At The Cash: What Is Cash?

At The Cash: Paul Vigna explains “What’s Cash?”  (August 6, 2025)

It’s a driving think about our lives. However how usually have you considered these little inexperienced items of paper in your pockets? Is cash actual, or just a collective delusion?

Full transcript under.

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About this week’s visitor:

Paul Vigna is a reporter for The Wall Avenue Journal and has been a journalist for greater than 25 years, as a reporter, editor, and photographer. He at present covers the cryptocurrency sector, together with bitcoin, different digital currencies, and blockchain-related applied sciences. He’s the creator of “The Almightier: How Cash Turned God, Greed Turned Advantage, and Debt Turned Sin.”

For more information, see:

Skilled Bio

Masters in Enterprise

LinkedIn

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TRANSCRIPT:

Cash. It’s a driving think about our lives. However how usually have you considered these little inexperienced items of paper in your pockets and the concept that created it, or the digital zeros and ones in our banks and brokerage accounts that signify your cash? Is it actual or is cash merely a collective delusion?

I’m Barry Ritholtz and on in the present day’s version of On the Cash, we’re gonna chat in regards to the idea of what precisely cash is to assist us unpack all of this and what it means to you. Let’s herald Paul Vigna of the Wall Avenue Journal. He’s printed quite a few books on cash crypto, his newest guide, “The Almightier, how Cash Turned God, greed Turned Advantage and Debt Turned Sin.”

Barry Ritholtz: Paul, let’s begin with the fundamentals. You outline cash as a perception system. Clarify what which means.

Paul Vigna: Positive, briefly. So, I imply, that is, look, that is one thing that, that I by no means thought of for almost all of my life. To me, cash was simply what was in my pockets, what was in my checking account. I may use it, I may purchase issues. I didn’t fear about what it was, it, it wasn’t essential to me. That modified during the last 10 years or so. And I began considering to my, , I began occupied with this query, what’s cash?

And that despatched me down this rabbit gap. And the place I’ve, the place I’ve come out on that’s that cash isn’t an actual factor. You, you, you maintain cash in your hand, you maintain paper {dollars}, you maintain cash, and also you assume it’s actual. You assume that’s cash. That isn’t cash. That’s a factor that represents cash, greenback payments, cash, cash itself is, it’s an, it’s a system.

It’s a system we made up. It’s a system. Human beings invented as a method to assist us preserve observe of assets of all our stuff. You take a look at the purpose of a society and actually the purpose of a giant scale society is to get a gaggle of individuals collectively to mix their efforts and their assets to maintain one another. The way in which as societies acquired a lot bigger and bigger, they discovered an environment friendly method to do this. And it was mainly to have all the pieces represented by cash. After which if in case you have cash, you’ve got a declare on the group’s assets. And what has occurred during the last 5,000 years or so is that, that we’ve got mythologized cash into this actual factor. And we’ve got satisfied ourselves, we’ve got hypnotized ourselves into believing that it’s a actual factor to the purpose the place the pursuit of it by itself has taken over most of what we consider as the purpose of economics in society. Nevertheless it’s not an actual factor. It’s not a factor that exists by itself. It’s a factor that we created as a system that we created. And it has turn out to be for us a perception system.

Barry Ritholtz: So I wanna stick with that. ’trigger it’s fascinating within the guide you write, cash isn’t actual, it has no goal existence of its personal. Clarify how cash is de facto simply this agreed upon collective system that everyone accepts, regardless that it’s an summary idea that’s created by individuals. Proper.

Paul Vigna: And look, the entire level of the guide is that, not the entire level, however a most important level of the guide is that cash is a product of faith. So I’ll, I’ll clarify it by way of that.

Barry Ritholtz:  Say that once more. Cash is a product of faith.

Paul Vigna: Cash is a product of faith. And I’ll ex i’ll, I’ll clarify it by way of that. ’trigger that’s how this all turns into very germane. When cash first seems within the historic report, it’s in these historical Mesopotamian temples. Temple officers developed cash. They developed cash and writing really as a strategy to preserve observe of the temple’s possessions. And that’s the place it begins. And what emerged from that, the conclusion of that really was that this was an extremely environment friendly system. Cash is definitely a, a extremely good product. For those who consider phrases of issues we’ve invented over our historical past. We didn’t invent fireplace, however you understand how to make use of fireplace, the wheel, bridges, boats, something. I may sit right here all day and do it proper. Cash is a kind of issues we invented.

Cash was an extremely environment friendly strategy to preserve observe of assets.

