This week we gotta talk about money. Where does it come from? Why do some people have so much and others none? Is the system just completely and totally rigged? Today, we’re gonna make sense of all of this. Now, warning: this episode is a little longer than usual. It also might be the most important show I’ve done so far.
I want to start with the most important thing I can tell you about money. Most people think money is a thing, Gold had value because it was scarce and shiny. Paper money had value because it represented gold, I think. And then digital money has value because I guess it represents paper money… maybe? And I think crypto is probably just… fairy dust? As money gets more abstract, our mental models get fuzzier and fuzzier until it feels like we just have to kind of accept all of this on faith. So let’s clear it up.
Money of any kind, as we know it and use it today, isn’t best described as a “thing” at all. It’s best described as a PROMISE. Specifically, money is a promise that someone, somewhere, will accept this paper or this phone ding in exchange for something real. And when you hold a dollar, you’re not holding a “thing,” you’re actually holding a promise backed by trust that the other party will honor their promise in the exchange.
So the global economy? It’s really just a vast, incomprehensibly complex web of promises layered on top of promises. We started this conversation about money when we talked about debt being a promise you make to provide your future labor. That’s still true. It’s just not the whole story because promises always have two sides.
When a bank lends you $100,000, two things happen simultaneously in their accounting system. On one side of the ledger, you owe them $100,000. That’s your debt, the promise of your future labor, your liability. But on the OTHER side of the ledger they are now owed $100,000. That is their asset. Same $100,000, same promise, just written down twice from opposite perspectives. The bank’s asset IS your debt. They’re not two different things. They’re one thing, one promise, experienced differently depending on which side of it you’re standing on.
Now let’s scale that up. The $39 trillion U.S. dollars of national debt sounds terrifying when we call it a debt. But flip it around, because that’s also someone’s asset. The U.S. debt is also simultaneously $39 trillion of treasury bonds sitting in pension funds and foreign exchange reserves investment portfolios and savings accounts all around the world. It’s not just a liability the U.S owes, it’s an asset the world holds. The promise runs both directions. Almost all money in the world is like this: It has debt attached to it, meaning someone borrowed it into existence.
There’s one main exception: money that governments create directly. Now this raises an obvious question. Why don’t governments just make more money? Why does debt matter at all? The answer is one word: inflation. Let’s demystify inflation. This applies to countries who print their own currencies. Imagine a small town with 10 apples and $10. That’s a very small town. Each apple costs $1. Now the government prints 10 more dollars. There’s still only 10 apples. Now each apple costs $2. The money doubled, the apples didn’t, so the money is worth less or more accurately, the cost of the apples went up.
That’s inflation. The term is in relation to the thing you wanna buy, The price of those apples inflated. This is the real constraint on money creation. The simple fact that if we create more money than there are real things to buy with it, the money becomes worth less and the cost of stuff inflates.
This part is really, really important. It turns out that the amount of debt, even if it’s in the many trillions like the U.S., it isn’t the most important part. The most important part is what we spend the debt money ON.
Let me say this another way. When we create money, we need to be damn sure we’re creating real things with real value or things will get more expensive. Roads, schools, clean energy, healthcare… things that make the future substantively better… those are apple making investments, because they eventually they grow more apples. Those are fine to fund with new money. Tax cuts for billionaires, endless wars… those are apple wasting investments, because they don’t make new apples. Those are the things that will eventually cause real problems.
Our grandchildren won’t be crushed by the number on the debt clock. They’ll be crushed if we spend huge piles of money on stuff that didn’t build anything worth having, leaving them with a broken climate, crumbling infrastructure, a dysfunctional economy. That is the real inheritance problem, not the number itself.
And here’s something almost nobody talks about. There are actually multiple ways to manage inflation. There’s one we always use, and it’s the only one you hear about: raising interest rates. This works because it cools the economy and costs workers their jobs.
Wait. That’s not the way they say it on the news. Why did I say it that way?
