[107582] in Cypherpunks
Hayek in the news
daemon@ATHENA.MIT.EDU (Robert Hettinga)
Mon Jan 18 17:17:21 1999
Date: Mon, 18 Jan 1999 16:51:31 -0500
To: cypherpunks@cyberpass.net
From: Robert Hettinga <rah@shipwright.com>
Reply-To: Robert Hettinga <rah@shipwright.com>
--- begin forwarded text
Date: Mon, 18 Jan 1999 16:12:32 -0500
Reply-To: Hayek Related Research <HAYEK-L@MAELSTROM.STJOHNS.EDU>
Sender: Hayek Related Research <HAYEK-L@MAELSTROM.STJOHNS.EDU>
From: Mark Brady <jbrad4@GMU.EDU>
Subject: Hayek in the news
To: HAYEK-L@MAELSTROM.STJOHNS.EDU
The Independent (London), Saturday, January 16, 1999
Financial Notes - The funny money revolution begins
David Boyle
Where does money come from? There was a time when most God-fearing Britons
felt the pound had been put on earth for their special use, backed by the
golden vaults Bank of England - and many of us are still under the
impression that this is true. Actually the pound cut itself loose from gold
long ago, and we haven't been able to exchange our notes for anything
except other notes since 1931. These days, the pounds in our pockets are
backed by our collective belief that the Government will pay the National
Debt.
The trouble is that the pound, along with the other currencies of the
world, is connected to a wild global system, and all currencies derive
their direction from the hidden hand of the market. But the hidden hand is
emotional and unpredictable; its decisions are based on hope, fear, mood
patterns and much else besides. It's this very unpredictability and
changeability which provides the traders with their profits.
It's a virtual monster, without concrete existence. When the stock market
lost A351bn on Wednesday, the end of the day left the value of British
companies in tatters, but their other assets - their personnel, bricks and
mortar, possibilities and plans - exactly as they had been eight hours
before. That's the peculiar thing about the modern world economy, it is -
as Diane Coyle put it - "weightless". And it has little or nothing to do
with ordinary life or ordinary trade.
At least 95 per cent of the currencies which flood across the planet -
$1,500bn a day - have nothing to do with trade at all. It is speculation,
but speculation which can have a devastating effect on people's lives. The
truth is that the world financial system isn't actually there for us at
all, yet we are connected to it.
So what can we do if we wake up one morning and find that the pound is a
limp shadow of its former self? Or, just as important, what happens if we
wake up and find ourselves with the euro - as we probably will, for lots of
very good reasons - but only one continental interest rate, which doesn't
suit most of us very well?
One answer is that we are going to have to create our own money. And,
although that seems a radical concept at first sight, you can see the
beginnings of this revolution already happening.
You can see it in the 400 or so Lets exchange schemes around the UK or the
innovative printed currency called Hours in Ithaca in upstate New York,
accepted by most local businesses and backed by the local chamber of
commerce. You can see it in the time banks emerging across the United
States and Japan, or the French Sel system or the Italian Banco de Tempo.
But you can also see it emerging in the world of international business.
Until recently, Northwest Airlines paid its entire world-wide PR account in
Air Miles. They still sell blocks of Frequent Flyer points to charities,
which then trade them on at a profit. And anybody who has used Sainsbury's
points or Midland Choice points is using the beginning of alternative
currencies which exert a little independence from the world's stock
exchanges.
This is the revolution which was predicted a generation ago by the great
economist F.A. Hayek, when he called for the "de-nationalisation of money",
and it is made possibly partly because of computers, which allow us to use
different aspects of our lives. But this is also the start of a kind of
protestant revolution for money. Just as the early Protestants did away
with the need for priests to intercede between them and God, so these "new
alchemists" are doing without bankers. Not for everything of course. But if
necessary, any group of people - even a handful of neighbours - have the
wealth among them to issue some kind of money to help them get through the
difficult times. We don't have to wait around for the banks to do it: we
can do it ourselves.
David Boyle is the author of 'Funny Money: in search of alternative cash'
(HarperCollins, 18 January, 1999)
--- end forwarded text
-----------------
Robert A. Hettinga <mailto: rah@philodox.com>
Philodox Financial Technology Evangelism <http://www.philodox.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