And what I discover fascinating is that as quickly as cash emerges, that’s once you begin to see what we actually consider as, as fashionable quote unquote human beings. Society takes off. It prospers as a result of cash is a priceless product. It’s a helpful product. The issue has turn out to be that cash is such product that we’ve began to think about it on it as this factor by itself with its personal values and its personal existence. And a variety of that’s tied up in our beliefs in faith. ’trigger as I mentioned, extra of its historical past, was it instantly a product of faith than it was an unbiased factor that existed by itself. So our beliefs in faith, in gods, and in, in supernatural beings that management what we do and the way we dwell is tied up very, very intently with how we really feel about cash.

Barry Ritholtz: Let me stick with the idea of Mesopotamia. You write a few metropolis there’s 50,000 plus individuals residing throughout the confines of this walled metropolis with tens of 1000’s extra working within the area, working within the farms and suburbs. However what’s fascinating in regards to the description of the ity is the one largest constructing within the metropolis and maybe on the earth is the temple, which could be seen for miles and miles round, even from outdoors of the partitions of town.

The primary writing is protecting observe of right here’s how a lot barley has come into the temple; Right here’s how a lot individuals ha owe on this. Right here’s how we create a system of belongings and liabilities of credit score and debt.

All of it stems from the truth that the whole metropolis was pushed by faith. Plus individuals needed to work to outlive. And the powers that be needed to provide you with a strategy of protecting observe of all this.

Is that the genesis of the shut relationship between cash and faith or is it one thing else?

Paul Vigna: It’s that precisely. And, and what I attempted to do in speaking about Europe was examine it to a contemporary metropolis, NY city. That’s what Europe was like again 5,000 years in the past is that this nice me, cosmopolitan, metropolitan metropolis. And also you’re proper, the temple was the biggest, the the, this complete metropolis actually revolved across the temple.

What’s essential after we discuss fashionable and historical cities is, is to understand there have been a variety of issues that have been comparable, however there was one factor that was massively totally different. And it’s that town revolved across the temple in these historical societies. And I discovered this very fascinating myself in these historical societies, the whole level of life really was geared round one aim. And that aim was to please the gods. Folks in these cities believed that the gods, a number of gods have been actual.

They existed they usually managed all the pieces. And whether or not you lived or died or how nicely you lived after which died and the place you went after you died, all of that was decided by these gods. And also you wished to please the gods. There was no separation of church and state. The church was the state and the state’s total existence was constructed round attempting to please these gods.

And that framework is what cash emerges from. And, and, and that framework I feel is in extremely essential to our understanding of how we really feel about cash in the present day. Wealth was seen as an indication of the God’s favor. If the God preferred town, if the God preferred the ruler, if the God preferred the individuals, they flourished. They’d wealth, cash was a illustration of that. So cash was a illustration of the God’s favor and also you wished extra of it, in fact. I actually assume that colours loads about what we take into consideration cash in the present day and the way we really feel about it. Nevertheless it’s one thing that has simply been type of buried in our collective unconscious and we don’t, we simply don’t see it.

Barry Ritholtz: Let’s discuss confidence and religion, which you emphasize all through the guide. What function did belief play in establishments, be they authorities or banks and even numerous religions in shaping the general public’s perception about cash over time?

Paul Vigna: Belief is a large a part of how we worth cash. I’ll provide you with instance of this: 1933, the Nice Despair the USA is in simply the worst financial form it’s ever been in. The system has largely failed; the banking system has collapsed; the federal government is, is barely working. And the federal government again then was not practically as giant as it’s now. It didn’t have as a lot of a direct affect in individuals’s lives.  In giant elements of the nation, the federal government simply wasn’t there. And I feel there have been actual fears that the whole American experiment was going to break down over what had occurred in 1929 and the years after.

So FDR is available in, he will get elected, he begins doing — it’s, it’s a fairly fascinating factor on the time — he makes use of a contemporary expertise known as radio. He does these hearth chats, he simply talks into the radio and he explains issues to individuals

They have been tremendously profitable. They actually labored. What’s the primary hearth chat about cash and banking? FDR the president will get on the radio and simply explains to individuals how the banking system works, how cash works, what they plan to do, the way it’s gonna work.

And what he says to them is, he says, you need to have religion, you need to have perception within the banks, within the cash and all this stuff. And collectively, if all of us have religion, we’ll succeed. It’s wonderful to assume that religion and and belief have been the issues he was actually speaking about. However for those who, for those who flip it round and look each single time you’ve got one in all these incidents the place a forex fails and a authorities fails and you’ve got hyperinflation and all the pieces falls aside, the widespread denominator in all these examples, individuals lose religion within the cash.

