Question

In the opening clip, reporter Jacob Goldstein is trying to understand where all the lost money went during the financial crisis. He asks his business savvy aunt “Where did all that money go?” and her response is “Money is fiction.” What does she mean by saying that “money is fiction”?

Answer 1

Money is considered fiction because its value is a consensual social construct rather than having inherent tangible worth; this is particularly evident during a financial crisis when value can vanish quickly due to the loss of confidence in financial instruments rather than physical currency.

Step-by-step explanation:

When Jacob Goldstein's aunt says that "money is fiction," she means that money is not inherently valuable or tangible in the way physical objects are; its worth is something we agree upon as a society. Most modern money is simply a series of electronic records that reflect transactions and value. Bank robber Willie Sutton was both right and wrong about where money is; while he was correct in seeing banks as essential in the economy's flow of money, he was incorrect in assuming it exists primarily in physical form. In a modern economy, money is tied up in complex financial instruments, and during a financial crisis, when assets devalue rapidly, the 'lost' money is largely a loss of perceived value, rather than physical cash disappearing.