Chapter 3. Where money comes from
Every number in the book has a source. To keep the book short, the notes live here instead of in print. Each source is listed with the section of the book it supports and the words it backs up, in the order they appear in the chapter. Web addresses are links; a page may have moved since the date shown.
The chapter page · Chapter 2 sources · All chapters · Chapter 4 sources
The problem barter could not solve: “Anthropologists have looked hard for a society that ran on pure barter”
David Graeber, Debt: The First 5,000 Years, Melville House, 2011.
What makes money good: “A sixteenth-century English financier named Thomas Gresham gets credit for the observation”
St. Louis Fed, “Gresham’s Law,” glossary.
What makes money good: “In 1965, the United States stopped putting silver in dimes and quarters”
Coinage Act of 1965.
1913: the dollar gets a manager: “locked other bankers in his library until they agreed to lend to each other”
Federal Reserve History, “The Panic of 1907.”
1913: the dollar gets a manager: “The meeting was real; the Federal Reserve’s own history website describes it”
Federal Reserve History, “The Meeting at Jekyll Island”; G. Edward Griffin, The Creature from Jekyll Island, 1994 (a popular account).
1913: the dollar gets a manager: “On December 23, 1913, President Wilson signed the Federal Reserve Act.”
Federal Reserve History, “Federal Reserve Act Signed into Law.”
1913: the dollar gets a manager: “Congress gave it two goals in law: stable prices and maximum employment”, “Its governors serve 14-year terms, longer than any president”
Board of Governors of the Federal Reserve System, “About the Fed” and “Federal Reserve Act” (Section 2A, monetary policy objectives; Section 10, 14-year terms for governors), federalreserve.gov, retrieved October 2026.
1913: the dollar gets a manager: “a dollar bought about twice as much in 1900 as it had in 1800”
Federal Reserve Bank of Minneapolis, “Consumer Price Index, 1800–,” minneapolisfed.org (estimates before 1913): index of 51 in 1800, 36 in 1873, 25 in 1896 and 1900, and 29.7 in 1913 (1967 = 100), retrieved October 2026.
1913: the dollar gets a manager: “a dollar in 1971 bought what 24 cents bought in 1913”, “A dollar saved in 1971 now buys what 12 cents bought then”
BLS, CPI Inflation Calculator, and BLS, CPI-U All Items index (1982-84=100): January 1913, 9.8; August 1971, 40.8; August 2026, 334.980 (Consumer Price Index news release for August 2026). One January 1913 dollar equals about $34 in August 2026 dollars, one August 1971 dollar about $8.20. bls.gov, retrieved September 2026.
1913: the dollar gets a manager: “a typical worker's hourly pay had risen about 29% after inflation”
Economic Policy Institute, “The Productivity-Pay Gap,” updated 2025, epi.org: net productivity up about 80% from 1979 to 2024, hourly compensation of production and nonsupervisory workers up about 29%, both after inflation. For the smaller gap found with one deflator and total compensation, see Robert Z. Lawrence, “Does Productivity Still Determine Worker Compensation?,” Peterson Institute for International Economics, 2016. For the causes economists cite, see Josh Bivens and Lawrence Mishel, “Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay,” Economic Policy Institute, 2015.
1933: the gold is called in: “required the Fed to hold gold worth 40% of the dollars it issued”
Federal Reserve Act of 1913, Section 16.
1933: the gold is called in: “On April 5, 1933, President Roosevelt signed Executive Order 6102.”
Executive Order 6102, April 5, 1933.
1933: the gold is called in: “In January 1934, Congress passed the Gold Reserve Act”
Gold Reserve Act of 1934.
1933: the gold is called in: “Americans could not own gold for investment again until the last day of 1974”
Public Law 93-373, 1974.
1971: the last link is cut: “In July 1944, delegates from 44 countries met at Bretton Woods, New Hampshire.”
Federal Reserve History, “Creation of the Bretton Woods System.”
1971: the last link is cut: “I have directed Secretary Connally to suspend temporarily the convertibility of the dollar”
Richard Nixon, address to the nation, August 15, 1971, American Presidency Project.
The kitchen table: “Mary’s wage was the federal minimum in 1971.”
U.S. Department of Labor, federal minimum wage history.
One thousand dollars walks into a bank: “Whenever a bank makes a loan, it simultaneously creates a matching deposit”
McLeay, Radia and Thomas, “Money creation in the modern economy,” Bank of England Quarterly Bulletin, 2014 Q1.
