‘Twas mine, ’tis his, and has been slave to thousands

by Eric on January 23, 2016

In the current Los Angeles Review of Books Quarterly Journal Michael W. Clune1 writes about odd small episodes, “particularly ephemeral perceptual experiences” we have that may alert us to the gap between how things seem and what they are. Riffing on Rei Terada’s Looking Away, he lists mirages, after-images; “clouds taken for mountains … looking at a landscape with one’s eyes half-closed so that it appears underwater.” He notes that we have nothing to say to each other about these experiences even if we share them, but that they remain with us. They remind us that if we pay too much attention to the mechanism by which we draw meaning from appearance we attenuate that meaning. One of Clune’s examples is an imaginary exchange with a sales clerk about money.

Suppose you tender the clerk a twenty.

She picks it up, examines it, and says:

“This appears to be money.”

… by drawing attention to your money’s appearance, the clerk opens a potential gap between what your money looks like and what it actually is. It is as if the clerk is withholding … judgment about whether the piece of green paper in her hand is money. You might get the feeling that the clerk is not entirely satisfied with your money. You might get the sense that she is somehow dissatisfied with it.

“That’s real money,” you mutter angrily.
“Never said it wasn’t,” says the clerk, putting it into the drawer and counting out your change.

Imagine that as you leave the store you can’t quite leave the scene behind. This appears to be money.” What the hell did she mean by that? That was real money you gave her. What’s she trying to say? What’s her problem?

This thought experiment shows that too great an interest in appearance is easily identifiable with a certain dissatisfaction. But perhaps the clerk’s dissatisfaction isn’t with your money in particular. Perhaps her dissatisfaction is both vaguer and more far-reaching. I vividly remember the time when I was 16 or 17 and I took out a 20-dollar bill and thought—this is just a piece of colored paper. It felt as if the world was an iceberg that had just slid into the ocean.

I understand why Clune used money as his example. This vague discomfort with currency is surely something many, if not most, of us experience at one time or another.

But teenage Clune was wrong: the $20 is emphatically not “just a piece of colored paper.”

Consider an incident from the introduction to James Buchan’s Frozen Desire (which Henry has once or twice recommended). Buchan recounts walking through a flea market in Hampstead and spotting amid the bric-à-brac a sheaf of notes, “biscuit-coloured.” The seller asks £25; he pays £20. She tries to tell him why they are worth something.

“They’re…” I knew what they were.… these currency notes, which never bought anything.… These notes which were signed by the Chief Elder of the Council of Jews in the concentration camp of Theresienstadt … barely circulated, according to the historian of the town, and were used chiefly as counters in card games.

The concentration camp currency was, near enough, worthless because it had so little to buy, because the institution that supported it—the Council of Jews—had so little power.

Consider the US dollar in the spring of 1933, just after Franklin Roosevelt ended convertibility to gold and had yet to institute a full, new set of rules for determining the currency’s worth. Talking to querulous advisors who wanted the gold standard back, Roosevelt held up a $10 bill.

“How do I know that’s any good?” the president asked, and answered his own question. “The fact that I think it is, makes it good.”

(Did Roosevelt mean “I” as in “anyone who has this belief about the bill,” or did he mean “I” as in “the President of the United States”? This is perhaps a very important question, but one to which we do not have an answer.)

Roosevelt had that belief about the bill because of the institutions that—he knew better than anyone else—backed it. There is a very good reason John Searle uses money as a principal and recurring example in his Construction of Social Reality. Functioning paper currency signifies the existence of institutions, of power. The bill Roosevelt held, and in which he believed, was an established bit of social reality because of those institutions and the power behind them. Even in that peculiar moment, the US dollar was not “just a piece of colored paper”—unlike the Theresienstadt currency.

And yet, of course, neither was the Theresienstadt currency, which was worth £20, or maybe £25. With its imitation of functioning currency it signifies fragile, maybe always fraudulent, and certainly historically failed hope that might yet be redeemed.

1Evidently not Michael C. Clune, as the cover has it, but maybe this is another comment on appearances.



