Monday, March 02, 2009


Money is a funny thing. I've never had lots of money at one time, relative to the people around me. (Having been at Yale and living in New York skews this, I realize.) It seemed like my family had money when I was a kid, and by the standards of a living in town that's built around some railroad tracks, we did. Right now, in the last few months, is the first time I've ever had a decent amount of money stashed away (as a result of having paid off my student loans w/ money from my day job, and then having saved up), and right now is the first time I've been really anxious about money, for obvious reasons.

Noah Cicero is freaking a bit, too, under rather different circumstances. I also read Noah's politically incorrect post about women from the other day, and while I think it oversimplifies, it does tie into something that I was thinking about, which is--how different is the experience of this depression for young women than young men? (I suppose I'm thinking about NY, mostly.) For a young woman, it's pretty easy to get someone to essentially give you money--in the form of goods. If you want a drink, you can go into a bar and be friendly and someone will buy you a drink; if you want an expensive dinner for free, you can let someone take you out and then you can stare distractedly in another direction when the check comes. Some men get angry about this and use terms like "dinner whore" or just "whore," but those comparisons are not only inappropriate but wrong, since there's nothing transactional in the behavior, although there may at times be something deceptive/manipulative. I wonder if many women are a) trying to take advantage of such opportunities more enthusiastically now; and b) finding it more difficult to do so.

A friend sent me this fascinating article by Gary Richardson about how he survived for many many years by basically living on imaginary money. The idea that money has become "information that you have money" is correct. That, I think, is one of the most obvious and fundamental lessons of the economic collapse that's happening now.

The other day I called my friend who understands economic theory better than I do and said something to the effect of, "There is, theoretically, a finite amount of money in the world, right? For example, the government should be able to tell you how many dollars exist? So how can there sometimes be 'so much more money' and sometimes 'so much less money'?"

It's an elementary school question but I was genuinely asking. He answered, sort of, but I can't remember what he said now--I think the thrust was that many things (like houses) were considered to have a higher value than they turned out to have. And stocks, which accounted for large chunks of so many people's "net worth"--they couldn't all have been "worth" that much, could they? Because not enough wealth existed to buy all of them at once.

But a prerequisite to accepting that concept is accepting the more basic concept that these days, "money" is the same thing as "information that you have money."


Richard said...

Thanks for the link to "Gary Richardson."

No, there's no finite amount of money in the world or in any country. Central banks can "create" money. The Fed can "create" money whenever they want to, meaning whenever policy calls for it. Same goes for the Bank of England, the European Central Bank, or any central bank.

This is simple Milton Friedman monetarism. Every high school student should know this. Back in the 1980s, people made a big deal about the money supply. The Times would every Thursday print the week's total M-1, M-2, M-3 and so on, comparing to the amount of money the week before and maybe four weeks before.

Then by the end of the 1980s, it became not such a big deal.

The Wikipedia entry on "money supply" should explain it better than I can.

Richard said...

My story "I Saw Mommy Kissing Citicorp", originally published in the Lower East Side magazine Between C & D in 1988 (the same time as "You've Got to Give Me Credit") deals with the money problem in a more fictional way.