Money, money. Without it all is lost.

There are barely any people who really understand the concept of “short selling” a position. However, we all partake in short selling. Our credit card expenditures, our mortgages and credit lines, are all instances of short selling in that we borrow money – meaning that we’re in debt – until the loan is repaid by acquiring euros, dollars or Swiss francs. Since the fruits of our labour are almost always paid in money, we always know what amount will have to be repaid if we are in debt, whereas we never know what amount will have to be repaid if we borrow shares…or Bitcoin, due to the volatility and uncertainty of these underlying assets’ values.

Nothing could be simpler than anticipating repaying a loan of 5,000 euros in a month when our monthly income is 5,000 euros. Also, since wages are sticky, we are at least intuitively reassured in our plans to pay back borrowings. This is because we know we won’t need to provide more labour than anticipated to cover our short position in euros due to our loan, credit line or bank card expenditures. Our Western nations also possess a key asset: inflation control. This allows us to make long-term plans, confident that a euro today will buy us pretty much the same amount of goods or services the next year. The problem is of a radically different nature when we short sell shares (as with Facebook, for example) or Bitcoin. So, since we are not paid in these instruments but in money, we will never know how much work to provide – paid for in money – in order to cover our short position in Facebook shares or Bitcoin. In the extreme, the value of these assets would likely rise exponentially, in theory forcing us to work ad infinitum to pay back a debt that’s not denominated in money…while paying back borrowed money is a relatively easy thing to plan for since we are paid in the same medium of exchange.

That being said, the idea of short selling is absolutely crucial in our societies because it builds a bridge between what we plan to buy and our income. As our spending appetite and investment plans do not routinely coincide with our monetary income, short selling thus creates a vital junction between present and future, and that’s exactly why the medium used in such circumstances must be stable and resilient. Let’s imagine for a minute borrowing Bitcoin to buy a car and basically overnight having to repay double its price when the value of Bitcoin bounces from 10,000 to 20,000! In this hypothetical situation, it is both us – the debtor – but also our creditor who would be doomed to bankruptcy, with all the harmful consequences very easy to imagine for all of society. Such volatility of short-sold underlying assets is therefore toxic for the economy, whereas short selling in money ensures longevity for banks, in turn overseen by the central bank that has the exclusive power to create money. The central bank can therefore print money – both cash and scriptural – in the event of a rush for money during banking crises or deflation, and can thus guarantee the supply of money. However, it would of course not be able to print Facebook or Bitcoin shares if their value was to take off.

We should therefore resolve to keep the rationality and distance necessary in the face of these stock market take-offs and cryptocurrency hysteria, because no medium of exchange can claim to be replacing our good old money.