Conversations among economists are incredibly valuable—they sharpen our thinking, challenge assumptions, and refine ideas. But it’s easy to forget how complicated and unintuitive economics can seem to people outside the field. The concepts we toss around every day, often in shorthand or with an unspoken understanding, can feel confusing or even paradoxical to non-specialists. That’s why it’s not only worthwhile, but often refreshing, to engage with people who don’t have formal training in economics. They bring curiosity, common sense, and practical insights that make us see things differently.

Last year, after giving a talk, someone shared a comment with me that sparked a fascinating conversation. I’ve also noticed how economic memes—popular online—can raise interesting questions. At a recent conference, for example, I gave a talk about de-dollarization and the Mar-a-Lago Agreement. During the Q&A, someone asked: “When will we finally have a fixed dollar?” They argued that money—whether dollars, euros, pounds, or francs—should be treated like units of measurement. If we wouldn’t accept inches or hours changing unpredictably, why do we accept it with money?

It’s a fair question. We live in a world that’s obsessed with data and measurement. So it’s tempting to think of money as just another unit—like inches for length, seconds for time, or pounds for weight. But money is not, and has never been, a fixed measure of economic value. A dollar is not like an inch. It doesn’t represent a universal constant. Instead, money is a social institution, and its meaning and value depend on wider economic, political, and cultural contexts.

Part of the confusion comes from the fact that money acts as a “unit of account.” We use it to set prices, track transactions, and compare economic values over time. On the surface, it looks like a measuring tool. Salaries, fortunes, and GDP are all expressed in dollars, so it feels like money is a unit of measure. But this is misleading. Unlike inches or kilograms, which are anchored to stable physical constants, the “unit” of money rests on a fragile consensus shaped by governments, central banks, markets, and individuals.

Real units of measurement are designed to stay the same, no matter where or when you use them. An inch in Florida is an inch in Alaska. A minute is the same whether you measure it with a sundial or a smartphone. A kilogram in 1965 was still a kilogram in 2025, even though scientists redefined it in 2019 based on universal physical constants. By contrast, money constantly changes in value—even though we still call it a “dollar.”

Take inflation. A dollar in 1925 could buy what now takes around $20—meaning today’s dollar has about 95% less purchasing power. Even during periods of low inflation, the dollar quietly loses value over time. If money were a true unit of measure, this variability would make it useless. Imagine buying lumber, only to find the agreed-upon lengths had shrunk or stretched depending on the economic climate. Trade would collapse, contracts would fail, and projects would never get finished.

But here’s the key: we don’t want money to be fixed like a meter or kilogram. We need it to fluctuate, because that’s how it signals economic conditions. When wheat gets more expensive relative to corn, or labor costs rise in one industry compared to another, those price changes tell entrepreneurs, producers, and consumers how to adjust their decisions. If the dollar were perfectly stable, it would be “dead money”—unable to send those signals.

In this sense, money isn’t a measuring stick—it’s a messenger. Its value lies not in stability, but in flexibility. And this flexibility reflects its political and institutional nature. Unlike inches or kilograms, which are maintained by scientific bodies like the National Institute of Standards and Technology, money is managed by central banks and governments. That means it responds to inflation expectations, labor demands, geopolitical crises, and even election politics. Its ups and downs aren’t flaws—they’re features of how the system works.

Money also doesn’t exist on its own. It’s tied to credit, debt, and trust. A dollar only has value if people believe in it and are willing to accept it. That makes it very different from units like seconds or kilograms, which don’t rely on trust. You don’t need faith in the Federal Reserve to know how long a minute lasts. But the usefulness of a dollar depends entirely on expectations, confidence, and functioning financial systems.

This also explains why money is subjective. Economists talk about “nominal” versus “real” value. A price tag might say $100, but that doesn’t tell us much unless we know the context. If bread costs $1, then $100 buys a lot. If bread costs $10 or $50, that same $100 means something very different. Physical units don’t work this way: an inch is always an inch. But a dollar today may not buy what it did yesterday.

Even tying money to gold or silver doesn’t make it a true unit of measure. Under the gold standard, the dollar’s value still depended on convertibility, trust, and the ability of governments to maintain that link. History shows that gold standards could be—and were—suspended, manipulated, or abandoned. Linking money to a commodity doesn’t make it constant; it just ties it to another changing asset.

So, what is money? It’s a special kind of good. Unlike most goods, its value doesn’t come from being consumed or produced, but from its universal acceptability in trade. It’s a medium of exchange that lets us coordinate across time, space, and markets. And unlike a true unit of measurement, money is active. A dollar sitting in your wallet isn’t just a neutral standard—it’s part of a dynamic system that influences liquidity, demand, and the economy at large.

That’s why it’s more accurate to think of money as a channel for exchange relationships. It reflects relative scarcity, consumer preferences, and market expectations—not as a fixed measure, but as a constantly updated signal.

The problem is that treating money like a unit of measure creates illusions. It encourages us to believe we can precisely compare values across time and space, when in reality those comparisons are blurred by inflation, exchange rates, and shifting social norms. It leads us to put too much faith in monetary statistics, as if they directly reflected economic output or well-being.

In the end, money is not a rule or a measure. It’s a social convention—shaped by institutions, influenced by beliefs, and open to manipulation. It’s a tool for coordination, not a fixed standard of value. And understanding that is essential if we want to see past the illusions of price, value, and wealth in today’s world.

Money is a language, a signal, a lever, and a ledger entry. It makes trade possible, allows specialization, and helps us create wealth. But it is not, and never will be, a unit of measurement. And realizing that is the first step to truly understanding how our economy works.

The Daily Economist