Recycled Money

After the seminar on Thursday, I realized that my current research focuses on a unique recyclable that never came up during our discussion: money! Beyond the normal circulation of currency that we engage in any time we make a purchase, investment in capital is a particularly striking form of recycling, although it’s rarely made so salient (after that one lecture in intro econ).

To make it more clear, consider the loans you can make at a site like www.kiva.org. Here, you can make a loan (in full or in part) to an entrepreneur in the developing world who will use the loan to invest in capital; perhaps the loan will enable the purchase of a sewing machine which will help the entrepreneur to make a better living. When he or she is able (after using the sewing machine to increase output), the loan is paid back. After the loan is paid back, the lender has the same amount of money he or she started with (excluding interest, although you could easily incorporate interest into this system as it is in most others), and the borrower now has a sewing machine… It really does have a bit of a magical feeling about it.

At a meta-level, I received a gift certificate to the site from my brother after he had a loan that was paid back from a gift certificate he had received, and so on and so on. Unlike the other kinds of recycling we discussed, there doesn’t seem to be any loss here, other than the value of having money today rather than tomorrow. Of course, it may not quite satisfy the definition with respect to being decomposed into its component pieces through violence…

Stephen