MDH 01.23.16 at 9:57 pm

I’m linking to a lengthy compilation of DeLong (and some others) thinking about von Mises and Austrian monetary policy. It’s related, particularly in its discussion of money’s value. Anyway, there are bits in here that I found instructive and I think Brad is entertaining when he writes in this style, so I while this unlikely to be new for much of the audience, here it is.



Eric 01.23.16 at 10:13 pm

Have you ever tried to buy a latte at Peets with a copy of Ludwig von Mises’s Money and Credit?



Rich Puchalsky 01.23.16 at 10:20 pm

There’s a possibly apocryphal Phillip K. Dick story in which PKD is taking some kind of recreational drugs and he and his friend decide to go to Disneyland. PKD hands the ticket clerk a $20 bill. “Do you have anything smaller?” she asks. He looks her suspiciously. “All American money is exactly the same size” he replies.


Ebenezer Scrooge 01.23.16 at 10:22 pm

Like Walter Bagehot said:

Queen Victoria is loyally obeyed—without doubt, and without reasoning—by millions of human beings. If those millions began to argue, it would not be easy to persuade them to obey Queen Victoria, or anything else. Effectual arguments to convince the people who need convincing are wanting. Just so, an immense system of credit, founded on the Bank of England as its pivot and basis, now exists. The English people, and foreigners too, trust it implicitly. Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone: but what we have requires no proof. The whole thing rests on an instinctive confidence generated by use and years.


Jason Smith 01.24.16 at 12:14 am

If anyone is interested, I’ve put together an argument that the value of money depends on the amount of information it can represent:


It’s a bit mathy, but only a bit.


Trivial 01.24.16 at 12:25 am

A summer history course student perused a magazine review of Adair Turner’s MMT variant and then proposed a “critical application” to EO 6102 and the 1934 Gold Reserve Act during discussion section. A newbie instructor suggested instead more readings on New Deal history as well as the establishment of the Federal Reserve Board. This instructor added that comparative studies of land banks, both in the colonial period and throughout United States history, further provided introductions to changes and continuities in monetary policy. Colonial and state bills of credit posed questions not only on the interplay of law, policy, and practice, but also natures of dissent, sovereignty, labor, estuary, ship, and soil.


heckblazer 01.24.16 at 12:49 am

The work of artist J.S.G Boggs surely deserves mention here. A description from an old Atlantic article:

Boggs does an extremely precise and realistic drawing of one side of a banknote on high-quality paper, taking care to incorporate playful idiosyncrasies clearly indicating that the bill is not intended to deceive. (A bill might bear the stamp of the “Federal Observe Bank of Bohemia,” for example, or might be signed by “J.S.G. Boggs, Secret of the Treasury.”) He then attempts to use this bill to pay for goods or services of some sort, but only after making it plain that what he is offering as payment is not money but rather a work of art — which, he points out, must have some kind of value, surely, because drawing it took a lot of time and skill. (And money, for that matter, since the paper and pens and inks needed to produce the notes don’t come cheap. “It costs me a goddamn fortune to draw these bills,” Boggs tells Weschler.) Boggs then announces that he is arbitrarily assigning to his bill the dollar value that he has drawn on it, and leaves it up to his befuddled victim whether to accept the bill or demand “real” payment, which Boggs also offers.
If the bill is accepted, Boggs demands exact change and a receipt, and then, before handing the bill over, annotates it with the details of the transaction. A few days later — after the recipient of the bill has had, Boggs says, “some time, unbothered, to think about what’s just transpired” — Boggs sells the receipt and the change (for considerably more than the face value of the bill in question) to one of the many art dealers who hunger after his work. The dealer goes off in search of the person who has the bill, in order to try to buy it (for considerably more than its face value) and then sell all the elements of the transaction (at a considerable markup) to a collector or a museum. Boggs likes to point out that somewhere along the line the work of art shifts from being the bill itself to being the series of transactions that the bill has set in motion.


oldster 01.24.16 at 1:10 am

Jason Smith @5–

You’ve propounded a principle long known to bank robbers.

As Shannon’s 1948 work on entropy showed, the information value of a signal goes up when its predictability goes down.

So a stack of bills in which each successive serial number can be predicted from the previous one, contains less information than a stack in which the serial numbers are random.

