Something You Should Know - SYSK Choice: The Complexities of Ownership & What Money Really Is

Episode Date: February 11, 2023

How much gold is on our planet? And have we found most of it? This episode begins with some fascinating intel on gold including how much gold is actually in an Olympic Gold Medal and how much more gold is on a Nobel Prize. https://www.rd.com/article/gold-facts/ If you own your home, how much of the sky above it do you own? Why is “tolerated theft” actually encouraged by some businesses? These are just some of the interesting questions about ownership you will hear discussed with Michael Heller, one of the world’s leading authorities on ownership. Michael is professor of real estate law at Columbia Law School and co-author of the book Mine! How the Hidden Rules of Ownership Control Our Lives (https://amzn.to/3uDMJkn) Where did money come from in the first place? Why do we (and must we) agree that pieces of paper and metal discs actually have value? Listen as Jacob Goldstein tells the fascinating story of money. Jacob is co-host of NPR’s Planet Money program and author of the book Money: The True Story of a Made-Up Thing (https://amzn.to/2P11CwB). Jacob discusses things about money you probably didn’t knew including why there are more $100 bills than $1in circulation and who is uses them mostly. A lot of people collect autographs – but what makes certain ones so much more desirable and valuable than others? Listen as I explain what type of autographs are really worth something and which ones are worth little more than the paper they are printed on – and why. https://www.worldcollectorsnet.com/features/autographs/ PLEASE SUPPORT OUR SPONSORS! Dell Technologies’ Presidents Day event is here! The savings start now on select sleek XPS laptops and more powered by 12th Gen Intel® Core™ processors. Don't forget special pricing on the latest monitors, docks and accessories, plus free shipping on everything and monthly payment options with Dell Preferred Account.  Just call 877-ASK-DELL for these limited-time Presidents Day deals! With With TurboTax, an expert will do your taxes from start to finish, ensuring your taxes are done right (guaranteed), so you can relax! Feels good to be done with your taxes, doesn’t it? Come to TurboTax and don’t do your taxes. Visit https://TurboTax.com to learn more. Intuit TurboTax.  Did you know you could reduce the number of unwanted calls & emails with Online Privacy Protection from Discover? - And it's FREE! Just activate it in the Discover App. See terms & learn more at https://Discover.com/Online Learn more about your ad choices. Visit megaphone.fm/adchoices

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Download June's Journey now on Android or iOS. Today on Something You Should Know, how much gold is there in the world and have we gotten most of it? Then, understanding ownership. It's murky and fascinating. For example, they may have shared a password with a friend for HBO or Netflix. And you're like, can I do that? Is that okay? Is that illegal? And the answer is it's illegal. But HBO wants you to illegally share their passwords. They don't

just tolerate, they actually encourage it. Then what makes an autograph valuable? An understanding money. You've probably heard we're moving towards a cashless society, but the amount of cash, of actual paper money in the world, is actually increasing. This is very largely driven by people's demand for $100 bills. What do we make of that? Well, $100 bills are a really convenient way to do crime. All this today on Something You Should Know. At Wealthsimple, we're built for whatever you're building. Built for Jane, who wants to break into the housing market. We're built for Ted, who's obsessed with what's happening

in the global markets. And built for Celine, who just wants to retire and explore the world's flea markets. So take a moment and think about what you're building for. We've got the financial tools to help make it happen. Wealthsimple. Built for possibilities. Visit wealthsimple.com slash possibilities. Something you should know. Fascinating intel. The world's top experts.

And practical advice you can use in your life. Today, Something You Should Know with Mike Carruthers. Hey there. Welcome. As I've mentioned before, this part of the podcast, this introduction that I'm doing right now is one of the last things I do before an episode is complete. So I've already heard what you're about to hear. I was also part of what you're about to hear. And in this episode, you're going to learn some fascinating things. Just for example, in the second interview today with Jacob Goldstein, did you know, I can't believe this, that there are more $100 bills in

circulation in the United States than $1 bills? I mean, I hardly ever use $100 bills. So why is that? The answer will fascinate you. And the conversation coming up in just a moment about ownership and what it means to own something. It's really, really interesting. First up today, I want to talk about gold. Gold is valued pretty much everywhere in the world. I mean, getting something from someone made out of gold, well, that's pretty special. But here are some things about gold you may not know. We have already mined about 80% of the world's 244,000 mineable tons of gold. Ocean waters and seabeds contain about 20 million more tons of gold, but that treasure remains largely untouched because it would be so expensive to go get it.

