Back To The Basics: What Is Money?

Since pundits are convinced we’re headed for the next Great Depression, let’s be optimists and fast-forward to post-depression boom times when America will return to the basics and once again learn about money. Join little Tommy and his crisp new $5 bill as they travel through America’s financial system, circa 1947…

What Is Money? (1947) [YouTube via Get Rich Slowly]
(Photo: Ryan McFarland)


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  1. Thassodar says:

    Oh my god, how much better off would people be if they were forced to watch this. I never had a video like this in any of my schooling, not even economics in high school! This is a fantastic film, and I personally hate black and white films.

    If only there weren’t as much corruption in the corporate world. I doubt our trust in the government is anywhere as high as it was when this film was released.

  2. B says:

    1947? I’m guessing this was produced in response to America going off the Gold Standard.

    • zeroraveson says:

      @B: In that case, it was released about 24 years too early.

    • doughboys says:

      People were taken after the gold standard in the US in 1931. After 1931 US currency was no longer exchangeable for gold.

      The US closed the ‘gold window’ between it an other countries in 1971.

    • Snowlovers says:

      @B: I think this was around the time silver certificates were being phased out. This was probably produced to convince that the “new” paper money (Federal Reserve Notes) still had value.

  3. Vander says:

    If only my car could run on gallons of paint…. :(

  4. sonneillon says:

    After the bank takes the check the bank then takes the money and lends it to people who have bad credit. They then sell that bad credit to other people in packages. They then loan out this money.

  5. Thaddeus says:

    “As long as people remain confident that our government is strong and secure, they will continue freely to accept and spend it’s money without questing it value…”

    Aw crap.

  6. forgottenpassword says:

    We need to go back to carrying around gold on our person.

    • B says:

      @forgottenpassword: I say we go back to carrying around grain. or spearheads.

    • LibertyReign says:


      Gold certificates would actually work at least better than Federal Reserve notes. Consider that prior to 1913 and after the Civil War US dollars had real value.

    • says:


      Errr… Gold as a medium of exchange has problems for the very reasons fiat currency does. In and of itself it is not very useful or valuable. If there were no longer any goods or services available for purchase, what could you do with your gold? Stare at it? And paper currency, what would that be worth if there were no longer any goods or services for which it could be redeemed? You could cover your thatched roof with it… use it as wallpaper… papier mache anyone?

      Point is, if people cease to see gold as having value then it ceases to, which is true of fiat currency as well. It’s much less likely that the opinions of the majority concerning the value of gold should change than that the opinions of the majority concerning the value of non-gold-backed paper money should change, but still… it can happen.

      And for every problem having gold-backed currency solves, it creates two. I doubt that America and, indeed, the world, would have reached its current level of prosperity and technological innovation had it not been for fiat currency. Fiat currency, despite its problems, is such that it allows a much larger number of loans to be taken out, which can be used to create business, public works, fund scientific research. If the amount of money in the money supply were fixed because all of our currency were backed by gold, then loans could only be taken out if the banks had the money to loan. The amount that they’d be able to loan out to any one individual would be quite limited and thus there would be a great deal less activity economic and otherwise within the country. The other problem is that banks make interest loans and therefore banks would be calling for an amount of money greater than the amount existing in the total money supply and thus no one would be able to fully pay back their loans and in the end the banks would have all the money and economic activity would cease.

      I am so tired of all the Ron Paul gold fiends… I… I… just don’t know what to say. Gold is the solution to absolutely nothing. Sure fiat currency opens us up to depression and bubbles of various sorts, but it always us to make progress of all sorts much more quickly.

      The real solution is to have the government print its own money and make loans to the people at zero interest.

      • doughboys says: How about a standardized world currency?

        • rushevents says:

          @doughboys: The only way to really make a standardized world currency would be to submit to a central world government entity.

          This would be great for 3rd world nations but would ABSOLUTELY suck for the US, Canada, UK, Japan, South Korea and the list goes on. The value of their money comes from the strength of their base economy.

          If you put everyone on the same scale and base money on a “World economy” as it exists today you would remove any incentive for international investments as well as any real growth in the 3’rd world.

          And yes I know there are those who would say you would just pay more of those dollars to the wealthy countries’ citizens but goods and services would be more difficult to manage.

      • Dude, gold is super useful. Jewelry is one thing. Electronics is another area. Likewise, Platinum is super useful in making catalytic converters and they’re running out of it.


        If there were no longer any goods or services available for purchase,

        …so um, civilization is at an end and you’re somehow left alive? Well then either you can support yourself with what you produce and you have no need for money, or, um…you’re fucked.

        to have the government print its own money and make loans to the people at zero interest

        Um… Isn’t that kind of already what they do, instead they give out the money to corporations?

      • “In and of itself it is not very useful or valuable. If there were no longer any goods or services available for purchase, what could you do with your gold?”

        Exactly. I am hooked on apocalyptic websites that tell you how to survive nuclear war/earthquakes that send California into the sea/alien invasion/the Rapture/a Palin presidency, and they all assure me that after everything goes to shit, your best currency is going to be stockpiled bullets. Also maybe hand tools. But mostly bullets.

