The
Money Revolution
From Funny Money: In Search of
Alternative Cash, by David Boyle, published by
HarperCollins
Publishers, January
1999.
Picture the scene. Millions of people gathered on a rocky island off the northern coast of Europe, and getting hungrier. They only have two fivers and a couple of crumpled dollars between them.
"What do we do?" Gordon Brown asks Kenneth Clarke.
"Make them sit down," he says. Then he converts the money into small change and, when he has given thanks, begins to distribute it among the crowd. And by the end the whole crowd was satisfied and there was enough left over to fill 12 large unit trusts.
The cabinet, commentators and economists, needless to say, were astonished. After all, it was quite a different method of creating money from the usual one, which involves taxing the small amount at 25 per cent, carefully allocating the proceeds, together with some words of wisdom about working harder, and carrying on doing so until it all runs out.
Money just isn't like that, is it. The one thing we learn about money is that it isn't infinite, and it certainly doesn' behave like the Feeding of the Five Thousand. Short of winning the lottery, we are dependent on eking out our small incomes to fit our burgeoning bills. The one thing money doesn't do is pour forth.
But after writing this book, I'm not so sure - because something peculiar is happening to money. There was a time when we knew where we were with it: good solid coins which burned a hole in the pocket just by jiggling up and down, notes which said the Chief Cashier promised 'to pay the bearer on demand'. You'd earn it - if you were lucky enough - put it in the bank, count it, spend it, then it was gone, and you'd have to earn some more. It was simple and straightforward.
The Prime Minister Sir Alec Douglas-Home was even said to balance the budget using matchsticks. It was an endearing picture of a more innocent age: you could imagine Britain's First Lord of the Treasury putting hot towels round his head and putting off the dire moment when he would have to sit down and work it all out, complaining that he hadn't been any good at sums at Eton.
Nowadays things seem very different. The number of professionals involved in different aspects of looking after money, the futures dealers, the traders and arbitragers, reads almost like a cast list from The Canterbury Tales, with all its priests, pardoners and summoners. Finance has become a strange complicated global system fuelled by inter-linked computers and burgeoning information. A large institution like Citibank collects all the money in all its branches around the world electronically overnight and invests it until the morning. Tiny slithers of percentages of transactions are bundled together in deals to pay the traders. Nothing is wasted in the financial markets.
It is a peculiar shadowy world, where rumour and mood can shift billions of pounds in a few minutes. And where Chancellor Norman Lamont, looking at the fragments of his European exchange rate policy after Black Wednesday, could describe himself as being "overwhelmed by a whirlwind". This view was echoed by former Citibank chairman John Reed, who famously described the financial markets as "a little like the physicist who created the bomb".
"We see about 400 billion dollars every day of foreign exchange transactions going through the system," he said, and that was a good decade ago. By the end of the 1980s, $800 billion a day in electronic payments were going from bank to bank through the Clearinghouse Interbank Payments System in the USA, known as CHIPS - in Britain, we have a similar overheating system called CHAPS - and that figure rises every year. The daily flows in the currency exchanges are now running at an estimated $1,300 billion, and the World Bank reckons that 95 per cent of them are speculative, which means that only five per cent is actually related to the real trade which keeps our economies moving along. The rest is froth, but froth with terrifying power over ordinary lives.
So you can be sure that, if you knock politely at your bank manager's office door and ask actually to see your money, then it's not going to be there. It will appear on your bank statements of course, with bizarre fractions charged in interest and service. But you know it will probably be off travelling the globe, investing in massive dam projects, or dabbling in the Tokyo Futures Markets while you're asleep.
The truth is that, actually, it doesn't exist at all. The days where you knew where you were with those chunky coins has gone for good. Money is now blips on computer screens, its value can disappear overnight, it pops up unexpectedly in the form of credit or pseudo-money like Air Miles or supermarket affinity cards. Its total demise is widely reported. "Cash is dirty, cash is heavy, cash is quaint, cash is expensive, cash is dying," said the New York Times magazine recently on its front cover, hailing the advent of sophisticated computer debit cards.
The trouble is, while some people seem to be able to surf this new world of money easily, others don't. Banks create it by lending money they don't possess, tycoons like Robert Maxwell seem to have loans pressed on them by adoring financiers: when he fell off his yacht into the Atlantic, he owed twice as much as Zimbabwe.
The rest of us are stuck with the old idea. We believe there is a finite amount of money, which comes to us from employers and occasionally from the government, and we spend it just a little faster than we should. Why aren't our coins and notes as flexible as they are for the Masters of the Universe in the City of London or Wall Street?
At our end of the equation, money stays irritatingly concrete. It runs out, and we all feel increasingly fearful about it. In the world of glass towers, on the other hand, everything is fluid and expandable. If you don't have it, you borrow it, discount it, arbitrage it, trade it, ride the market with it, knowing that money increasingly gets its changing value from the psychology of the international market: our hopes, fears, weather patterns, mood swings all effect its value.
Money, in other words, has become a psychological construct. And if so, I thought to myself, why can't we find psychological ways of getting more of it? Maybe we can put aside the narrow world of chancellors, bank managers and balance sheets, and work out ways to tap into this infinity of wealth for ourselves - as our prehistoric ancestors did when they wandered along beaches picking up shells to use as currency. Maybe we can take Monopoly money and somehow make it real: even the economics editor of The Independent Diane Coyle describes in her book The Weightless World using 'pretend money' from an old board game to pay her neighbours in her local baby-sitting circle.
Is DIY money possible? It is an idyllic dream by any stretch of the imagination, but it's what this book is all about. It is a journey to discover people who claim to have found ways of conjuring money out of nothing, the so-called 'new alchemists' who can take the modern equivalent of base metal and turn it into gold - and with it turn all our ideas about money upside down.
I don't mean the mystics who think you can imagine it, or who urge us to load up supermarket trolleys and then pray for the means to pay for it at the checkout - and there are people like that, and if money is a psychological construct, there may be an element of truth in it too. I mean the people who are working out practical ways of turning the whole system on its head. I wanted to go to the USA, find them and interview them . . .
