Tuesday, October 21, 2008

An idiot's Guide to Money - 3. Burning Money

When was the last time you made a sacrifice? When was the last time you chose to destroy something that had value to you? When was the last time you did something sacred?

The last time I did all of those things on the same day was on 23rd October 2007. At the time I was a bankrupt. For a week before, I kept a tenner in my back pocket. On the 23rd I burnt that £10 with my wife and son as witness. As I write this I've slipped £20 into my back pocket. In three days time on the 23rd, I'll burn that £20.

And I'll be doing a good thing.

On the 23rd August 1994 the K-Foundation burnt £1 million, cash. This single act has become the greatest artistic statement of the C20th. Pure genius.

Of course it sparked a lot of controversy. Many people were upset that they burnt the cash rather than gave it away and claim it was a waste of the money. But it wasn't wasted. The power in the money, released from the paper symbols made to inform us of its existence, has been nurtured and nourished by the telling, writing, and showing of its story. It is now a myth with power and value that far exceeds the K-Foundations original sacrifice.

When we burn money, its power is not destroyed. Its not money we sacrifice. We sacrifice our custodianship of money's power.

The promise made by the Bank of England to pay a debt due to the note's bearer still exists in the books of the Bank of England. The person who burns the notes says that the Bank of England will never be called upon to meet that debt.

By burning notes we increase the value of money without reducing the quantity.

Its true that the quantity of cash in circulation has been reduced, but the reported quantity of money (recorded in the Bank of England's books) has not been altered. The £10 debt remains on their books as real as all their other debts. It may seem counter-intuitive to say that the value of money increases with burning. But think about it. Imagine if tomorrow half of all cash disappeared. Prices in the shops would fall to chase harder for the available cash. Deflation increases the value of money. Its human nature to find greater value in diminishing resources.

Far from being wasteful, burning cash to release ourselves momentarily from the power of money is a very good thing to do for money and for ourselves. Environmental concerns excepted, burning money is good for all.

Once in a while you should show money that you are the boss. You can't show it you're the boss by buying something - that only proves how much you need money. You can't show it you're the boss by giving it away - that just makes your money the boss of someone else. The best way to show money you're the boss is to deny it; to refuse its power and to exert your own. Burn it.

Money will love you for it. Burnt cash is free money.

Respect money, it is an immense power. Remember, people who work with it every day have to wear suits. But don't worship it. You know what they say - 'the love of money is the root of all evil'. They are wrong about many things, but they maybe right about this.

Hedge your bets. Burn some of your money just to make sure. You'll feel good, after.

That's my take on it.

Here's what someone else thinks about the K-Foundation burning £1million:

I thought it was awesome in some ways, very funny in others; quite liberating. It burned well - very clean flames. I'd like to know if it was Newton on the fifties, but he's represented anyway - he organised the Royal Mint, and that's interesting because Newton was kind of the bridge between Magic and The Age of Reason. On the one hand he was an alchemist and yet, on the other, he was the father of all contemporary science. He had the last remaining stone maypole in London made into the base of his telescope.

William Blake called the Age of Reason 'Newton's sleep', the falling asleep to anything beyond rationality and reason ... spiritual values. This film was Newton's bed clothes on fire. It's what money represents which is the important thing magically. Anyone's probable immediate reaction is 'Why didn't you give it to charity?' they mean 'Why didn't you give it to me?'

Alan Moore, Writer & Occultist

Thursday, October 16, 2008

An idiot's Guide to Money - 2. Financial Crisis

As we all know, money can solve any problem. Ask a Doctor how she can save more lives, and she'll say with more resources. Ask a Policemen how he can cut crime, and he'll say with more funding. Ask bankers how to save the economy in the face of financial crisis, and they'll say with more money.

And don't forget those poor Africans. Sir Bob and Bono have both told us that they need more money too. Make poverty history is what they say.

So how do we get all the money we need?


1. We increase the value of the money. To do this, we make and do stuff cheaper.

2. We increase the quantity of money. To do this we make promises, and keep them.

So when prices are falling and promises are being kept, money is created. But when prices are rising and promises are being broken, money is destroyed.

Generally, things have been going well for us since WW2. Technology has helped us to do most things cheaper than before. And promises - 'I promise to pay the bearer of this note etc' - have (for the most part) been kept.

So what's the trouble?

Its yer 'flations mix, mate !

1. Deflation increases the value in money, inflation decreases the value in money.

- Falling prices mean that £1 buys more, rising prices means £1 buys less.

