What if people lose faith in the currency

Money is worth nothing without trust

Money alone may not make you happy. And it may be more important to some than to others. But the vast majority of people agree on the fundamental advantages that the means of payment has for (survival) life - worldwide and whether they like it or not. Money is there or it is not there. When it is there, it is usually better than when it is missing. This has been the case for individuals, families, communities and states since coin money was invented in the 7th century BC in the Kingdom of Lydia in what is now Turkey.

Still: money is artificial. Above all, it symbolizes the agreements and rules that are supposed to make trading - and thus everyday life - easier. The fact that money largely fulfills this requirement is the reason why coins, bills, credit cards or mere account numbers on the computer screen are generally accepted in society.

Anything but a matter of course

But all money is worth nothing without the trust that people place in it. The Berlin cultural scientist Christina von Braun writes in her book “Der Preis des Geldes” (2012) that money can only fulfill its function if everyone is convinced of its credibility. However, this credibility is anything but self-evident.

Since the financial crisis in 2008, the European Central Bank (ECB) has flooded the financial markets with cheap money and cut interest rates to zero. “Savings and government bonds no longer pay any interest. Confidence in the stability of the currency is dwindling, ”complained the economist Gunther Schnabel from the University of Leipzig in a message from his department last year. He was neither the first nor the last to criticize the ECB's zero interest rate policy. However, he once again spoke out on what concerns savers, investors, property prospects and banks to this day.

Vulnerable system

What happens within the international financial flows is usually incomprehensible and abstract for outsiders. At irregular intervals, however, it is precisely there that it shows again and again how vulnerable the money system is. For example, when the coronavirus breaks out in China and spreads across the globe, the subsequent fluctuations on the stock exchanges and financial markets reach almost everyone in every corner of the market economy. All investors who have deposited their money in stocks, funds or strong currencies, for example, find themselves powerless at the mercy of such a development. Companies lose value. Some even go bankrupt. Entire economies are affected as if it were the most normal consequence of an outbreak of a virus ‘.

In her remarks about money, von Braun asks with good reason why society believes in the power of a system that hardly anyone understands anymore. Has the system become independent? The answer is still pending. But one thing is clear: as rationally as money can be calculated and increased, the feelings it evokes in people are irrational. Between euphoria, despair, greed and fear, all shades of emotions come to light. Money sometimes unfolds its effect on the individual so deeply and ingests him so strongly that it is repeatedly referred to as a substitute religion or a substitute drug.

The promise remains great

Nevertheless: The positive aspects seem to predominate. At least no one has yet invented a better system. For many, money creates the independence to live well and safely. Even if the wealth is not evenly distributed, the promise remains that everyone can partake of it. Money is not a rigid system. It flows - as the saying goes - from one to the other and constantly changes its shape. For example, those who invested early in the virtual currency Bitcoins have been able to look forward to nice profits in recent years - even if the crypto currency fell sharply again after a considerable all-time high in late 2017 / early 2018. Nobody can say where it is going.

After all, as the Berlin sociologist Georg Simmel found in 1900 in “The Philosophy of Money”, money helped to overcome feudalism and to strengthen democracy through self-determined citizens. Money brought freedom to the citizens. Nevertheless, the money economy and the "independence of economic processes" have the property of developing into an end in themselves through their "mechanical process". Money is powerful. Whoever has it has power. All the greater is the responsibility associated with owning money. And responsibility is mutual - and requires trust.