But the biggest trove of gold is actually in outer space. One asteroid alone, called 16 Psyche, supposedly has a few hundred quintillion dollars worth of gold in it. The U.S. Treasury currently holds 147.3 million ounces of gold bullion. About half of it is stored at Fort Knox, a stash that's worth more than $130 billion. And speaking of bullion, the term bullion, which refers to gold bars or coins ready to be traded, that term comes from the Latin word for boil, because that's how you remove gold's impurities. You heat it or boil it at 5,173 degrees Fahrenheit.

Most of the world's gold is now mined in China. That country took over South Africa for total historic gold production in 2017. Some gold comes from sewage. Among the more surprising and unpleasant sources of gold, treated sewage. In 2015, after analyzing sewer sludge from local treatment plants, researchers at Arizona State University concluded that the sewage produced each year in a city of a million people includes on average $2.6 million worth of gold and silver. The Nobel Prize is made of gold, although it was downgraded in 1980

when it went from 23 carats to an 18 carat core coated in 23 carat gold. The gold in each medal is worth about $8,000. Olympic gold medals haven't been made of gold since the summer games of 1912 in Stockholm. Modern gold medals are mostly silver. The gold medals from the 2016 games in Rio contained 1.2% gold. And that is something you should know. When I say the word ownership, that seems like a pretty simple notion to grasp. If you own something, it's yours to do with as you see fit.

What's yours is yours. That's ownership, right? Well, not exactly. As you're about to hear from Michael Heller. Michael is one of the world's leading authorities on ownership. He is a professor of real estate law at Columbia Law School, and he is co-author of the book, Mine, How the Hidden Rules of Ownership Control Our Lives. Hi, Michael. It's great to be here. So when I think of ownership, the concept is pretty simple on one hand. You know, what's mine is mine. That's what I own. But it also seems like ownership is complicated in the sense that

when you buy a house or a car, I mean, there are pages and pages of documents about the ownership of this. So in that way, it seems complicated. It does. But those pages and pages are stuff that really nobody ever reads. When you think about what ownership really means, this is something that kids figure out from the earliest ages. It's one of the first words that kids learn is, this is mine. And you see kids on the playground fighting over whether it's theirs or the other kids. They're using a few simple stories. Those are the same stories you use when you buy your house. And so when I say something is mine, and I think it's mine, what does mine mean?

Well, think about two kids on the playground. One says it's mine because I'm holding onto it. Another says, no, no, no, I was first. Those are two of the six very simple stories. It's mine because of possession, it's mine, or it's mine because I was first. So we actually all claims to ownership, whether it's the house or the shovel in the playground, trace back to just these very, very few simple stories that even kids know. Well, let's run through them. Well, the first one is, like we just said, it's mine because I was first. And so much of what we own in the world is because you are first. You lined up first. A country gets claimed by somebody first. We put satellites in orbit to get the space first. Second basic story is possession.

Possession is nine-tenths of the law. I'm holding onto it, and therefore it's mine. That's a very powerful feeling that we have of ownership. The third is that I worked for it. My labor went into it. That goes back to the Bible. You reap what you sow. That's why we have patents and copyrights. A number of that, it's attached to something mine. Like I own a, like I said about the house, you have the deed, but do you own the airspace above? Can a drone fly above your land? Well, that turns on whether or not the airspace is attached to your house.

The fifth one is it's mine because it comes from my body. Self-ownership. So this is why an NCAA athlete, for example, can or can't sell their celebrity endorsement. It comes from self-ownership. The sixth and final one is family. It's mine because I am in the family. The meek shall inherit the earth. That's not really true. Family ownership is where wealth gets concentrated and destroyed. But these things can conflict, right? I mean, you could have two kids on a playground and they both want to use the swing and one of them was there first. So he should get the swing

because he was there first, but the other one may have, you know, run around him and grabbed onto it first. So he's in possession of it. And so he's on the swing, but he wasn't first. So who's right? Exactly. So that comes up all the first. So who's right? Exactly. So that comes up all the time. So again, people think the ownership is something fancy and complicated, but what's really happening there is that it's a storytelling battle. You're telling the story of possession and I'm telling the story of first, and we have to solve that battle all the time.

So let me give you an example. Think about the last time you were on an airplane and you wanted to lean your seat back. Like you say, okay, well, I have a little button. I can lean back. And the person behind says, no, no, no. That's where my knees go. And that's where the laptop tray goes. So that's my space. I possess it. So that wedge of space turns out to be a really important ownership conflict that you experience when you fly. You're having two of these simple stories, attachment and possession, in battle with each other. The difference there from the playground is that the airlines deliberately create that battle in order for them to profit