2. Inflation increases the quantity of money, deflation decreases the quantity of money.

- Rising prices mean that more £1s are needed to buy the same stuff, falling prices mean that less £1s are needed to buy the same stuff.

The bad news is that we don't really understand inflation and deflation. We can never even be sure which one's the goodie and which one's the baddie, because it entirely depends on your position.

Governments will keep trying to sort it out. Its all they can do. But there are no guarantees that anything will work. No 'one' really knows what the value of money should be, nor the quantity of money needed. That's the point of money, really. I don't decide. You don't decide. Our conflicts of interest are played out through the market, and magically a value/quantity is set.

When money isn't there to help us do that, history shows us that the same conflicts of interest are played out through famine, social unrest, and war.

That's my take on it anyway.

Here's someone else's:

'..there is an unceasing conflict between the interests of debtors, who seek to enlarge the quantity of money and who seek busily to find acceptable substitutes, and the interests of creditors, who seek to maintain or increase the value of money by limiting its supply, by refusing substitutes or accepting them with great reluctance, and generally trying in all sorts of ways to safeguard the quality of money.'
Glyn Davies - A History of Money (1994) p30


PS. I've left out a ton of important stuff particularly on interest rates, and supply and demand for money (inflation increases the quantity of money is a contentious thing to say - monetarist's think that having too much money in the economy causes inflation). I also was tempted to go into the power dynamics of moneyied relations (which Glyn Davies touches on) [tip - substitute the word debtors with 'the poor' and creditors with 'the rich]. Best to save that for another time though, I think.

Thursday, October 9, 2008

An Idiot's Guide to Money - 1. Secrets and Lies

President Reagan and General Secretary Gorbachev signing the INF Treaty in the East Room of the White House.Image via WikipediaThere's part of me that gets very excited about the financial crisis. I was a young teenager when the cold war was at its hottest, and the prospect of nuclear war was in people's minds. I remember feeling both fear and excitement - it would be terrible because people would die, but also exciting because the world would change forever. I guess my excitement over the financial crisis comes from the same place in my head. Of course, I would never tell anyone this - I'm only saying it here because I trust you not to tell anyone. As a grown-up you have to keep secrets. There's certain things you don't discuss in front of the kids.

Banking is all about secrets. As crunch turns into crisis, these secrets are being exposed. The shock we feel is akin to a child witnessing a primal scene - 'you have to do that, to make me?'. The modern banking system has been pretty good a keeping its secrets covered up. Our governments have no real choice but to collude with the banks. Human beings always seem to need someone to lie to them. Whether its preachers, politicians, or bankers we need someone to take on the responsibility of allaying our fears. Post WWII its worked well; long periods of feeling safe, punctuated by occasional bouts of fear (but with the sweet pill of someone to blame).

The soundbite of the moment seems to be the 'real economy'. Poe-faced pundits have hauled out this old chesnut to attempt to put some distance between the firms who deal in money and the firms who deal in stuff. It's bit like saying 'make love' rather than 'have sex'. And its a rather pernicious lie. If the making and doing part of the economy did really separate from the financial part, we'd have real problems. I'd find myself trying to swap 10 minutes driving for a loaf of bread. Money acts as medium of exchange. Its the oil for the economic engine. Try running your car without oil if you want to test the analogy ;o)

U.K.Image via Wikipedia
It might seem odd to you but I have a lot of sympathy for bankers and politicians. We need secrets. To protect secrets we need lies. And to tell lies we need liars. The people I don't have too much sympathy for are the 'morally outraged'. This might sound harsh, but if you've spent your working life taking a wage from a government agency or institution and the value of your pension has just dropped by 30% - tough. If your home is losing more value each day than you earn - tough. If you're worried about the future - join the club, Sherlock. The greater your faith in the words of the false prophets - of Gordon Brown, Alistair Darling, and Mervyn King - the harder events will hit you.

And even if you lose all your money and your house - and I do know how that feels - you'll still be better off than most people in the world. Do you remember the debt relief campaign? The combined US and UK bailout is about $1.5 trillion ($700m plus £500m). The combined debt of world's poorest 49 countries - over which Sir Bob and Bono made such a fuss - is a mere $375 billion. (Thanks to Some French Guy for bringing this to my attention). I'm sure most people would find this outrageous. Personally, I don't think its that simple. The US itself has a national debt of $10 trillion (some people reckon its nearer $60 trillion when you account for social spending). You could look at that and say that the level of debt of a country is directly related to the wealth and well-being of its population. In other words, the higher your debt, the better off you'll be. The logical conclusion is that to improve the lot of it's people the world's poorest nations should take on more debt, not less.

