Funny Money

Gordon Swire

I wanted to tell you that I know I’ve fallen behind answering your posts and choosing a winner for the Family Tree competition. I have really been busy – so many commitments and also planning my next collection. But I will deal with everything very soon – please be patient!

In the meanwhile, you know I’ve spoken about the ideas of debt, growth and the financial crisis in previous blogs. I also often talk about these things with my brother, Gordon, who sent me some of his thoughts about it all:

Money’s funny stuff, in fact probably the funniest stuff ever – weird in fact. 

For thousands of years men used precious metals as a means of exchange, other things as well like seashells, feathers, even large circular stones on one Pacific Island, as well as all the bartering of sheep, goats, cattle, even womenfolk sometimes, sorry girls but I’m sure it’s true, you know it is – but precious metals won the day. There are about 7 redeeming qualities that the gold bugs quote ad infinitum but the main ones seem to be that precious metals are portable and that they’re very rare. You just can’t produce more gold or silver without a lot of time and effort. Also you can have lovely jewellery which you can fashion and put around your chosen ones.

The ancient goldsmiths and dealers would buy and sell the gold, and quantified it into bars and gold coins and then what happened was interesting. Instead of people carrying lumps of gold around in their pockets, the goldsmiths issued bits of paper which were like title deeds to the gold you had held and deposited in their vaults and then what happened was even funnier, the bits of paper themselves started to become tradable.

Then the goldsmiths got even more ‘creative’, one of the most overused words in the English language today but there you go, those guys really did literally create something out of nothing – and it’s still going on today.  They realised that all the people holding their bits of paper would never all come to try and redeem their gold at the same time so they figured they could issue extra paper than was covered by the gold they were holding as security – illegal you might think but this paper money grew with the assent and connivance of the governments of the day which was usually a greasy little despot who only wanted to kill more people so that he could grab more power and this growth of money gave him the wherewithal to do just that. Think of scumbags like Gaddaffi and Saddam, we just used to call our lords and masters by different names that usually started with the words ‘your majesty’.

Now in the free world as they like to call it, we have democracy as they like to call it, and elections as they like to call them, and our politicians always need to borrow and create just as much money as they can to keep the punters voting them into power, and so it goes on, the money caravelle goes around with connivance, lies, schemes and con tricks  – time after time after time.

Then in 1971 something sort of interesting happened, a turning point in fact. The Vietnam war, which apparently was started to save the free world, was costing a fortune and America who held what was called then and now ‘the world’s reserve currency’ which means that the world trusted the dollar more than any other currency, well Nixon stopped promising any gold in return for the paper money of the USA. The word dollar denoted a twentieth of an ounce of gold when it started in the 19^th century but even in 1971 an ounce of gold could be redeemed for $35.

What happened was down to our old sparring partners across the channel, the French, always the villains of the piece. They started to suspect that there wasn’t perhaps enough gold in Fort Knox to really go around and began asking for the metal instead of paper. So Nixon astute politician that he was realised the game was looking decidedly dodgy and took the dollar off any gold standard –  paper money was free at last, a situation that has never really been around before….. Seriously, the world is in uncharted territory and if you don’t believe me just use your imagination when you read through the news headlines next time.

Then something very very weird happened or rather didn’t happen, the world just carried on spinning and spinning and not much else. People’s understanding of the true nature of money had been neutered; they simply took the paper and didn’t ask questions. The dollar was still the world’s reserve currency and every other bit of printed paper money traded against it, everything was in fact ‘floating’ with no precious metals guaranteeing anything in the background. The Bankers had really won the day, they could now start to print money like it was falling off trees, but then a forward thinker might wonder would they have enough trees to complete the exercise….. Ah well, they worked that one out easily, they managed to largely get rid of paper money altogether.

When I was a kid you could buy a new mini car for about £500. They now cost about 20 times that, maybe 30 times, I just haven’t looked because the cars don’t do much for me these days……that’s an inflation rate of about, ah , ahhh, ….well put it this way it’s a lot and that’s what inflation actually does, it robs people of  the real value of their money, it’s a con trick like the guys who used to go down Oxford Street with 3 cards and a tin cup to cover them, they knew what they were doing as well but they were just on the wrong side of the fence.

Then things got reeeeeeeellllly weird, we entered the brave new electronic world – yes, you guessed it, we got computers. When these were first invented in the 1940’s the word was that there would only be about a dozen of them in the whole world because there weren’t enough ace mathematicians to keep them performing. Well those scientists were way out of line, the frigging things are everywhere. I even read that they’re going to build them into our clothing soon.

Staying with money though, the boffins and bankers could grow and blossom and create now in an unprecedented way; the velocity of money could accelerate and it could pass even faster into the hands of the few. The three card trick of old entered the area of the sublime and no one, absolutely no one, sorry, Freudian slip,  I mean politicians, understood the methodology – the computers seemingly were in control.

And that’s where we are today with quantum amounts of money passing from people with very little to those who already had stacks in the first place and our political leaders, as usual, the last in societies’ upper echelons to twig what’s really happening, desperately trying to keep all the balls in the air as they confront the dreadful unpalatable truths about the sheer scale of thievery that’s been perpetrated right under their long, droopy, snotty noses.

But I lied as well, someone always understood the system of course, they always do, the computers were never really in control at all.