buffalo hide, so and people can use it to stay warm for cold nights and even for using it for hides for other types of ceremonial types of things. So you you see where I'm kind of getting at this, right? And you know, and even turquoise for Native Americans is considered viable, and other culture cultural items used for exchange on that same idea. So the meaning behind money has always been based on a social agreement. So get into the critical questions. If money only works because everyone believes in it, what would happen if that belief disappeared? Wow.

If Belief Breaks What Changes

SPEAKER_00 22:49

That has that blown anyone's mind yet? I think it's blown my my mind. Let me say that again. If money only works because everyone believes in it, what would actually happen if that belief disappeared? I think you would have a social change of thinking. And I think there would be some kind of uprising of some sort. I'm not saying wars will break out or anything, I'm just saying that people would s think of it in a different concept, a different idea. Because we would see what value is, we would kind of look at you know things like time. Time is valuable. How do you measure time? How do you measure the value of time? Honestly. Because you can't there's no way you can get that back once it's gone. I was talking to a friend not too long ago, and I said, Look, you live in a certain time period right now, and you don't realize that yes, you've worked really hard to get to this point, but you are working so hard that you're not even enjoying the fruits of your labor. You're not enjoying the moment, the time that you're doing all of this stuff. It's kind of like the the grasshopper and the aunt that you know the the aunt worked all summer long to get ready for the fall in the winter, and the grasshopper was playing around and you know eventually froze to death. So I can see why that's important and I do see the concept, but for the argument, or not the argument, but for the the idea to take it is that you know it has value. And what I'm trying to get at is it would change society's way of looking at value of how we value things. We would look at water as being a precious commodity that you shouldn't waste, and people would take care of that. We would see the trees as something valuable that cannot be replaced. I mean, you can plant stuff, but it takes 50 years at most for a tree to be at a recognizable you know size and to be, you know, value to someone. You know, we would take more value in a lot of stuff and we wouldn't we would see how precious the earth is, we would see how precious life is, we would take more appreciation of the things that we have. I think that's what changed, that's what would happen if that belief system disappeared. It wouldn't really disappear, it would transfer into a different set of beliefs of value. Next question: how many other systems in our lives work the same way based on the shared agreement? Excuse me, sorry. Again, I haven't eaten yet. I should have eaten beforehand, but I didn't. So, this is the question I

Bitcoin And Shared Agreement Systems

SPEAKER_00 26:08

want you guys to think about, and I was mentioning and hinting at it. So, how many other systems in our lives work with the same way based on shared agreement? So, as I said before, you know, it's saying it's worth this about it's worth this much. You and I agree on it, and everyone agrees that it's worth that much. What currently works the same way? Bitcoin. Bitcoin and all the other cryptocurrencies are the same thing. Because what it is is people as a society have to buy in the idea of how much it's worth, and if it's just by itself, it's just a digital, you know, numbers of one and zero. You know, basically that's what it is, it's code. It comes down to that. Bitcoin is a digital currency. So those ones and zeros lead out to a program saying it's worth this much, and it has this much percentage of the original part of it, and then you and I agree that it's worth that much. But it's not tied to anything, it is kind of a fiat currency, it's based on what society believes it's worth. So, this is the dangerous part about cryptocurrency. And I I'm not trying to steer you guys away, but just have you guys think about what cryptocurrency is. It's not based on anything, it's just based on what people say it's worth, of how much we believe it's worth as general. It has no real rat value, it's just ones and zeros, guys. That's all it is. The same concept with paper or the the currency that we're we use right now. It's made of paper or it's made of plant materials and linen, and we're saying that it's worth this much, and it's just that we believe it's worth that much. So I want you guys to kind of have that idea. So moving on to the next question. The next time you hold a bill in your hand, are you holding money or a symbolic a symbol of collected trust? Think about that. The next time you hold a bill in your hand, are you holding money or a symbol of collective trust? And I'm gonna say it's a collective trust. So we're gonna kind of wind down the end of this uh episode. I sure hope you enjoyed it. It was pretty interesting for me to talk about money in this concept. So money may not be just currency, it might be one of the largest belief systems in humanity participates in every day. Yeah. It's the largest belief system that we participate in every day. So the next time someone says money doesn't grow on trees, you might pause for a moment because technically part of it does come from plants, but most importantly, money grows from something even more powerful: human belief. And we start seeing money through that lens, it becomes less about coins and bills, and more about a system of trusts that holds society together. So I wanted to say thank you for stopping by. Before wrapping up, I want to thank everyone who supports the podcast. Listeners had mentioned that they enjoy it, they I've gotten some

Support The Show And Farewell

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pretty positive feedback. So if you enjoy these conversations and want to help the kick the show going, you can support it through the link in the description for a small support. It does help the conversation for commercial commercial free. So I hope you consider that because I do enjoy doing these things for you guys, and I hope you guys get something out of it besides my entertainment. So so until next time, keep asking questions and keep looking at the world from a new perspective. And as one of my friends always used to tell me, create yourself a great day. Take care.