with your discomfort. Right. Well, I've always thought that, but you bring up an interesting point, but I've always thought if the seat can go back, then it can go back and that that's okay. Because if it's not okay, they wouldn't make the seat go back. But you know, what's interesting is if you get on the plane first and put your seat back before the guy behind you gets there, you're probably going to have an easier time selling that than if you do it after he sits down. You know, Michael, your reaction is interesting and you're, I'm sure, pretty confident in your reaction, as am I in mine. When I poll audiences on this and I do it all the time, 50% of people say they can lean back and 50% say, no, you can't lean back unless you ask. There's actually a huge division and it seems to turn largely on how big the people are. Larger and taller people tend to say there's no right to recline. Actually, there's one thing that's maybe useful for your audience. If you are the person behind and you want them not to lean back, asking them doesn't work necessarily. And offering them 20 bucks doesn't work. But studies have shown that if you offer them a drink or a snack,

three quarters of the people in front of you won't lean back into your seat. That's great. Well, and that's going to be cheaper than 20 bucks, most likely. It's cheaper than 20 bucks, and it's cheaper than buying a business class ticket, which is what the airlines are trying to get you to do. They make economy super uncomfortable because it makes the larger seats more valuable. Do the airlines have an official position on this? Their official position is actually quite interesting. The rule on most airlines is that you can lean back, but they never announce it and they keep it quiet because keeping it quiet is what lets them sell that same space twice.

They assume and they are right that people mostly try to be polite and they take advantage of our politeness and good manners, working it out between ourselves in order to sell that space to both of us. Right. Because that's really what they're doing is they're double dipping. It's amazing. And nobody knows. This is one example of how ownership is all around us. We have hundreds of these interactions every day, and we don't realize most of the time that we're in an ownership battle. Now, the airlines do. They are savvy masters of ownership design. What they have to sell are those inches of space. So that ambiguity about the space is a deliberate strategy. It's one of the advanced tools of ownership design.

We're discussing the world of ownership. And my guest is Michael Heller. He's author of the book Mine, How the Hidden Rules of Ownership Control Our Lives. nice life. Unfortunately, life doesn't come with an owner's manual. That's why there's BetterHelp online therapy. Connect with a credentialed therapist by phone, video, or online chat. Visit betterhelp.com to learn more. That's betterhelp.com. This winter, take a trip to Tampa on Porter Airlines. Enjoy the warm Tampa Bay temperatures and warm Porter hospitality on your way there. All Porter fares include beer, wine, and snacks, and free fast-streaming Wi-Fi on planes with no middle seats. And your Tampa Bay vacation includes good times, relaxation, and great Gulf Coast weather. Visit flyporter.com and actually enjoy economy.

So Michael, what are some of the other examples of advanced ownership design? This is maybe something some of your listeners may have done in their lives. Certainly many of my students have. They may have shared a password with a friend for HBO or Netflix, and you're like, can I do that? Is that okay? Is that illegal? When I ask my students, have you ever downloaded music or books or movies illegally? 100% of them say, yes, I've done that. And this is law students. And when I ask them, how many of you know if this is legal or illegal? About half of them don't even know. And the answer is it's illegal. But HBO wants you to illegally share their passwords. They don't just tolerate illegal password sharing. They actually encourage it. So this is another hidden example. They're using a different advanced strategy of ownership design, which is they're tolerating theft. They get you hooked on their product. In the words of their president, Richard Plepler, he said,

what we're trying to do is build video addicts. And to do that, they want you to feel like you're getting away with something. But the people who are using someone else's password can continue to use it forever, so they never have to pay. But they feel bad. See, what HBO is counting on, this is actually a part of their marketing strategy. The feeling that people want to go legit. And later as they earn more income, they will eventually get their own password. What they did is they watched what happened. Some years ago, Napster was putting music out for free and the music industry sued a bunch of customers and it turned off people to the music industry. HBO watched and learned and realized they could make more money

by protecting their property rights less by not just tolerating, but encouraging theft. And it's not just HBO that uses tolerated theft as an advanced strategy of ownership design. Let me give you one other example, Disney Corporation. And what they've discovered is that by tolerating a certain amount of theft, they can actually increase their profits. So what they do now is they will look around at pirate fan sites that are selling Mickey merchandise. In past years, they would have shut them down instantly. Disney had one of the most aggressive litigation strategies to take down illegal content. Now, today, what they do is they look and they wait

and they watch and they see. So there was an online vendor named Bibbidi Bibbidi Brooke, and she came up with this really cool thing, Rose Sequin Mickey Mouse ears. And they sold amazingly well on her pirate site. Disney was watching. They didn't shut her down. They said, that's a really good idea. And they copied her ears and sold them in Disney stores where they sold out. So what Disney was doing was using the pirate sites. They were tolerating the pirate sites theft as a avenue for product development for Mickey merchandisers. And it's not just Disney. It's not just HBO. Netflix does the same thing. And it's not just them. It's also companies like Rolex and Prada. They actually benefit by having fake Rolexes

