Is Money Just Green Paper?

Ainsley Slusher-Honorbound

What is money? At face value (currency pun!), money is nothing more than a piece of green paper that is used as a medium of exchange. In The Politics, Aristotle points out “others maintain that coined money is a mere sham, a thing not natural, but conventional only, because, if the users substitute another commodity for it, it is worthless.”[1] Similarly, to quote Charles Wheelan in Naked Economics: “Wealth consists of all things that have value—houses, cars, commodities, human capital. Money, a tiny subset of that wealth, is merely a medium of exchange, something that facilitates trade and commerce. In theory, money is not even necessary.”[2] If all of this is true, why does a dollar carry more importance than any other piece of green paper?

Both Aristotle and Wheelan put forth the idea that money is fundamentally worthless. During the time of Aristotle “men agreed to employ their dealings with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver, and the like.”[3] On the contrary, modern day currency truly holds no intrinsic value, as it would be nothing more than paper if someone were to take away its worth. A recent article posted to the TIME website correlates closely to these ideas as it claims that “a dollar bill is just a useless piece of green paper in your wallet unless everyone else believes that it’s worth a dollar.”[4] To put it bluntly, the only reason why money has value is because people say that it has value. It’s possible to substitute paper money for something as basic as a pack of gum, as gum could just as easily be used as a means of exchange. In truth, anybody is capable of finding a medium of exchange, for example: “Cigarettes long served as the medium of exchange in prisons, where cash is banned.”[5] This further reinforces the point that money does not have any intrinsic value and could easily be replaced if the situation called for it.

All of this emphasizes the argument that money is really just green paper, so why is it important? To quote Wheelan: “It has purchasing power. Dollars have value because people peddling real things—food, books, pedicures—will accept them…A dollar is a piece of paper whose value derives solely from our confidence that we will be able to use it to buy something we need in the future…Since paper currency has no inherent worth, its value depends on its purchasing power.”[6] Saying that money has purchasing power simply means that it has the ability to buy products and services. Because money has purchasing power humans can rely on the fact that the checkout clerk at the grocery store will accept it as a means of exchange for the groceries they are attempting to buy. Money may seem like nothing more than green paper, yet it is the fuel behind all the spending that goes on in the economy, although it still does not have any intrinsic value.

[1] Aristotle, The Politics (Edited by Bernardo Aparicio, Dallas, TX: Ursuline Academy of Dallas, 2016).

[2] Charles Wheelan, Naked Economics (New York: Norton, 2010), 228.

[3] Aristotle, The Politics.

[4] Tepper, Taylor. “Why Does Money Have Value?” Time. March 03, 2016. Accessed December 04, 2016. http://time.com/money/4226657/why-does-money-have-value/.

[5] Wheelan, 228-229.

[6] Wheelan, 229-230.

Image:

“I Am a Piece of Paper and I Own Your Soul.” Digital image. At Break. Accessed December 5, 2016. http://www.atbreak.com/wp-content/uploads/2012/07/I-Am-A-Piece-Of-Paper-And-I-Own-Your-Soul.jpg.

 

 

 

 

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