The Magic Coin

Chapter 2

CRUSOE DOESN’T NEED MONEY

She heard the sound of waves and tropical birds. The brightness faded and Lily found herself standing on a sandy beach next to a forest.

“Where am I?” Lily asked.

“Few economic subjects are more tangled, more confused than money. To untangle it, we need to see the why of money. So our first stop is this remote island, where a poor fellow named Crusoe has been stranded.”

“Hey, I read about him! But what does he have to do with economics or money?”

“You’d be surprised! We can learn a lot from Crusoe. He helps us simplify complex topics to their bare bones. For our purposes today, he shows us that money is a product of trade.”

“But Crusoe doesn’t exchange—he’s all alone.”

“Exactly! And he doesn’t have or need money!”

Just then Lily heard footsteps in the jungle behind her. She ran and hid behind a big banana leaf. Newton quickly shrank back to his original size, and the coin plopped down into the sand.

Crusoe emerged from the jungle with a fishing net and headed toward the ocean. He saw the silver coin in the sand and picked it up with a curious look on his face. After a moment, he shrugged and flipped the coin up into the air. Before it fell back into the sand, Crusoe continued moving toward the water.

Lily tiptoed out from behind the banana leaf toward Newton.

“See?” Newton whispered, “Crusoe doesn’t need me. I can’t help him get any of the things he needs. There’s nobody to trade with! He needs food, water, and shelter. Money is worthless here.”

Lily nodded with understanding. “So where does money come from, then?”

“I’m glad you asked,” Newton said as he began to spin, hover, and grow. Sunlight glinted off him as he spun, and Lily and Newton vanished in a flash of light.