Money & How The Naked Emperor Has Lost His Musical Chair

What is money ? This is something that appears a meaningless question , after all we all use it , need it and the world somehow gets by with smooth functioning of money being used and exchanged .

There is currently a panic and alarmist chorus coming from the Cabal which we call governments that 'represent' people of the rich part of the world and more indirectly rule the poorer parts too. The refrain heard is also sung by the ubiquitous outlets and instruments of the corporate news merchants and other means of communication controlled by Media Moguls .

The tune is one preaching of impending doom and economic recession , depression and painstakingly irritating phrases such as ' credit crunch' and 'economic meltdown' .
We hear this everyday and and it is somehow 'real' in the sense that all of a sudden , only in the past few months we see businesses closing down , money institutions become 'penniless ' banks emptied of their lending capabilities etc. And all this following a financial boom where a current prime minister of Britain whilst riding on the crest of this wealth's wave declared in his wisdom : 'No more boom and bust... ' implying not only that the buoyant economy would last but that the wretched individual himself was somehow instrumental in defeating once and for all this capitalistic self fulfilling prophecy.

Yet even such an erudite boardroom bandit as the current prime minister of this great country , Mr Brown was wrong. As if over night, we hear that banks are going bust and are not lending to each other.

So one minute they are money shops ,loaded and lending at a profit then we hear that they have nothing...and businesses too.

So this 'money ' is a very elusive substance if we can call it such . Now , many years ago there was no money. Some people believe that this was a better period as the cliche goes: 'money is the root of all evil' , although partly true let's look at those golden days where before money was around or in isolated places where it was not even necessary ,people still got by with bartering.

So if for example ,if I was the owner of a few sheep and thus was able to trade them for other goods ,I would have to find someone who has what I want to purchase before I can part with a single sheep, moreover I have to find something of at least equal value. So , fancying a chicken curry or two , I meet somebody who has twenty chickens and swap my one sheep for twenty of his chickens, sounds about right. So now I have made a deal. But after a while I fancy some tomatoes , I find someone who has baskets full of tomatoes...yet I reckon that one of my sheep can earn me at least thirty baskets full of those, I don't want that many to start with ,they would rot by the time I got to eating them ,also the trader who has the tomatoes happens to be a vegetarian and doesn't fancy the sheep or chicken . This tomato sales man is looking for a machete or sickle to help with his work. In this case I must search for a person who has farming tools and actually wants to buy meat , make a deal with that person then return to the tomato producer and swap at a fair rate tomatoes for a machete . I fail to do this,as the person with the machete was looking for a cucumber so eventually found a cucumber grower that wanted meat, exchanged one of my sheep for ten cartons of cucumbers kept some of them then struggled to take some over to the man with machete , made a deal with him , two cartons for one machete. I then ran over to the tomato man , gave him one machete for two baskets of tomatoes...phew! but th en I realised t hat the surplus of cucumbers I was left with were rotting and that the effort wasn't worth it , I could have settled for cucumbers with my meal that week ! ........and so it gets more complicated as it goes.

For the above reason , people arrived at a more common sense way of making deals and commodity money was developed . A particular commodity such as dried corn or animal skin; pelts such as a sheep's or Bear's skin were used . Both were valued by people and could be preserved for a period of time, hence these commodities became a currency , someone wanting something could pay by this type of currency which would be accepted by all , who can again use it .It had value that most people believed in and was durable and portable. A further development from this was the issuing of money which was paper notes . This money was equivalent to the amount of gold reserve. Countries would have a reserve of gold which was in effect a guarantee of the paper money circulated, Gold , something that most people value, inspires confidence in a money supply. Yet money in a thriving economy in essence is a matter of faith or what people believe in . It is believed that in a strong economy where a state is producing sought after products and services for itself and being generally self sufficient as well by exporting these products and services abroad, can even do away with the gold reserve , which is in a sense symbolic . Gold is difficult to find anyway. Also it is good to sell. I believe the last gold ingots where flogged by the present regime. The USA also no longer has a gold reserve if I am not mistaken.

So now we have arrived at Fiat money : that is paper money that is not equivalent to reserve of Gold but representative itself of a buoyant economy. This fiat or paper money then is valued by the public of a country by its own people and other people abroad. So there putting it crudely is what money is . It is an idea .
Yet as an idea it can be quite meaningless. We are told by various economists who know about these things that the paper money we have has value as long as we believe in it and have confidence in its value.

