Welcome to another issue of Net Interest, where I distill 25 years of experience investing in the financial sector into a weekly email. If you’re reading this but haven’t yet signed up, you can join over 19,000 others and get Net Interest delivered to your inbox each Friday by subscribing here:

Reinventing the Financial System

Everyone thinks they understand money. People earn it, they count it, they save it, they spend it, they covet it, they talk about it, they don’t talk about it. It makes the world go round; everyone understands it. 

Yet scratch away at the surface and what we all think of as something tangible dissolves into the abstract.

Economists traditionally thought that money was invented as a solution to a problem in the system of barter. They presumed that before money, people would simply swap goods and services. But barter presented a problem: the “coincidence of wants” – both sides wanting what the other has at the exact same time. My wife, a school teacher, once bartered …