because those fake Rolexes are the best advertising out there for the real thing. Tolerated theft is such a powerful strategy. And it's one that most people aren't really aware that businesses are using. You had mentioned something earlier in the conversation, and it's a question I think a lot of people wonder about. When you buy a house, you own the property, you own the house, but how high up, how high up in the sky does your ownership rights go and how far down below do your ownership rights go? And I know that can be different, but generally speaking, what's the answer? So what you own is much more up for grabs than people ever realize. So the newest contest right now is over the airspace, like one to 300 feet up, way up in the sky, used to be claimed by

homeowners, but now airplanes fly there and they don't pay you when they fly overhead. But how about drones? Like what happens if a drone flies over your house? Can you blast it out of the sky? That is up for grabs right now. And it varies from place to place, but it's mostly unsettled. And there is no natural or correct answer to whether a drone should be able to fly over your house. You might say it's my space, you're trespassing, keep out.

And Domino's Pizza might say, no, we're using that space for delivering pizzas or Amazon for packages. So that's a current ownership battle that's going on above your house today. And below my house? And below your house, just the same. So does oil or water or gas or minerals, are they yours? Are they attached to the land or are they belong to somebody else? So in many countries, actually, those all belong to the government. In the US, they mostly belong to the surface owners. But what does it mean for the water under your land to belong to you? So many of your listeners are not in big cities and they have well water. Millions and millions of Americans rely on wells. You put a pipe down and you drill

and the water is attached to your house. But it turns out that if your neighbor drills a deeper well or a bigger well and pumps out more, it can dry your well up and the water that was attached to your house suddenly disappears. And that happens more and more today as people dig deeper wells and use water for more purposes. Well, and speaking of your house, and this has always interested me, that you own your house, and let's say you pay off your mortgage and you own your house free and clear. Well, not really, because if you don't pay your taxes, your property taxes, you lose your house.

So you say you own it, but you don't really own it in the sense of in the olden days when somebody put a claim down and said, I own this. In the olden days of homeownership, you owed responsibility to the king. Like if you go way back, ownership was purely relational. The king gave you land, this is in England, and in exchange, you provided a mounted knight for the war. You said certain prayers for the soul of the king. So those prayers or that mounted knight turned into ownership in American law. So instead of prayers or a mounted knight, today, those same obligations have been translated into property

taxes. So your ownership is always held from the government in this country. It's always subordinate to the taxation and other obligations are part of what it means to own property. And also, like if you produce a movie in the traditional form and you use, you know, union talent, I mean, it's your movie, you paid for it, you produced it. But if you use it, you have to keep paying those people residuals. I know this because I was in an episode of Baywatch many years ago, and I get checks for $7 about twice a year for my appearance in Baywatch. And I don't really need the money, but it's interesting that the people that own that master program still pay me. Isn't that great?

Actually, I say great because my wife is a television writer. So we actually live on the residual checks. So we actually view that as quite an important income stream in our household. And it's part of how ownership is divided up. So it's not just a single owner. Often what you have is multiple owners of the same product. And that works really well sometimes. It pays a lot of actors. It pays a lot of writers and producers. It keeps their kids in school. But sometimes what happens is all those different rights, all those different residuals, some of those owners can block the reuse of the video or the movie without their permission. And when you have too many owners, each of whom can block,

what that means is down the road, many of those old shows can never be re-aired because you have too many owners, each of whom can block, what that means is down the road, many of those old shows can never be re-aired because you have to get permission. You have to do what's called clearing rights. Getting all those permissions from all those people turns out to be impossible. Talk about the lines people weighed in at Disneyland and Disney World, which people wouldn't necessarily think this is part of a discussion on ownership, but it is. Those lines are all about ownership. When you're standing in line, you think the line of Disneyland is first come, first served. And it turns out that Disney is the real master of engineering ownership, not just in the tolerating theft side we talked about before, but also in

engineering how lines really work. So what they do is they've created something called a fast pass. It gets families like me out of the line. It means we can, instead of waiting for three hours for Splash Mountain, we can come back at a fixed time later in the day. That's part of the price of admission is these fast passes. And what it does for Disney is it gets families like ours walking around buying Dole Whip, buying Mickey merchandise, buying those big turkey legs. It's actually extremely profitable for Disney. What they then realized is they can make even more money. They could basically create business class at Disney World. So they created something called