I studied Economic History at the London School of Economics - the same place many of the bankers and politicians would have learnt about economics. At the end of three very enjoyable years I was more aware than ever that no-one really knows what money is. Seriously. Myself, I think it's a magical, wonderful, beautiful phenomenon that brings us both pleasure and pain. Its not just figures on a bank's books, nor the pieces of paper and metal we hand over the bar. Its much more than that. We each have a deep relationship with this unique power. And we're a long way from understanding it. In the end, maybe that's why we need all those secrets and lies.
Reblog this post [with Zemanta]

Tuesday, October 7, 2008

A word on Microblogging and Twitter

Image representing Twitter as depicted in CrunchBaseImage via CrunchBaseImage via CrunchBaseWho Microblogs?
When I first came across twitter (the original internet micro blogging facility) I didn't really think it was important. I was wrong. Twitter allows you post 140 characters - a micro blog. Some people, like me, use it as a daily update to let people know what I'm up to. Mostly it looks like a reply to a moblie phone text asking 'what you doin?' - personal, friendly, but essentially factual and functional. jonone100's twitter feed

Other people use twitter to 'life stream'. In other words they update many times a day and will tell you what they're doing, what they are thinking, what they are listening too, how they are feeling, etc, etc. Personally, I find these life stream tweets (a tweet is the name given to a single post on twitter) dull in the extreme. I think less can be more.

A further group of people use microblogging to market goods and services to you. While this can be annoying, it can also be useful and entertaining. I follow one guy (follow means read the posts of) who is into the Internet and goes to seminars on web 2.0 and other such things. Its not like he trys to sell you stuff; he'll post relevent links, some music, the odd book recommendation. He also lets you know about his own projects through his posts. All of this I find very useful - he strikes the right balance with the frequency of posts. He keeps it personal without boring me with mundane detail. nick levine's twitter feed

Why is it called a Feed?
Because a microblog is a small and simple bit of information its easy for the wizards of technology to do all sorts of things with it - they can feed your information into other services. You can put twitter feeds into your newsreader (if you don't know what this is don't worry), or you can have it appear in a widget on your igoogle page (or pageflakes or any other personalisation service). So for example when I boot up my computer something like this appears on my home page.

So from this widget I can read all the posts (tweets) of the people I'm following, and I can also post myself without visiting twitter at all. You can get this widget for free from 32hours.com/betwitteredinfo/ (but you'll need to know about igoogle and I haven't posted about that yet !). If you have an iphone you can get a widget for that too.

My favourite thing to do with my twitter feed though is to create a picture from it. You'll see this picture on my blog. Its this:

This simple facility is really cool. It updates from my twitter feed automatically. So although it appears to your computer as a static image, it actually updates everytime you do. The advantage is that you can stick a static image nearly anywhere - in the footer of your emails (I'll tell you how to do this is your gmail footer at a later date) or in your online profiles. No need to get complicated with burning rss feeds - just cut and paste the image URL. Once you have a twitter account, you get your own from twitsig.com. Its free, so say thank you to the nice man.

Another thing you can do with your twitter feed is use it to update your status on facebook, myspace or any similar social network. This is really handy as it provides an 'information pulse' for your friends. To integrate twitter into facebook use the twitter application. I haven't got the myspace twitter sync working yet (but my twitter feed is already displayed through my twitsig picture).

Why do I want to know what you're doing?
I use my twitter feed to primarily to keep people informed about my availability for driving work. People still call me up and ask if I'm available (you're not going to beat talking to someone directly) but the twitter feed acts as a reminder to them, and it stops them calling when I'm working. If my tweet says 'on my way to Glasgow' no-ones going to call to see if I can do a job in Brighton.

Work availability is just one thing, you can use your feed for whatever you like. Events you're attending, music you're listening to, your bowel movements - the possibilities are endless. Just don't expect me to follow you if you're going to tweet everytime you use the toilet.

I tend to follow people I know personally. Although I'm quite into following people with whom I have some shared interest. And this is the most amzing thing about microblogging - by following people's tweets you begin to feel like you get a sense of who they are. I know it might seem odd, but try it. The world is a funny place full of syncronisities and serendipities. Microblogging helps you to see more of them.

13/10/08 - I found this which might be of interest (its from a blog I follow)

What’s Twitter? 5 Things Your Business Needs to Know

Reblog this post [with Zemanta]