When the Fed raises interest rates, it makes borrowing more expensive, which slows down spending and that cools the inflation. It sounds neutral, right? It’s not. Why? Well, let’s go a layer deeper. WHO is forced to slow down spending when borrowing gets expensive? It’s not the person with multiple houses and a robust stock portfolio. It’s the worker who was about to buy their first home. The small business owner who needed a loan to expand. The mid-sized company that was about to hire a bunch of new roles. Raising interest rates fights inflation by making life disproportionately harder for people who are already living closer to the edge. That’s the mechanism and that’s who pays. But there are actually two other ways to manage inflation you almost never hear about.
First option: tax wealthy people.
Now when I say “tax wealthy people,” I don’t mean doctors or lawyers or lifetime savers with a paid- off house and a great retirement account. I mean people whose primary income isn’t a paycheck, but comes from money that makes more money: dividends, capital gains, returns on assets. This is the Capital class, not the Labor class; the people for whom labor is optional, because their portfolio does the work for them. That’s actual wealth. And that’s barely taxed compared to the wages of someone who has to show up and work every day.
Remember the apples. This kind of wealthy person… basically has warehouses full of apples sitting there serving absolutely no one. Also, their demand on the economy is usually enormous. Private jets and super yachts and multiple mansions and consumption at a scale that might literally kill you from shock. Taxing that demand would reduce pressure on productive capacity without touching a single worker’s job or anyone’s ability to buy groceries. The inflation would cool because the people doing the most consuming are just doing a little bit less of it. And believe me, they would still live a lifestyle you can only dream of.
This isn’t the dominant approach used today, of course. I’m pretty sure you know why you don’t hear about it. (Remind me who owns most media outlets again? Oh, right!) But economically, this is the first alternative option for controlling inflation that we never hear about.
The second option: we could intentionally shrink wasteful industries to free up resources for useful ones.
Here’s what I mean… Right now, we have enormous production capacity tied up making things that the planet really can’t afford. Oversized vehicles, disposable fashion, single use frickin’ everything. Meanwhile, we have a housing crisis, a healthcare crisis, an infrastructure crisis, a crumbling public transit crisis, an energy crisis… on and on.
What if we redirected those factories, that labor, those supply chains towards things we actually need…? We have the factories, we have the workers, we have the supply chains, we have the engineers, the designers. What we don’t have YET is the collective will to point our vast resources at the right problems. We could redirect our money toward affordable housing, community health clinics, clean water infrastructure, mobility projects, clean energy. Same economy, same workers… very different output.
This is the second alternative option for controlling inflation you never hear about. And you can probably guess why we don’t hear about this one too. (Hint: it’s the wealthy who decide what gets made. And oversized vehicles and disposable fashion and single use everything… really profitable!)
The problem we’re talking about is the same one — inflation — but the solutions are wildly different, with very different winners and very different losers. And guess what? Right now, YOU always get to be the loser. Because our leaders choose the one option that protects Capital and costs YOU.
More than anything else, I want you to leave this episode understanding this: our monetary system isn’t neutral. It’s a set of rules about who gets to make promises and who has to keep them.
Let’s recap.
So far, we understand that money is a promise that almost always has two sides. Someone’s debt is someone else’s asset. We also now understand that the amount of money we can create has limits based in reality. The apples, right? We stretch those limits too far, we get inflation, which someone has to pay for. The wealthy should pay, but they usually don’t, because the monetary system is not a natural system, but a bunch of made up rules…usually made up by the people with the money.
Are you seeing some problems here? Yeah, but we’re just getting started.
In the spirit of “who makes the rules,” I wanna tell you a story. It starts at the end of World War II. July, 1944. Representatives from 44 Allied nations gather at a hotel in Bretton Woods, New Hampshire, to design the post-war monetary system.
The world needs a new financial architecture because the old one, which was based on the gold standard, hadn’t exactly caused the Great Depression, but it did turn a bad recession into a nightmare. How? Basically, the gold standard made it impossible for countries to do the one thing a collapsing economy needs to do: spend your way out. These folks weren’t just redesigning finance. They were trying to make sure that never happened again.