a Disney VIP tour, where they assign a guide to your family to take you in from the side door or from the exit so that the families waiting in line for Splash Mountain don't even realize that the super wealthy are having a whole different definition of what it means to be first in time. They go in straight ahead of you and you don't even know it. So what you're seeing there is an example of just how sophisticated ownership engineering is around lines. This is the same thing with a 20-year underline at the Walmart or the cut the line at Starbucks if you have the app. There's all sorts of ways that savvy businesses are able to engineer lines to get you to do what they want to maximize their profits. And sometimes that means minimizing your hassle. But Disney actually values all those people waiting in line because that's what creates

the market for, for example, the VIP pass, just like it's valuable for airlines to have the sort of misery in the economy because that's what creates the market for business class seats up front. Another ownership issue I remember hearing about is your trash. Your stuff is your stuff, but once you put it in the trash and you put it out on a public street for pickup, it's not yours anymore. It's whoever wants it. Isn't that cool? And sometimes it is. There's actually real debates about that because people put out, it turns out, important tax records that they then end up in criminal charges. And they say, no, no, no, I didn't mean to abandon that trash in my trash can.

And the courts actually split on whether your trash is abandoned or not. So in many places it is, and in many places it's not. Well, another place where things are a little fuzzy to me anyway is online. Like when I buy a movie from my cable company, I buy my movie. I own it. I don't own it because I found out when I moved, I don't get to take it with me. That's one of the big changes as we move our lives from tangible stuff to the intangible world. When you click buy now and download a movie online, you think that possession is nine-tenths of the law. But the reality is that Apple or Amazon can delete your show right off your Kindle, right

off your device, and they owe you nothing. Online, you own much less than you do in the real world. And Amazon and Apple know that you don't understand that. Most people, almost 90% of people, believe that it's the same to own a book online and to own the real thing. And Amazon actually profits from every download because you believe that you own more than you actually own. Well, it's interesting because when I think of ownership, it just seems so clear cut. You either own it or you don't own it. Just the opposite. Ownership is always up for grabs.

It's always the storytelling battle. And there's a handful of these stories. You use them, your kids use them, your parents use them, your friends do. And once you start noticing that people are using them all around you, you will sort of see the world in a different way. And my hope is that once you see it, you can't unsee it, the world starts to look a little more interesting and you can actually have a little bit more control over it. Well, this has been very enlightening and helpful in understanding that ownership is not necessarily as simple as you think it is. Michael Heller has been my guest. He's one of the world's leading authorities on ownership. He's a professor of real estate law at Columbia Law School. And his book is called Mine, How the Hidden Rules of Ownership Control Our Lives.

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Squared wherever you get your podcasts. Imagine life without money. It's really impossible to imagine because in many ways money makes the world work. So where did the concept of money come from? And why do we buy into it? I mean, money is just bits of paper and little metal coins. Yet we have collectively all agreed that it has value.

Why? And in this digital age, what's the future of money? It's a fascinating tale that directly affects you. And here to tell the tale is Jacob Goldstein. He is co-host of NPR's Planet Money program and author of the book Money, the true story of a made up thing. Hey, Jacob. So where did money all begin? Where did the idea of using money and exchanging it for goods and services? Where did that begin, if we know? The first thing we would really clearly recognize as money was coins, which emerged around, oh, 600, 700, let's say 700 BC in the Eastern Mediterranean.

There's like a nice clear moment of like, there were not coins. And then suddenly, boom, they invented coins in the kingdom of Lydia, which is in present day Turkey, right around 700 BC. And people liked coins. They took off. Which, when you think about it, is kind of an unusual concept that we're all going to carry around these little metal disks and use that to buy things. But obviously, clearly, it caught on. It became a thing. And now it's really falling out of favor.

I mean, who wants to carry around a bunch of coins? True. It's not what it was. You know, the origin of coins is interesting sort of on a few levels. I mean, the very first moment of coins comes in this kingdom of Lydia, where they had a lot of this amalgam of gold and silver called electrum. It's a naturally occurring blend. And, you know, gold and silver were electrum. It's a naturally occurring blend. And, you know, gold and silver were both already valuable in the world. Silver especially was money like for a long time up until this time. But when you have a blend of gold and silver, it's kind of a problem. I mean, it's a nice problem if you got a bunch of gold and silver. But when it's blended, you know, you don't know exactly how much a lump of it is worth.

