The Irony

December 31, 2012 8:19 am

Most of us understand the importance of Money in life. In most parts of the world, Money is used as a metric to measure success across domains and geography. Money impacts most of our decisions, both short-term and long-term. We intuitively understand the importance and value of Money. For instance, we try to compare things based on how much they cost. We can go on and on, but the point is this: we all acknowledge the fact that Money is among the top three most important things for most of us in our lives. If that statement does not sound right, at least we all acknowledge that Money is not something we can ignore in our lives. It is a critical piece of how we have chosen to structure our societies everywhere.

The Irony is this: How many of us actually understand how Money is created? How many of us can make a flowchart, clearly explaining the mechanism of Money creation, the way we can explain how a website works? We are curious about so many things – how an app is created, how a device is created, even how a spacecraft is created – but why is that so many of us lack a clear understanding of how Money is created?

Yes, it is just a wikipedia lookup – but let us be honest, we have not done it yet. At a high level, we think we ‘kind of’ know – but given how important this thing is, is it not absolutely ironic that we have a very limited understanding of how it is created, or for that matter, how exactly the supply of money is managed?


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