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CENTRAL BANK? This article originally appeared in the December edition of Penguin's ThinkSmarter Newsletter . Money pervades our everyday economic interactions. But, despite its importance, it is also pervasively misunderstood. Here are three common monetary myths – frequently perpetuated by economists – that need challenging. Myth 1: Money emerges from barter Economists often tell a tale about how old communities first used barter to exchange goods and services. Bartering throws up tricky situations. Take as an example a farmer trying to exchange a cow for bread from a baker, a clumsy and difficult negotiation. Thus, according the old economists like Adam Smith, money was supposedly 'invented' as a way to get around that inefficiency and confusion. This narrative is ahistorical and inaccurate. Anthropologists have long had a much more convincing account: in small communities without money, exchange does not take place through on-the-spot barter. Rather it takes place throu...

(Note: I originally wrote this article for the July 2014 edition of Contributoria , and it is republished here under the following  Creative Commons licence. If you wish to use the article, please attribute the original) "Like everyone else you were born into bondage, born into a prison that you cannot smell or taste or touch, a prison for your mind." This is a line from The Matrix . Morpheus is explaining to Neo that he’s actually stuck in a nightmare prison-world enslaved to computers. The world is not as you think Neo, but I can set you free, provided you take the red pill . In some ways Morpheus resembles one of those single-agenda zealots who goes around telling people that they have a certain secret truth that will liberate them, like the guy who corners you in a pub and says, “Don’t you realise we’re trapped in a corporate prison. The Bilderberg Group owns the world’s governments!” Morpheus, however, is also different to the average conspiracy theorist. The key dynam...