Right. Because it depends on how much gold is in there and how much silver. So what the Kingdom of Lydia does at this time is they say, okay, we're going to cut these lumps of electrum into relatively consistent sizes, weights. But also we're going to use electrum that has a consistent ratio of gold and silver. So we're going to have this electron where you know how much gold and how much silver it is, and you know how big it is. And then we're going to stamp a lion, which is the royal symbol, onto each of these lumps to essentially guarantee that this is what it says it is. And it's this set ratio of gold and silver. So they're solving this problem of value. They're making it much easier to know how much this lump of metal is worth. And that's like

the birth of coins, the birth of the first thing we would recognize as money. And so the general notion of money, whether, you know, then there's different currencies around the world, but the general notion of money is how old? You can go back for a long time before this moment when coins were invented, and you don't see things we would recognize as money. You don't see paper money. Paper money is not going to be invented for thousands of years ago, where the very first writing that we know of was, you know, not some epic poem celebrating the king and not some love note. It was accountants

writing about debts, basically, right? It was, you know, so-and-so brought a bull to the temple on this day and is owed this many rations of barley or whatever. So on some level, a record of debt is very money-like. Whether it's money or not, we could argue about it, but it's quite money-ish. You know, sort of systemic recording of debt is a lot of what money is about. And so you can say that the origin of writing, which is thousands of years ago, is, you know, also the origins of money or at least sort of money-ish thinking and record keeping. Well, I like that word money-ish. I bet there are a lot of things that are kind of money-ish, even if they're not actual money. We think of money as this binary thing,

because obviously in our day-to-day life, you know, a dollar bill is money and a piece of paper that I write, I owe you five bucks, is not money. But in fact, what is money changes over time. And at any given moment, there are things that are sort of money adjacent, that are money-ish. So like, you know, bank deposits today, your money in a checking account, that is basically money. Most money is bank deposits. Didn't used to be so clearly money. You know, it used to be the case that your bank deposit was a loan to the bank. And if the bank went bankrupt, you didn't

get it back. Or take, for example, money market mutual funds, right? So kind of a mouthful. But if you have a brokerage account and you have a little bit of cash in that account, what you're, you know, Schwab or Vanguard or whoever you have your retirement fund with, if they have something called cash, that's probably in a money market mutual fund. And that is an investment fund, but a lot of people think of it like cash. You can write checks

on a lot of money market mutual fund accounts. And in the financial crisis of 2008, the government stepped in and guaranteed those accounts, just like bank accounts. So money market mutual funds at that moment became much more money-ish. And that's what's so interesting to me is that we say we have money, but a lot of our money is in mutual funds or stocks, individual stocks or whatever. And it's relatively liquid. We could get much or most of it out or some of it out if we needed it right away. But it isn't money right

now. No. And even your money in the bank, like, you know, banks are built to look like great, big, secure buildings, or at least they used to be. But they don't have a bunch of dollar bills in the vault for every dollar you have in your checking account, right? Like most money is just a number on a computer at a bank. That's all it is. It's just a record. It's not a thing. But I think people think about their money or I think about my money as a thing,

not just a record on a computer. You know, if somebody writes me a check, I understand that nobody from that guy's bank runs over to my guy's bank and says, here's Mike's money because that guy wrote him a check. I understand that nobody from that guy's bank runs over to my guy's bank and says, here's Mike's money because that guy wrote him a check. But I still like to think that the money is a thing. And if it isn't a thing, if it's just a record, well, then where is the money? Do people even write you checks anymore? That alone is something in 2021. Yeah, occasionally. Okay, good. Better

to get a check than to write a check. Yeah, I mean, if you think about it now, it's even more virtual, right? Like I pay bills on my phone. And so what am I doing? I'm like opening a computer that's sending a message to my bank to transfer money to some other bank, to whatever, the power company's bank. And there's no trucks involved. There's no money moving. It's just numbers, you know, the digital record of a number on one bank's ledger changing it. That's it. That's all money is. It's just the ledger. Does money ever move? Other than when I go to the grocery store and I hand them $20 for my milk and bread, and that's money moving. But does money move in any kind of big, significant way? And if it doesn't move, where is it? You mean physical? You mean

literal, like, bills in armored cars move? Yeah, well, I mean, in terms of all the zillions of transactions that go on every day, money... day. Almost none of it is anything happening in the physical world. I mean, especially if you think by dollar value, right? Every big transaction, like you might still pay in cash at the grocery store or something, but you're not going to pay in cash if you buy a house. You know what I mean? Like if you think about the amount of money you move around, the bigger the transaction, the less likely you are to use cash. So it's really just a set of ledgers, right? Just a set of records.

I mean, I think it was one of the Federal Reserve presidents described money as memory. Money is memory, which is kind of nice, kind of poetic for a central banker, right? And it's really just a record. It's really just a record of sort of, you know, if you think of a town and you go to the store and you have a tab at the general store, right? It's like that, really, but writ very large with more zeros attached. Yeah. If I have a tab at the general store, though, there does come a day of reckoning. At some point, the storekeeper is going to say, it's time to settle up. You need to actually bring some money into the store and pay your tab.

But that never seems to happen in the real world today. There's no paying of the tab. Are you talking about physical bills? Is that what you're talking about? No, I'm just, well, as I said, I mean, so we have money. Where is it? It's nowhere. Like thinking of money as a thing is ultimately misleading, right? Money is a record. It really is on the computers of banks, right?