Two visions compete. The first is from economist John Maynard Keynes, representing Britain. Keynes proposes something called the bancor — this is a neutral unit of accounting that would sit above all national currencies and which contains a brilliant built-in mechanism: it penalizes both extremes.
What this means is that Countries who are exporting far more than they import would get penalized, and countries importing far more than they export would also get penalized. What this does is it makes the goal not to “win trade,” but healthy circulation. Money and goods flowing, nobody hoarding, nobody drowning. The penalty funds would flow into a shared global pool used to help struggling nations get back to functional economic balance and fund development in poorer countries who are just building infrastructure and stability. It’s elegant. It’s fair. It’s designed for global stability, not a certain nation’s advantage.
The second vision is from Harry Dexter White, representing the United States. His proposal is simpler and considerably more self-serving: make the dollar the world’s reserve currency. Every other country gets pegged to the dollar. The dollar gets pegged to gold at $35 an ounce. The U.S., which at this point in history holds most of the world’s gold and is basically the only major economy left standing after World War II, becomes the center of the global financial system.
Now you have to understand, in 1944, the U.S. was basically an arsenal of exports, sending out way more than what we bought. Under Keynes’s system, that excess exporting would have been taxed in a big way. So, like a good businessman with a lot of frickin’ leverage, White looked at that proposal and said, “Hell no!” Keynes loses, White wins, the bancor dies in that hotel in New Hampshire. And for the next 27 years, the system mostly works. Countries hold dollars. Dollars are redeemable for gold. The U.S is the anchor of global stability. Then comes August 15, 1971.
By the late 1960s, the U.S is spending heavily — on Vietnam, on the Great Society programs — printing way more dollars than it has gold to back. France starts demanding gold for their dollars. Other countries follow. The U.S. gold reserves are draining. So, Richard Nixon goes on television on a Sunday night in August and does something that stuns the world. He unilaterally closes the gold window. Dollars are no longer redeemable for gold. Just like that. The U.S. just changes the rules of the global monetary system, because it can. This becomes known as the Nixon Shock. It leaves the dollar backed by, well, basically by stately Uncle Sam vibes and the full economy and the political weight of the United States.
So if dollars aren’t backed by gold anymore, why does anybody in the world want them besides us? You still hear a lot about the dollar in global finance conversations, right? Yeah, there’s a reason for that. Enter the petrodollar. In 1974, Nixon sends Treasury Secretary William Simon to Saudi Arabia with a secret deal. The terms: the U.S. will guarantee Saudi military protection and weapon sales. In exchange, the Saudis move to pricing oil in dollars and to recycle their oil profits, which are enormous, back into U.S. Treasury bonds. By 1975, every OPEC member follows.
For the U.S., the genius outcome of this arrangement is breathtaking. If you want oil, and every country on Earth does, you now need dollars first, which means every country on Earth has to maintain dollar reserves, which means demand for dollars is now structurally guaranteed not by gold, not by treaty, but by ENERGY. If you’re a country, you can’t grow your economy without energy. And you now can’t buy energy without dollars. Therefore, it’s become very difficult to run your economy without dollars. The U.S. has just made itself the global toll booth for any country on the road to modern civilization.
Economists have a word for currency control benefit: seigniorage. In this case, it means The U.S. gets to print dollars, spend them on goods and military and debt, export them to the world, and the world has to absorb them because the alternative, not having dollars, is worse. It’s essentially a global tax that every other country pays to the U.S. simply by participating in the global economy. This is the “petrodollar,” and it’s been the invisible architecture of global power for 50 years.
We’re talking about money here, so let’s put this back in promise-based language. The U.S. essentially put itself on the asset side of the promise. Everyone else got to be on the debt side. In other words — remember this from the debt episode — there are essentially two camps, Capital and Labor. You wish you were Capital, but you’re probably Labor. This is basically that, but at a planetary scale… the U.S. is Capital and it made everyone else Labor.
Here, in the present in 2026, things are getting uncomfortable and kind of urgent because the petrodollar system is starting to show some serious cracks. Saudi Arabia has started accepting Chinese yuan for some oil sales. The BRICS countries — Brazil, Russia, India, China, South Africa, and a growing list of others — are actively building alternatives to dollar denominated trade.
