Figuring out money to understand the world

It had to happen, sooner or later: money and finance are the most highly visible among the many topics of interest to economists. Since I am an economist, and easily accessible through this blog and my social media presence, Wired’s Fabio Deotto asked me for a comment on a piece of financial news: apparently Facebook is considering bringing Credits, the virtual currency used for buying Facebook apps, to the wider world as a universal means of payment. Is it possible to leverage Facebook’s 500+ million users to launch a new global currency and revolutionize the world of finance?

In the best tradition of economics, my answer was that the question is wrong, for many reasons: there are already dozens of virtual currencies that work quite well but did not revolutionize anything; currencies need to be aggressively backed by reserves and open market operations, or they’ll depreciate; credit card companies have already in place globally accepted virtual money operations with many more users than Facebook — only in the USA there were 1.3 billion credit cards in 2006 (the full article, in Italian, is here. But the real answer is that I know nothing about finance, so I recommended that Fabio talk to a real money expert.

This made me realize that not knowing anything about finance is a bad idea for an economist as of 2010. The rising tide of social innovation contains a lot of financial innovation: just think of internet-based microlending agency Kiva; of Italian “community lending” platform Del community lending dell’italiana Prestiamoci; of crowdfunding services for the arts; of Solidarity Purchasing Groups, another Italian invention (yes, Italians, seem to be right on the frontier of social financial innovation). My conclusion: time to go back to studying money. Money is difficult, counterintuitive: its hard to figure out just what it is and where it draws its magical powers to get us the things we need. Can anybody suggest a book to start from? Rigorous, but starting from the basics, ideally with a historic approach? I tried reading Niall ferguson’s The Ascent of Money, but that’s maybe not advanced enough. Thanks in advance for any suggestions you might pass along!

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3 thoughts on “Figuring out money to understand the world

  1. Federico Bo

    Ho appena letto “Il dono ai tempi di Internet” (M.Aime,A.Cossetta, Einaudi) e viene citato il libro del sociologo di inizio ‘900 Georg Simmel “La filosofia del denaro” ; dello stesso autore “Il denaro nella cultura moderna”.

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  2. Rizomagosophicus

    In tema di economia e finanza mi ritengo abbastanza ignorante (e basterà forse la presente segnalazione a confermarlo); dagli abissi della mia ignoranza mi sento però di suggerire alcuni approfondimenti tra la questione del signoraggio ed i suoi legami con la finanza ed il potere delle banche centrali. Su Wikipedia la voce “signoraggio” è trattata nelle sue molteplici accezioni con dovizia di particolari e fior fior di formule matematiche a me inintellegibili; segue anche una ricca bibliografia sull’argomento.

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  3. lg

    Federico Bo sopra mi ha ricordato che il libro di Simmel è uno di quelli che avrei voluto leggere da sempre (solo rubricherei Simmel in primo luogo come filosofo e sociologo, non solo per pedanteria 😉 — uno degli ultimi grandi maestri della tradizione tedesca bla bla). Però forse il nostro qui cerca una cosa diversa o più recente… Mi ronza in testa per es. uno o più titoli di Pier… Dacrema (scusa non ricordo il nome proprio), di cui avevo pure sentito una presentazione, ma non li ho e non li ho mai letti.

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