One thousand dollars walks into a bank: “If every bank in the chain kept 10% and lent the rest”
Standard textbook money-multiplier illustration; for why it is a simplification, see Michael McLeay, Amar Radia and Ryland Thomas, “Money creation in the modern economy,” Bank of England Quarterly Bulletin, 2014 Q1.
One thousand dollars walks into a bank: “In March 2020 the Fed set the required fraction to zero”
Board of Governors, “Reserve Requirements,” March 26, 2020.
One thousand dollars walks into a bank: “paper currency is roughly a tenth of the broad money supply”
Board of Governors of the Federal Reserve System, H.6 Money Stock Measures, via FRED series MBCURRCIR (currency in circulation, $2,475.6 billion) and M2SL (M2, $23,342.8 billion), both for August 2026, about 10.6%. fred.stlouisfed.org, retrieved September 2026. (The older FRED series CURRCIR is discontinued.)
One thousand dollars walks into a bank: “In September 2008, the Fed held about $900 billion in assets.”
Board of Governors, H.4.1 Factors Affecting Reserve Balances, via FRED series WALCL: $905.3 billion on September 3, 2008; peak of $8,965.5 billion on April 13, 2022; $6,747.7 billion on September 23, 2026. fred.stlouisfed.org, retrieved September 2026.
One thousand dollars walks into a bank: “In the two years from February 2020, M2, the Fed’s count”
Board of Governors, H.6, via FRED series M2SL: $15,492.8 billion in February 2020, $21,725.6 billion in February 2022 (40.2% growth), $21,788.1 billion in March 2022 (40.6%). fred.stlouisfed.org, retrieved September 2026.
One thousand dollars walks into a bank: “By June 2022, prices were rising at 9.1% a year, the fastest since 1981”
BLS, CPI release for June 2022.
Who gets new money first?: “An Irish-French banker named Richard Cantillon worked this out in the 1730s”
Richard Cantillon, Essai sur la nature du commerce en général, 1755.
Who gets new money first?: “No man should work for what another man can print.”
Jack Mallers, chief executive of Strike, speaking at Bitcoin Amsterdam, October 2025, as quoted by The Bitcoin Conference and Bitcoin Amsterdam on X; the line was already circulating under his name in December 2024. His own post on X, April 29, 2025; Times Square billboard, December 9, 2025, as posted by Bitcoin Magazine on X that day and reported by TechStory, “Times Square Goes Orange,” December 11, 2025. The first occasion he said the line is not documented.
2008: the bailout and the whitepaper: “Lehman Brothers filed the largest bankruptcy in American history”
Federal Reserve History, “The Financial Crisis of 2008.”
2008: the bailout and the whitepaper: “the government rescued the insurer AIG, in a package that reached $182 billion”
Federal Reserve History, “Support for Specific Institutions: AIG.”
2008: the bailout and the whitepaper: “President Bush signed a $700 billion bank rescue, the Troubled Asset Relief Program”
Emergency Economic Stabilization Act of 2008; U.S. Department of the Treasury, “About TARP,” Office of Financial Stability: $700 billion authorized, $443.5 billion disbursed. home.treasury.gov, retrieved September 2026.
2008: the bailout and the whitepaper: “Outside the banks, unemployment reached 10% in October 2009”
BLS, Employment Situation, October 2009.
2008: the bailout and the whitepaper: “and millions of families lost their homes to foreclosure”
CoreLogic, “United States Residential Foreclosure Crisis: Ten Years Later,” March 2017: about 7.8 million completed foreclosures nationally from January 2007 through 2016, peaking at about 1.2 million in 2010.
2008: the bailout and the whitepaper: “It described a form of money with no bank in the middle”
Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” October 31, 2008.
Worth repeating: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Bitcoin block 0, coinbase transaction; The Times (London), January 3, 2009.
A fair objection: “most historians judge that rigid gold rules made the Depression worse”
Ben S. Bernanke, Essays on the Great Depression, 2000; Barry Eichengreen, Golden Fetters, 1992.
A fair objection
TreasuryDirect, “I bonds interest rates,” treasurydirect.gov: 9.62% annualized for I bonds issued May through October 2022; money market fund yields from the Investment Company Institute and Crane Data, 2023 to 2025 (retrieved October 2026).
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