Get Real

Currency is basically just a symbol of belief.
It has no intrinsic value.
In fact, currency may be the ultimate brand.
Because currency is worth whatever people in general agree it’s worth.
Initially we had barter.
I am a carpenter, you are a farmer.
We agree I will repair your cart in return for a chicken.
But I don’t need the chicken right now.
So you make me out a voucher for it.
But I do need some new shoes.
So I exchange the chicken-voucher for shoes.
And the cobbler who ‘sells’ me the shoes later exchanges the chicken voucher, for something he needs.
The chicken-voucher has thus become a form of currency.
Of course it needs to be standardised into easily transferable units of value.
Units that don’t actually exist at all but are purely conceptual.
Then everything can be measured against those units of value, and exchanged for them.
As long as we all agree what that value is.
So actually they are units of belief and agreement.
And that belief is incredibly powerful.
This was demonstrated at its clearest in Brazil in the early 1990s.
The Brazilian currency was the Cruzeiro.
Inflation was rampant, prices, marked in Cruzeiros, were changed daily.
Sometimes more often.
So bad was the situation that shoppers would try to beat the person with the pricing gun.
Whatever they saw him or her heading towards, they would quickly run there and grab it before the price was changed.
This became a daily ritual for shoppers.
Watching where the prices were going to be changed and getting there first.
This was merely symbolic of the financial shambles Brazil was in.
The government couldn’t control the currency but they had to stabilise the economy.
So four economists decided to manufacture something everyone could believe in.
Even if it was abstract, it would at least be a real measurement of genuine value.
Which is why it was called the Real.
As in one ‘real value unit’.
People needed to see some stability before they could begin to have any belief.
So, while the price of everything in Cruzeiros kept rising and rising, every item in the shops was also marked in Reals.
Reals were ‘real value units’ so they didn’t change, however much the price changed.
Of course, at that point the Real wasn’t a currency, just a concept.
But everyone could see the Real didn’t change.
Whatever happened in Cruzeiros, the Real stayed the same.
Eventually people began to trust it.
Even though it was just an abstract concept, it was something they could rely on.
Something firm.
And that trust became real.
Even though it was based on something that didn’t actually exist.
People trusted the Real because it was stable.
And units of trust is actually what a currency is.
And eventually, the economists decided to make the Real the actual unit of currency.
The Cruzeiro was taken out of circulation.
The Real replaced it.
And inflation was brought under control because people believed in the Real.
Whereas they didn’t believe in the Cruzeiro.
And that’s what a brand is.
Belief.

And that’s why an abstract concept has a real, powerful value.