What is money ?

This most interesting question was discussed on NPR (yes, National Public Radio) the other day for about 1 hour. Here's the link:

http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

If you'd like to listen to it, click on the link, click on the "Play Episode" button that is located right next to the lower right hand side of the picture of the huge stone disk, that the authors present as an example for money.

According to these lighthearted experts, money is fiction. You can listen to them for 1 hour and will be not any wiser. Too bad that this opportunity was wasted that way, as a better understanding of money certainly would make it easier to understand our economic life.

Here's what they could have said :
1.Money is credit
2.Money is something of value that people agree on to act as an intermediary to facilitate the exchange of diverse goods
3.Money is anything that people agree to be money
4.Money is whatever the government tells you it is

Ok, but what SHOULD money be ?
It should be whatever people decide to be money. Money should have independent value that all parties to transactions voluntarily recognize.
Money is really a yardstick, a measure. Few people ever want to hold on to money, as no matter what form it takes, money itself is likely not very useful. Money helps us to get what we really want. The only time that people will want to hoard money itself, is when the future seems especially uncertain.

Today, money is credit. It does not have any independent value and the government tells you that you have to take it (legal tender laws). When a credit card company sends you a cash advance check and you decide to write it for $4000 and deposit it into your checking account, you have just legally printed money.
That $4000 didn't exist before you wrote that check, and when you pay it off, it has ceased to exist.
You could say that our money is backed by debt. People will accept it as long as they have debts that they need to pay off. If they would be debt free, they would likely think a lot harder about accepting something for value that has such a poor track record of keeping it.