So it's not like when a bank gets more money, they don't need more computers, right? They just tell the computers to record different numbers. Or you can think of it like points at a game, right? One team has some number of points, the other team has some other number of points. But you don't need to move anything to make the points move. But at the end of the day, I could go to my bank and say, look, I've got $50,000 in this account. I would like to get the cash. Somebody has to give me the money. It's my money. Well, that's true.

And, you know, the government prints banknotes and the Federal Reserve provides those banknotes to the banks. And so they will have it for you. And if everybody goes to the bank all at once and asks for their money, that is another kind of problem. That's a bank run. But in general, you know, banks don't keep all of the cash on hand to represent every dollar in somebody's bank account. In fact, if you look in like the whole world, the amount of money in the world is far greater than the amount of paper money, because most people don't use paper money that much. And so this money that we're talking about, whose money is it? Do the wealthy control most of the money?

I mean, how is it spread around? The rich are indeed very rich. You know, people talk about income inequality, right? The gap between incomes for high earners and low earners, or very high earners and everybody else. But the gap in wealth inequality, not how much do you make, but how much do you have in the bank or the value of all your assets minus all your debts, if you want to be technical about it. Wealth inequality is much larger than income inequality in significant part because lots of

people have essentially no wealth, right? Lots of people, if you take all of their assets and add them up and then subtract their debts, you get zero or negative, right? You owe more than you own. So there is a lot of wealth inequality. Where is money going, do you think? I mean, it certainly has changed just from what we've been talking about here. Where do you see it going? Are we headed to this cashless society or do we have a foot in it already?

What do you think? Well, there's a few different trends that point, interestingly, in kind of opposite directions. One thing that is really interesting to me is if you look over the past year or past several years, you see, surprisingly, the amount of cash, of actual paper money in the world, is actually increasing. In fact, it's growing faster than the economy. We don't know exactly what's going on because, you know, a lot of the point of cash is that it is not traceable, right? But there are a few interesting facts. One is this is very largely driven by people's demand for $100 bills. There are something like 40 hundreds in circulation for every man, woman, and child in America, you know, thousands of dollars in hundred dollar bills. There are, you know, I think more hundreds than ones last time I checked. So like vast, vast numbers of

hundred dollar bills are flowing out into the world and flowing around the world. So one, you know, what do we make of that? One, well, hundred dollar bills are a really convenient way to do crime, right? Like if you want to move money around undetected and not, you know, fall into anti-money laundering laws or be tracked, a bag full of hundreds is a great tool. So they're probably being used a lot for crime. The other thing is people outside the U.S. love the U.S. dollar, which is in many ways useful for America. You know, if you live in a country where you don't trust the government, where you If you live in a country where you don't trust the government, where you don't trust the banks, where you don't trust your currency,

a $100 bill is a very useful store of value, a very useful savings tool. So that is the interesting cash is not dying story. There's more of it than ever. The more obvious counter story is who even uses cash anymore, right? I mean, the pandemic only accelerated what was already going on, right? When you can pay with your phone, why bother with cash? Unless you don't want the government to know. That's really interesting. Isn't it?

Yeah. I mean, because I never, almost never use $100 bills because they're inconvenient. People don't want to break them. And, you know, I mean mean people use twenty dollar bills because that's what the atm gives you but but a hundred hundreds of dollars hundred dollar bills it must be crime because otherwise yes it must be crime that is correct you know there's this uh really quite prominent economist named ken rogoff he's at harvard and he used to be at the International Monetary Fund. Big name guy who wrote this book, The Curse of Cash, a few years ago, actually just saying, like, look, we should get rid of hundreds and fifties, like now, easy call.

Because any normal non-crime committing person, you can buy anything you want with 20s, right? Even if you want to buy something for $1,000 in 20s, like you can, right? You could still use cash. All it would do to get rid of hundreds of 50s is make it harder to commit crimes, basically, right? So I think he got a ton of blowback for that book, actually. I've talked to him a few times since it came out. And he's, he is much less, oh, I don't know, aggressive now in kind of pitching his ideas than he was before. Because I think the prospect of getting rid of cash makes people very angry. People worry about surveillance, essentially, which is, I suppose, valid, right? It is certainly true that if you're not using cash, you should assume that your transaction is not private, right? So that's, I guess, the counterpoint. What other things about money like that,

