Drawing Word Pictures

IBM’s research labs have created an online tool that allows anyone to see pictures that literally tell a thousand words, to which my friend Zak pointed me. They call it Wordle, and I used it to get

a snapshot of our blog.

Well, even if we hadn’t noticed before, quite clearly we are quite concerned about money. And rather naturally, it bothers us that the present overwhelming emphasis on money as a value in itself, rather than its arguable origin as an efficient and just means of exchange, has led to the control banks have on our lives.

an interesting article by George Monbiot

George Monbiot usually comes across as radical, but  in this article he sounds remarkably restrained. I never knew of this bit of economic history from the 1920s.

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If the state can’t save us, we need a licence to print our own money

It bypasses greedy banks. It recharges local economies. It’s time to think seriously about an alternative currency

Financial crisis – 3 big truths – Consumption, Investment, Labor

Been talking with Don Hill for past few weeks, and these themes emerged in those, so posting them here for your inspection.  The financial crisis reveals some unspoken truths about the fundamental nature of our current global economy.

1.  Consumption.  Our system of capital accumulation is based on ever increasing consumption – consumerism.  The more consumers consume, the more firms produce, and that results in economic growth.  Give consumers cheap credit and they will willingly consume themselves into oblivion.

Money: Why understanding its origin is important today – 4

Fast Forward to the 20^th and 21^st Centuries: Where Do Banks Get Their Money?

Bankers know how to create money out of thin air. In fact, banks are money factories. Banks exist to make money. You might think that banks are in business to provide services such as banking accounts and loans to their customers. It’s true that banks provide essential financial services. However, the reason that the banks provide such services is that banks need money to use as raw material to create more money. Where does this money come from? It comes from customer deposits. In other words, it comes from the money you and I deposit into the bank.

Money: Why understanding its origin is important today – 3

Banking

(extracts from Glyn Davies: A history of money from ancient times to the present day)

The invention of banking preceded that of coinage. Banking originated in Ancient Mesopotamia where the royal palaces and temples provided secure places for the safe-keeping of grain and other commodities. Receipts came to be used for transfers not only to the original depositors but also to third parties.

…After the fall of the Roman Empire banking was forgotten and had to be re-invented much later.

Money: Why understanding its origin is important today – 2

Origin of Coinage

(Extracts from “Money: Whence it came, where it went” by JK Galbraith)

Metal was an inconvenient thing to accept, weigh, divide, assess as to quality in powder or chunks, although more convenient in this regard than cattle. Accordingly, from the earliest known times and more likely somewhat before, metal was made into coins of predetermined weight. This innovation is attributed by Herodotus to the kings of Lydia, presumably in the latter part of the eighth century B.C.

It seems possible, based on references in the Hindu epics, that coins, including decimal division, were, in fact, in use in India some hundreds of years earlier.

Money: Why understanding its origin is important today – 1

As we survey the accumulating wreckage of the financial system, it is now the prognosticators of doom and darkness who fuel our discourse. Less than a year ago, it was the fast-talking salesman who held sway. From “we are about to enter a period of unprecedented prosperity” to” we are about to enter a period of unprecedented decline” has been a short and painful journey.

Central to both ends of the spectrum has been one word: “Derivatives”. Nobody seems to understand exactly what it means. Nobody knows the real total value of derivatives afloat in the financial system. Some, perhaps, would prefer not to, under the mistaken impression that some ostriches always survive.

Money Debate – 3

Vickram:

It’s your statement ” ..it seems to me that money is in fact precisely that, an equitable replacement for barter” – that I would like to focus on. The rest can wait.

Money as we know it – in the form of instruments such as notes, checks, deposit receipts, etc- is not an equitable replacement for barter. According to me, this is absolutely fundamental. The whole economic edifice rests on the assumption that not everyone will demand redemption at the same time on the basis of the “I promise to pay ..” in the humble currency note.

Money Debate – 2 : Vickram’s response

Let me see if I’ve understood you correctly. My comments are also as below:

1. Your proposal is to replace currency notes by ‘e-cash’. To a large extent I see this as an increasing trend. For example, when I pay my credit card bill off my Internet-enabled banking account, a lot of paper has gotten saved, including the currency notes that were not required when i used my credit card.
   

   Correct. Material savings, and a green move too, potentially.

Money Debate – 2

Let me see if I’ve understood you correctly. My comments are also as below:

1. Your proposal is to replace currency notes by ‘e-cash’. To a large extent I see this as an increasing trend. For example, when I pay my credit card bill off my Internet-enabled banking account, a lot of paper has gotten saved, including the currency notes that were not required when i used my credit card.