And when the U.S. froze Russia’s dollar reserves after the invasion of Ukraine, it sent a message to every country on earth: the U.S. will weaponize the dollar system against you if it decides to. That message landed… hard. Countries that had never seriously considered dollar alternatives started quietly building them. Now, these are early signals. This is not a collapse, but the direction is a big deal.
And then there’s something harder to quantify, but really impossible to ignore: TRUST. Money, as we’ve established, is a promise. And a promise is only worth something if the other side trusts you will keep it. The U.S. dollar has been the world’s reserve currency for 80 years, partly because of oil, partly because of military power, but also because of those stately Uncle Sam vibes, right? The U.S. was seen as stable, predictable, governed by rules and institutions, the kind of counterparty you could trust to honor its commitments.
What’s happening now? Well, when our President governs by chaos, imposing tariffs by tweet, threatening allies, questioning the independence of the Federal Reserve, making the U.S. feel erratic and unpredictable, he’s not just causing “quirky diplomatic awkwardness.” He’s making everyone on earth wonder if the promise is still good. And that question, once it’s in the air, is really hard to un-ask. Just think about it from the perspective of a foreign central bank. For decades, the answer to stability questions was obvious: hold dollars. The U.S. is stable. The promise is safe. Now, you’re watching the U.S. threaten its closest allies and freeze adversaries’ reserves as a weapon and govern by whim. You don’t have to hate the U.S to start quietly asking, “Should we hold fewer of their promises?”
Here’s the terrifying feedback loop this creates. The more countries diversify away from dollars, the weaker dollar demand would become. Now the weaker dollar demand becomes, the more it costs the U.S to borrow, the more it costs to borrow, the more pressure on U.S finances, the more pressure on U.S finances, the more erratic the political response. The more erratic the political response, the more countries diversify away from dollars. This is a crazy loop.
There’s a concept in finance called “risk-free.” U.S. treasury bonds are called “risk-free” assets because the assumption is that the U.S. will always honor them. That assumption is so foundational that much of the entire global financial system is built on top of it. What happens when “risk-free” gets a big fat asterisk put next to it?
Nobody knows. It’s never happened before.
Welcome to the Chaos Window, my friends. Not just geopolitically, monetarily. That promise that held the post-war world together is visibly fraying. And while that’s happening at the planetary scale, at the level of nations and currencies and oil, that exact same logic has also been playing out for the individuals who learned how to game the system.
Yep, it’s time to talk about billionaires.
We can’t do a money episode and not talk about billionaires. Our gleaming exemplars of what it means to get all the money and win capitalism. Our heroes, emblazoned eternally on the covers of Forbes.
Anyway, before we go there, I want to be really clear about one really important point. I am not against capitalism for things we want. I am against it for things we need. Let me explain. Capitalism: extraordinary for producing things people want. Streaming TV and quirky restaurants and innovative software. The profit motive, competition, price all work remarkably well when the thing being produced is optional. When you don’t need it, the market is great at pricing it. When you can walk away, the exchange is fair. People can be adults, experience freedom in their choices, work harder for extra things they want, all good. But capitalism has a catastrophic track record with providing things people need.
Housing, healthcare, education, water, energy, food, these aren’t optional. You can’t walk away. You can’t refuse to participate in this month’s drinking water. And when you can’t refuse to participate. It’s no longer like dealing with a “market,” it’s like dealing with a monopoly. The challenge is when capitalism invades the things we need to live. That’s like a cancer cell infecting our biology. Left unchecked, the endless extraction there eventually kills the host.
Now take this idea and zoom out. Stick with me — we’re about to tie everything together we’ve talked about and get back to billionaires.
The petrodollar is extraction of needs happening at a planetary scale. Why? Because energy is the most fundamental need of a modern economy. Energy and what we want to build are completely interconnected. Because of the petrodollar, for 50 years, the U.S basically extracted a global tax from every country that needed to participate in the modern economy. They maybe didn’t want dollars, but they needed them because they needed oil. At the top of this mountain of resources that this system created, personal extraction through debt, national extraction through dollar dominance, global extraction through energy pricing, sits at the top, you guessed it… the billionaire.