Which if you consider what I used to be simply saying is type of bizarre. Why ought to religion in cash matter in any respect if cash was actual? If cash had its personal existence, if the intrinsic worth of a greenback invoice was one thing that was tangible, as an example, a tree has intrinsic worth, copper oil, commodity, all this stuff have intrinsic values, intrinsic makes use of – they’re actual. Your religion in them doesn’t matter one bit. Whether or not or not you imagine in copper, copper continues to be there and all the pieces you should utilize it for continues to be there.

Cash is totally different. For those who don’t think about cash. Have a look at Zimbabwe, YMR, Germany, Argentina, all these examples. For those who don’t think about cash, cash is ineffective. Why? Why ought to religion matter?

And the reason being as a result of cash isn’t actual and cash is simply the system we agreed upon. So long as individuals agree to make use of the system, the system works. As quickly as individuals cease believing within the worth of the system, they mistrust it, it collapses. That’s the core, core a part of all the pieces I’m speaking about.

Barry Ritholtz: So that you talked about within the guide that one of many first hearth chats that FDR did over the radio was to debate the quote, lack of confidence within the soundness of banks and his plan to revive religion, to revive confidence, together with issues just like the creation of the Securities and Alternate Fee so we don’t have issues on Wall Avenue and the Federal Deposit Insurance coverage company, so we don’t have these numerous runs on banks and on and on the listing goes.

All of this sounds prefer it was simply an try and shore up the assumption system, the religion within the banking system. Is that what you’re saying?

Paul Vigna: Completely. That’s what it was. I’m not, I’m not accusing FDR of being underhanded, however under no circumstances he was being slightly underhanded. He was attempting to hypnotize individuals into believing in cash once more in US {dollars} and utilizing them. And he needed to go on the radio and he needed to speak to them and he was an extremely persuasive speaker.

He used that as a software. All of the belongings you’re speaking about, the regulatory constructions he put in, these have been instruments to persuade folks that these belongings that they’d beforehand believed in and didn’t anymore imagine in nonetheless had some type of basic worth that might be helpful to society.

Barry Ritholtz: One of many issues FDR did was take us off the gold normal and gold had lengthy been regarded as if not cash, nicely actually cash. Like how did the elimination of the USA Treasury Division in Central Financial institution from a gold normal affect our idea of cash?

Paul Vigna: Gold had been used and for, , everybody is aware of gold has been used all through historical past as cash, however gold isn’t really cash, gold is a illustration of cash. Something is usually a illustration of cash, gold greenback payments, cash, calorie shells, digits, crypto, Bitcoin, , I imply you may have a, a digital ledger that represents cash. All of these issues can be utilized as cash. None of them are cash. Cash is the system.

Within the (Thirties) thirties you’ve got the gold normal, the financial system begins collapsing, individuals begin hoarding gold. There’s not sufficient circulating forex for the federal government and for FDR to do something that he desires to do. So he has to persuade individuals to think about the system. And what he does is, you may see this, he maneuvers individuals over to believing within the system and he maneuvers them away from the religion in gold.

That isn’t what issues. What issues is the soundness of the banks. What issues is the soundness of the federal government imagine in these issues, have faith, think about all these issues. And when he did that, as soon as he did that, he acquired individuals type of believing once more, then he went and removed the gold normal.

Barry Ritholtz: Is cash a retailer of worth or is it a medium of change?

Paul Vigna: Cash is each of these issues. Cash is a retailer of worth. It’s a medium of change. It’s a unit of account. Something can actually be a retailer of worth. Most of what , the markets commerce in are shops of worth. Something can actually be a unit of account. It simply so occurs that it’s {dollars}. However any forex will work simply as nicely so long as the people who find themselves utilizing all of it agree upon it. And all of them can work as a method of change. Something can work as a method of change, barter can work as a method of change. These are simply capabilities. These are usually not the factor itself. The factor itself is nothing greater than a shared collective perception on this system.

Barry Ritholtz: guess cash is a collective delusion. It’s an summary factor that will not exist with out human beings, not like timber or copper or gold for that matter. However it’s a part of a collective system of perception. It depends on confidence, it depends on religion. If the system is doubted, it begins to creak and it begins to crack. And we find yourself with circumstances just like the Weymar Republic or Zimbabwe, which is why it’s so essential for a society to take care of a perception that their programs, and this consists of banks, debt and credit score, our sound and we’ll proceed to work.

I’m Barry Ritholtz. That is Bloomberg’s on the Cash.

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