Sunday, 6 February 2011

Money - part 1

Here's a little thought that enters my head every now and again and has me going around in circles.
We all use money, don't we? I have a ten pound note and I use it to buy bread from the shop. The shopkeeper uses the ten pound note to pay his supplier. The supplier uses the ten pound note...and so on.
But what is the ten pound note? What value does it truly have? This is the bit that gets my head spinning. It seemingly has value to you or I because we can "buy" things with it. What it is in truth though, is a promissory note. English bank notes say on them, "I promise to pay the bearer on demand the sum of [insert value]" - that is their worth, the promise itself. But what would you get if you attempted to redeem that promise? People have tried at the Bank on Threadneedle Street but they have been turned out, the doors locked behind them and the police called. The promise is empty because there is nothing of worth backing that money.
It's a very clever illusion and it has us all trapped. We simply swap promissory notes that have no value.