Many of us did as we were told , yet in the past year or so with frequency, reports were heard from America that there was a crisis looming that was going to hit the world economy. This we were told was all to do with 'Sub prime mortgages' a term to denote money lent to a person on a low income or one that cannot on paper really fulfil the agreement of paying back the mortgage. ( I always thought most people came under this category ,especially on their first home).
The sub prime mortgage lenders were not getting their money back and many were going bust , this in turn affected other companies in the money business eventually cascading to major banks and financial institutions which were hitherto regarded as holy ,immortal god like entities.

This spread throughout the world like wildfire and whereas only a year or so ago we were told that things have never been so good and that it is all the work of our beloved government's shrewd fiscal policies , yet now we are told things are going to be very gloomy and alas it is all due something global and beyond our control.


So now beyond belief we see large well known banks and other money lending institutions closing down ,summarily dismissing staff in large numbers and scared, refusing to lend money to each other . Large industrial manufacturers of motor vehicles and consumer items ,closing down , laying workers off in their
thousands . High street chains of shops collapsing. ..how can we make any meaning of this?

Let's look at this more closely . We were encouraged to borrow money and buy property ,also on a larger and more frequent scale so were companies who by their very nature are constantly borrowing , waiting to get paid by a customer as they simultaneously spend on other obligations. Yet all this at one point comes to a halt.

So if we stop and look at what is going on in an instant , it becomes like a paradox of Zeno of Elea , the ancient Greek philosopher who explored movement or lack of it.

So one bank has assets of X billions , yet it is lending so much to others , who in turn are doing the same and the same again ad infinitum. Obviously as we were taught to believe 'The Market ' will sort itself out and will solve everything , the 'market' being some kind of holy self- sustaining god- like entity which can be relied on to answer all the prayers of the rich and also give some crumbs to the poor . But what happens when we freeze this frame like Zeno would ?

It becomes something like 'musical chairs' the party game where a group of people , say six or so are dancing to music and circling around a group of chairs that they previously sat on. Only that one of the chairs has been taken out of the equation and there are only five chairs .So long as the music and the movement around the chairs continues , everyone is in the game and has a chair.Once the music stops , all compete to sit on the limited number of chairs and one individual ends up without a chair and is out of the game. It continues in this manner .

Similarly all these greedy banks and other corporations lending money which they themselves probably lent from other institutions who lent from other people etc ad infinitum have found that they don't have any money during this instant : no chair to sit on! So what they do is to refuse to lend and then other banks get into trouble and then companies including chains of high street shops , major manufacturers etc etc , and hey ! we have a so called 'recession ' which we are warned is becoming a fully bown 'Depression ' .So where was all this money?
It seems to have had no meaning after all? whether we believed in the holy prophets of the church of free market capitalism or not , the truth seems to be that value of money seems to be disappearing like a mirage , yet , people are still there , still living in houses still willing to work , raw materials are still available ,cabbages are still growing in abundance within the green and pleasant land, people still want to buy products and services, physical wealth has not vanished`..


So what does that mean in relation to money? in its present form;, fiat money , paper notes? and figures on a bank statement. It makes it look like there has been a lack of confidence.

Very much like the Hans Christian Anderson fairy tale: ' The emperor's new clothes' the story of an emperor of a prosperous city who cares more about clothes than military pursuits or entertainment hires two swindlers who promise him the finest suit of clothes from the most beautiful cloth. This cloth, they tell him, is invisible to anyone who was either stupid or unfit for his position. The Emperor cannot see the (non-existent) cloth, but pretends that he can for fear of appearing stupid; his ministers do the same. When the swindlers report that the suit is finished, they dress him in mime. The Emperor then goes on a procession through the capital showing off his new "clothes". During the course of the procession, a small child cries out, "But he has nothing on!" The crowd realizes the child is telling the truth. The Emperor, however, holds his head high and continues the procession.

So this faith we have in money seems to have vanished and our great countries , economies , our leaders our captains of industries, what have they amounted to? One thing is for sure it is now fashionable to blame rich bank chiefs for all the economic disaster , even the politicians who backed this religion of the 'free
market ' are sticking the boot into the poor bankers as the bank chieftans quietly retire with their colossal pensions after a career of mischief which the politicians encouraged in the first place .

Money is possibly a shape shifting alien illusion but a powerful one .And the collective wealth we had (at least nominally by virtue of living in a rich
country )is not really there and the archetypal capitalist, the white collar criminal, the emperor , continues to dance mindlessly around the chairs hoping that the music will not stop and that none of us will realise that he was stark naked from the outset.