    • Sian says:

      Gold, a sword, and a pistol.

  7. alliebean says:

    This is a good little film. It reminds me of all those times I sat in class in elementary school, they brought out the film projector, and we watched little educational films.

    But, what always gets me confused is, from where does the value of the money come in the first place? I know it used to be based on gold and silver, but I think that got scrapped when the wealthy started hording the money, and there wasn’t enough to go around (since there’s a limited amount of gold and silver). I could be wrong on that point, so don’t hold me to it.

    Really, though, is there really any sort of tangible thing that backs up the value of money, or is it all just a mass delusion? I find it confuzzling.

    • xerent says:

      @alliebean: The value of money is based on the same logic that the value of gold was once based on.

      Gold never came with a manual that said “1 oz equals 50 dollars.” It was set largely by it’s scarcity which other people determined.

      You can think of today’s money as a sort of synthetic gold. The government artificially sets a value and scarcity of the dollar, which gives the dollar its initial value.

      (I think.)

    • B says:

      @alliebean: Currently money has no intrinsic value, and it’s value is set based on the supply and demand. This isn’t a big change from the old gold standard, because gold is only valueble because of it’s scarcity and perceived worth. But really, gold has no more intrinsic value than paper money, as it’s rather hard to eat gold.

    • LibertyReign says:


      Uhh.. Are you trying to answer your own question? The point of coins is that they are tangible and LIMITED as you point out. Commodities are a lot closer to real estate than public opinion is…

      The idea that anything asigned to the unnecessary negative balance which occurs whenever two human beings exchange goods and services will ALWAYS be mass-delusion.

      Knowing this, one must then conform to learning how the mass-delusion works, and controls the entire planet.

    • sirellyn says:

      @alliebean: There is no tangible backup to money, yes it is mass delusion.

      No I’m not kidding. You are correct money used to be based on gold and silver. This was not abolished because of hording. In fact those were necessary measures to keep governments from overspending. With a gold or silver standard, for the government to get more money they have to get more gold, borrow money, or tax. All of which are visible and painful to politicians.

      Right now because money has no backing you can also INFLATE currency. (Just print more, like counterfeiting.) This is invisible to the public. And makes all money everywhere worth a little less. The more you print the less your dollar buys. But you won’t notice until you start going to the store and noticing huge jumps in price. Which of course politicians blame on greedy businessmen increasing the prices.

  8. Shappie says:

    How much for that? 2 Dablooms? I’ll take it!

  9. LibertyReign says:


    Oh yeah..and then there’s salt-water, nuclear power, and hydrogen..

  10. weave says:

    A much better video explaining money…


  11. LibertyReign says:


    Except you can not PRINT gold…

    You seem to get the way prices are set, but you have to acknowledge that there is no “scarcity” to a Federal Reserve Note.

  12. LibertyReign says:


    Vegetable oil…

  13. xerent says:

    Well, the Federal Reserve only prints a set amount of money, and keeps the scarcity stable that way.

    It’s also why counterfeiting is a much larger deal than getting something for nothing, because you’re effectively decreasing the value of all the other money out there by printing your own.

    It’s also why we can’t solve all our problems by printing another 700 billion dollars. All that will do is just make the existing money even more worthless.

    (Again, this is just what I think. ^^;)

    • sirellyn says:

      @xerent: I’m not trying to be offense, but that’s very naive of you. The only reason the federal reserve has for not printing more money is people starting to notice it too much. But that doesn’t mean they won’t. In fact the government has already “printed” more than 700 billion since 2004. If you haven’t noticed, the value of your dollar has fallen by almost half of it’s value since then.

      Furthermore. NO one is going to lend the US government 700 billion. Not one country, or a dozen countries. Pretty much all that money will have to be printed. The “bailout” is also for those countries who LOST money invested in those companies that went under. So why in the world would they go an lend the US even more money.. to pay them back?

      There is no form of that bailout package that will NOT contribute to inflation.


  14. ElliottCaffeina says:

    hmm, standard of value. I like that phrase. Imagine going into Best Buy thinking to yourself…is that really worth that much? I hate Best Buy!

    ugh, forgot what i was gonna say that actually relates to this post…..stupid Best Buy….somehow, someway they are costing me money!

  15. LibertyReign says:


    “Well, the Federal Reserve only prints a set amount of money, and keeps the scarcity stable that way.”

    You are correct, but you failed to acknowledge that the “set amount” you refer to is “whatever the Treasury requires”, unless of course you believe that 700 Billion dollars(just to start) for the crooks in Washington, 3 Trillion for an illegal war based on lies, 50 trillion in “benefits” promised to generaltions of Americans who will see nothing, iced off with a cool trillion spent on maintaining our empire around the world, are all “set amounts” which benefit the value of the so-called dollar by keeping it “scarce”.

  16. LibertyReign says:


    ..and uh.. the Federal Reserve is the largest counterfeiting operation known to man..