A billionaire is not just a monetarily successful person. A billionaire is someone who has accumulated an incomprehensible quantity of promises from other human beings. A billion dollars is a billion claims on human time, human energy, human labor. And because of interest, it’s not just sitting there. It’s also generating more claims, more promises automatically forever without the billionaire having to keep any real promises in return.
That is not “success,” my friends. That is an endpoint of an extractive system that’s designed to concentrate promises upward at every level.
And here’s the part that ought to alarm even the most committed capitalists listening to this. This system will inevitably destroy itself. We’ve talked about this. If the system extracts surplus from labor so completely that workers can’t consume. If houses cost so much that people spend their entire surplus servicing their mortgage. If healthcare is so expensive that one illness wipes out a decade of savings. If education is only possible by borrowing against decades of future labor. The consumer base that that entire system depends on will eventually be hollowed out completely. And the billionaire’s foundation becomes a sinkhole.
The billionaire needs customers. Customers need surplus. But our current system is eliminating surplus. And when endless extraction enters the zone of needs, it doesn’t just harm the people being extracted from, it eventually destroys the system itself. It is a cancer cell, not a healthy cell.
So, billionaires are not exemplars of a healthy system, but of a rotting one. They’re the result of a monetary system that abuses promises and designs systems for one-sided gain. They are the individual equivalents of the petrodollar, the inevitable endpoints of a system so asymmetrical that it will eventually self-destruct under the weight of its own unfairness.
So what do we actually want? I may be from the U.S, but I do not support our behavior at Bretton Woods. I want a monetary system designed around shared global success. I believe a better definition of economy is our shared global household. It’s time we started acting like it.
Keynes had things directionally correct in 1944. His idea for a neutral supranational unit of accounting controlled by no single country with built-in mechanisms penalizing both excessive surpluses and excessive deficits, that makes a tremendous amount of sense. I believe we now have 80 years of evidence proving Keynes mostly right. And if I’m right about the coming Crisis, we’re gonna get an opportunity to try this again. So let’s define what great would look like.
A genuinely good global monetary system would do at least four things:
First, the new global system should not grant any single country outsized global monetary privilege. Reserve assets should be genuinely multilateral. Yes, this means the U.S. gives something up. Yes, that will be really frickin’ difficult. We should do it anyway.
Two, the new system should be decoupled from military power. The current system requires roughly 750 global U.S. military bases. My friends, that is not a “monetary system.” It’s an empire with a small side of accounting.
Number three, the new system should have built-in bias toward balance. Countries running persistent surpluses through exports are putting pressure on the system just as surely as countries running persistent deficits through imports. Both should face incentives to rebalance.
Number four, the new system must account for ecological limits. This is the piece that makes it genuinely new and accounts for some really essential things we’ve learned about life in the last eight decades. Essentially, our next system needs to penalize ecological destruction and reward regeneration.
All this might sound far-fetched. It’s not. It’s basically what Keynes proposed 80 years ago, just updated for the 21st century. And for what it’s worth, when we get to redesign this thing, I vote we toss the Bancor name. I think we name the new system Pax, for peace, and a pact, and a pointed replacement for the “Pax Americana” that got us here.
If you’ve been watching this show, you know I believe a reorganizing Crisis is coming. We’re not exactly sure what is gonna break yet. Could be A.I.-related, could be geopolitical, could be energy costs or a larger war. We don’t know, but something big is coming. Whatever it is, it’s gonna crack the foundation of our current system in a large enough way that it galvanizes and mobilizes huge numbers of people to do collective things that now in this moment feel completely impossible. After the crisis, these things will be possible.
The goal of this show is to get more of us thinking about what we want to build next. And I hope now you have some ideas for what needs to come next for money. The promises that hold the world together are about to be renegotiated, whether we participate or not. So I vote we participate.
Original post with all source links: https://joshallan.com/2026/03/24/what-the-frick-is-money-anyway/
