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The Death of Trust

BANGKOK – A friend recently asked a seemingly naïve question: “What is money? How do I know I can trust that it is worth what it says it is worth?” We learn in introductory economics that money is a medium of exchange. But why do we accept that? Banknotes are just pieces of paper with a number attached to them.

We believe in banknotes because we collectively decide to trust the government when it says that 100 is 100, not 10 or 50. Money, therefore, is about trust, without which no society can function.

Just as we obey our leaders’ orders to fight and die because we trust their judgment, we entrust our careers and our money to those who run Citigroup and Goldman Sachs and other such banks, because we believe their leaders will be fair to their employees and clients, and honorable in their business practices. We do not grow up wishing to work for crooks and liars.

Once that trust breaks, bad things happen. Money ceases to have credibility. Leaders become figures of contempt or worse.