It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

—Attributed to Henry Ford, Sr. (1863–1947) by Representative Charles G. Binderup of Nebraska, Congressional Record, 19376

We work hard for money. We save it. We spend it. How come sometimes there is too much money in the economy, and some people are giddy with buying and selling? Prices on real estate and other assets soar upward. Where does all that money come from?

How come the euphoria is nearly always followed by a period when there is not enough money to go around? Businesses close, people are out of work, some people sell off assets at fire sale prices to survive.

The number of people willing to work and spend has not changed, so what happens to the money? Where does it go?

The fabric of our communities is a warp of personal relationships and a weft of exchanging our goods and services. Money is a shuttle for building the weft. It is an incredibly useful utility that we generally take for granted. We use money like we breathe – unconsciously. We make something or provide a service and someone pays us money for our efforts. We turn around and use this money to buy a product or service from someone else. When we think about where money comes from, most people see the image of the government printing presses churning out the bills. This hides the way money really works.

So, what is it really? How many of us understand how money establishes the foundation of our economy and pushes us toward certain outcomes? Even when reading economic textbooks, an understanding of money is mostly elusive. Changing the consequences of our current money system depends on our understanding it and discovering our options. Let’s spend some time making sure that all of us understand our money system and our options.

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