  17. Difdi says:

    One thing it doesn’t touch on, is the difference between money (whether paper, gold or wampum) and wealth. Barter directly trades wealth, while money is merely the symbol of wealth. And the symbol isn’t the same as what it represents. That’s why people tend to fall back on barter during major disasters, wars, etc.

  18. humphrmi says:

    A few other points they should have covered:

    – Securitization
    – Tier 1 Capital Ratios
    – Deleveraging…

  19. LibertyReign says:


    Anoter great reason to have your money backed by tangible commodities.

  20. LibertyReign says:


    More likely in response to the American public’s short attention span finally refocusing off of the Great Depression and still reeming from the war.

  21. Brontide says:

    The current quandary was not only foreseen, but is was inevitable.

    * Fed was lending money at a net-negative interest rate to the banks ( after inflation )
    * There was a ready market that was prime for speculation and bubble economics ( housing )
    * Regulations were loosened or enforcement of sane standards was gone at all levels in the food chain.

    This was going to blow up sooner or later and everyone could see the problems, but nobody wanted to stop the free ponies while they were being given away. Greed was the motivating factor and everyone in the market believed they were passing the buck to the next person. In the end, the “next person” ends up being the taxpayer.

    As an added bonus, Americans as a whole are overspent to begin with and have little or no cushion to take a small downturn let alone a long recession.

    • LibertyReign says:


      Unless we obeyed the law and allowed those business to fail. Then greed would rewarded with failure, both for Wall Street and Main street.

  22. battra92 says:

    You know that the funny thing is, that $5 according to the inflation calculator would be $45.95 in 2007 dollars (let along 2008 dollars or what 9 dollars will be worth)

    Somehow prices don’t seem so bad. $300 for a radio (and having to make payments on it) and it doesn’t take $46 to fill my tank unless I ran it so much my fuel pump hated me so things aren’t that bad.

    Granted in 47 we were just two years after WW2 so things hadn’t fully picked up yet.

    By the way, +1 for being the same narrator as ‘What to Do on a Date?’. Would Kay enjoy a bike trip? Or a weenie roast?

  23. LibertyReign says:

    “what would that be worth if there were no longer any goods or services for which it could be redeemed?”

    You mean money would have no value if there wasn’t anything to buy with it? LOL! Where do you come up with this shit? I would call that circular logic if it wasn’t so retarded. I suppose the day when there are no goods and services to exchange comes along we will probably have to give up on money..LOL!

    The idea that progress is a direct result of fiat currency is laughable. The most progress is made free from regulation and the influence of an elitists’ personal greed and ambition. Necessity is the mother of invention, not Glutony. Fiat currency allows you to make progress just fast enough so that you have no actual foundation to relay upon when your bullshit system collapses in on you. Our own country’s history is clear evidence of this. Check the price of gold, and the value of the so-called dollar, over time, and then compare it to the size of government.

    Fiat currency is not how you get the job done right, it’s how you get the job done, BEFORE the Russians.

    If the first half of your post wasn’t amusing enough, you had to prove that you can’t hate Ron Paul without being a total shill for the “print first, ask questions later” mentality.

    History is obviously not your forte, but no worries, we are entering the age of the banker as we speak. Let’s see how much “progress” is made over the next 10 to 15 years. I’m sure WaMu is thinking that recent wave of PROSPERITY we have been experiencing was well worth it! LOL!

  24. clocker says:

    Why couldn’t I see Tom Servo, Crow and Gypsie’s heads?

  25. says:

    all money does is buy conveniences.

  26. Woah, paint, bookends and even radios were tax free back then!

  27. metaslugx says:

    Money, like everything, is only worth how much someone is willing to pay for it. The same applies to homes, ironically.

  28. redkamel says:

    I’m sorry, but when he said “soon, the five dolla bills adventures took a strange turn..” and a boy walked in the back door, I laughed.

    but seriously, these old educational movies are so good. I am glad I got to see them in highschool. I feel bad for the kids that dont get to.

  29. krunk4ever says:

    For those who haven’t seen Zeitgeist the movie, it’s a much watch. Part III is specifically important on how we ended up here today with a Federal Reserve which isn’t even a government entity.

  30. Oh god leave the old Zeitgeist fanboys out of this.

  31. P_Smith says:

    This is also worth viewing and clearly explains why the existing system is unsustainable.

    Money As Debt, in five parts:

  32. kc2idf says:

    A higher-quality copy of What Is Money? can be found at the Prelinger Archives.

  33. A quality education on money:

    Money, Banking, and the Federal Reserve.

  34. Canino says:

    Ah yes, I remember spending many Saturday afternoons downtown at the bookend store. Good memories.

  35. mrearly2 says:

    I can tell you what money isn’t: paper and non-precious metal slugs.
    The whole banking industry is based on fraud. The banks are allowed to create “money” out of thin air and issue credit.
    The private banking system, known as the Federal Reserve Corporation (the Fed) managed to steal (thanks to the Federal Govt) all the Constitutional money (gold and silver), except what people squirreled away, so what we use to “pay” for things is not (Constitutional) money, but debt instruments. We actually can’t pay for anything, but we are allowed to use their (the Fed) “money” for discharging debts. We have no money.