that people probably don't know, if anything jumps to mind, some interesting facts about money and how it works and what it is? You know, there are some really good stories from history. So paper money is a fun one, right? So you have coins. So coins, as I say, they start out in the Mediterranean about, oh, 2,700 years ago. And for a long time, coins are basically money. And they're popular, and they spread, and they're used widely in Asia and Europe. And it's not until 1,000 AD in China that we see paper money. And what happens there is, well, a few things. One, the Chinese invented paper, which is useful if you want paper money. But also, there is this province in China called Sichuan, and they use iron coins. In a lot of China, they use bronze coins, but in this particular province, they don't have as much bronze, so they use iron. Iron is a terrible thing to use for money in this

era because the value of a coin is still based on the value of the metal it contains. Iron then, like now, was not very valuable. So you needed a tremendous amount of iron coins to buy anything. You needed a pound and a half of iron coins to buy a pound of salt. So it's bad. It's a bad thing to use for money. So this merchant in Sichuan has this idea. He says to people, okay, I'll tell you what, you leave your iron coins with me and I will give you a paper receipt for those coins, like a claim check, right? And so you figure out what's going to happen. People start taking those claim checks and just saying, hey, look, I've got this claim check for 1,000 iron coins.

I don't want to go get them and bring them to you. Just take the claim check and sell me that thing. And the seller says, okay, sure, that makes sense. And lo and behold, the paper claim checks turn into money. And the government sees this happening, and they realize it's a good idea. And the government gets into the business of printing paper money and it spreads throughout China. And it actually helps to drive forward this really incredible economic revolution that happened in China around this time, around 1000 AD, where, you know, having paper money is a technological breakthrough, right? This is the era when there's no mechanized transport, there's no trains, anything like that. So it's really hard to move around vast quantities of metal.

So having money makes it more efficient to trade, right, to exchange goods over large distances. So you have this boom in trade and you have the growth of cities that follows from that. You have, you know, restaurants emerging. You have cities grow to a million people in China at a time when, you know, European cities have, you know, 100,000 or and they have this vast empire that stretches across Asia. So they really get this idea of like, oh, we can move value around. We can move money around without having to carry trunks full of heavy, you know, bronze. So paper money's existence is really the result of people not wanting to carry around all these coins. So are there other countries leading the way in the cashless society or are all the countries kind of operating at the same level? So Sweden has, in fact, gone further than a lot of other countries in getting rid of physical cash, which when I first heard that, I was like, oh, sure, Sweden, nobody wants to commit crimes there. Of course, they can get rid of physical cash, right?

But in fact, it's kind of the opposite. There was this crazy heist in Sweden several years ago where these like criminal masterminds like, I don't know, landed a helicopter on the roof of some cash depot and like broke in from the ceiling and like stole vast sums of cash. And I think got away with a lot of it. Like it's this incredible movie-like thing. And so it was actually a giant heist that led Sweden to push to get rid of cash. And they, you know, push people to use digital money, to use their phones to buy. But there's actually been a little bit of a backlash in Sweden. It went so far that banks themselves in some places stopped carrying physical money, which I kind of love, right? Like you go to the bank and they're like, no, we don't have money. What do you think we are?

And actually, we're kicking around passing a law to require banks to have money. So it's gone pretty far in Sweden. But there's also been some pushback, which I imagine is the way things are going to go, right? I imagine over the long run, we will see less and less physical cash. But there will also be sort of a persistent pushback. Well, this has been really fun to look at the story of money and the meaning of money, that money isn't necessarily what we think it is. It's not those bills in our wallet so much as it's records on a bank computer. Jacob Goldstein has been my guest. He is the co-host of NPR's Planet Money, and he's author of the book Money

The True Story of a Made-Up Thing. And there's a link to that book in the show notes. Thanks, Jacob. Great. Thanks very much. Autographs are interesting. Famous people are often asked to put their signature on something, piece of paper or whatever,

and you might wonder, well, is a famous person's signature actually worth any money? Well, some are, and some aren't. As with other collectibles, it really depends on supply and demand. There's a much bigger demand for Marilyn Monroe's signature than, say, Paris Hilton's signature. The document the signature is on also matters. John Lennon's signature on a piece of paper of handwritten song lyrics sold for over a million dollars, but his signature on a Beatle album cover, maybe $100 or so. The condition of the document, whether or not the signature is in pen or pencil, all those things

can affect the value. Autographs of current TV stars or pop music stars aren't really worth much of anything, at least not for now, but you never know. When he was alive, James Dean's autograph wasn't worth much, but today it could be worth thousands of dollars. An autograph from an historic figure tends to be worth more. The most valuable autograph today seems to be William Shakespeare. Only six are known to exist, and all of them are in museums. If one were sold, it would likely go for around five million dollars. And that is something you should know. More and more people are listening to this podcast, thanks in large part to people like you, who share it with friends and family and other people they know. I'd appreciate it if you would do the same thing. Share it. I'm Mike Carruthers.

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