That’s why bank robbers avoid money with sequential numbering–it makes the money more valuable.


Colin 01.24.16 at 1:10 am

Fiat money is criticised by the gold standard crowd as being too susceptible to the whims of government and/or belief in the creditworthiness of the government. But why is gold valuable? It has a few industrial applications, but even today, the main way in which gold is used (as opposed to merely stored) is in making jewellery. In other words, its source of value is that people think it looks pretty. How is that a less frivolous basis for the economy than government fiat?


Rakesh Bhandari 01.24.16 at 1:29 am

Perhaps an institutional theory of money can account for why something intrinsically worthless as paper can become so valuable to us, but it seems to stop far short of explaining 1. the value of money, 2. how those who already have it receive more of it. On the first point, it is worth remembering Marx: “…this power of the state is mere illusion. It may throw any number of paper notes of any denomination into circulation but its control ceases with this mechanical act. As soon as the token of value…enters the sphere of circulation, it is subject to the inherent laws of this sphere.”
Finally an institutional theory of money has to account for how monetary transactions are carried out between societies: what becomes the unit of account and the medium of payment.


Raven Onthill 01.24.16 at 1:39 am

Surely it is simply that money is like language, not a tangible thing, but a social reality? I do not understand why this is such a difficult thing. No one doubts that words in some sense exist. Why is it so difficult with currency.


Aron the Innocent 01.24.16 at 2:28 am

I was trying to think of a reply to this post. In particular, I don’t believe that “if we pay too much attention to the mechanism by which we draw meaning from appearance we attenuate that meaning”. While I was thinking about it, I hopped over to the comments thread on Corey’s post and found Geo saying this:

“Identifying the specific modalities whereby elites subvert democracy — [examples deleted, go read his comment] — seems to me about the most useful thing the left can do.”

When we see how democracy works we better understand what we really need and want and what is bullshit that has been imposed on us. When we understand how our senses work it makes us more aware, not less, of what is really out there and what it can mean to us.


Marshall Peace 01.24.16 at 2:48 am

He notes … if we pay too much attention to the mechanism by which we draw meaning from appearance we attenuate that meaning.

That’s an absurd thing to say even about money: there are hordes of investment bankers paying total attention to where the value of an entry in somebody’s ledger comes from, without the meaning of money being attenuated, much the opposite. Many in American politics desperately need to examine their epistemology but are far from doing so.

It is true that cultural attitudes and other social facts derive power from preconscious compulsion, but even so a reasonable human can develop a conscious commitment to whatever more desirable ethical standard.


Ebenezer Scrooge 01.24.16 at 12:25 pm

I’m surprised that Georg Simmel hasn’t yet come up on this thread. This is a well-trodden path.


Joshua W. Burton 01.24.16 at 4:14 pm

There’s a scene in Stephenson’s Cryptonomicon that lays this constructed reality bare: Lawrence Waterhouse, in the recaptured Philippines, is holding two Australian ten-pound notes, both purporting to be backed by the very same bank reserves, but one of them printed speculatively by the Empire of Japan and the other actually legal tender in our world.


LFC 01.24.16 at 4:50 pm

btw oldster @8 — funny. didn’t want you to think your humor was unappreciated. presumably Jason Smith means something else, though a glance at the first para of his link was enough to tell me I prob cdn’t understand it.


oldster 01.24.16 at 6:41 pm

LFC @16–thanks.


peterv 01.24.16 at 7:44 pm

Oldster #8:

Shannon says explicitly that his theory ignores the semantics of messages, so how can it say anything about the information value of signals?


oldster 01.24.16 at 7:48 pm

peterv @18–

before I answer that: how old are you?


Jason Smith 01.24.16 at 9:47 pm

@ peterv #18

What oldster humorously was referring to was that sequential numbers reveal less (actually zero) information when each number is shown than a random sequence of numbers. If we were to use Landauer’s principle where each bit of randomness erased cost kT log 2 energy, we could say the sequential sequence was more “valuable” in terms of energy investment.

@oldster #8 and @ LFC #18

It was pretty funny, and yes I was talking about something else. It’s a conjecture that the defining property of money is its fungibility and minimal information about its initial conditions (maximum entropy).

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