3 Money, money, money
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Bill Drummond and Jimmy Cauty,
Note:SI RITIRARONO SU UN ISOLA DESERTA BRUCIANDO I SOLDI
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Drummond and Cauty had, it is said, emptied their bank accounts to put the money together.
Note:IL GRAN GESTO 1mln DI STERLINE
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Drummond and Cauty stripped out a £50 note each, lit them with a cigarette lighter, and set the rest of the money ablaze.
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They saw their action as an artistic statement.
Note:ARTE CONCETTUALE
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Cauty and Drummond had committed a dreadful waste of resources.
Note:IL GIUDIZIO COMUNE...QUANTE COSE SI POTEVANO COMPRARE
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what £1 million could have bought,
Note:GIÙ CON LE LISTE
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Couldn’t the men have given the money to a good cause instead?
Note:OBIEZIONE
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At that point, Byrne challenged Drummond and said that there could have been more apples or bread in the world if they’d used the money wisely.
Note:MONETA E PRODUZIONE
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You’re going to tell me Byrne was wrong and Drummond was correct. Am I right?
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how much it would have cost the Bank of England to print £1 million to replace
Note:IL DANNO SEMBRA FACILMENTE RIPARABILE...RISTAMPARE HA UN COSTO IRRISORIO
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when he said that he hadn’t destroyed bread or apples, only paper, he was absolutely right.
Note:CARTA... LA GIUSTIFICAZIONE TIENE
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Instead of being outraged, people should have been thanking them.
Note:RINGRAZIAMO INVECE CHI BRUCIA SOLDI
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extra money should mean more demand for existing resources at the same price
Note:PIÙ MONETA PIÙ DOMANDA PREZZI PIÚ ALTI
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resulting effect is simple to describe: average prices in the economy would drop.
Note:SE BRUCI I SOLDI SEI UN PO PIÙ RICCO
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the effect of Drummond and Cauty’s ‘art’ was probably undetectable. Still, it was there in principle:
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MINUSCOLO
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What a shame Drummond didn’t call you for some media training.
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Er… no. Honest.
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Yap,
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Micronesia
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Their coins, the rai, are stone wheels with a hole in the middle.
Note:UNA MONETA PARTICOLARE
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one British sailor wrote in the late nineteenth century of a stone wheel that was four and a half tons in weight
Note:UN PEZZO DI MONETA PARTICOLARE
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almost completely immovable.
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The biggest stones might have been used for major transactions such as buying land or wives;
Note:INSERVIBILE NEL 99,99 DEI CASI
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Yap islanders had to develop an important monetary innovation: they divorced ownership of the stone from physical control of the object.
Note:IL DIVORZIO
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One day, a crew from the quarries were bringing a new large stone from Palau when they ran into a storm not far from the coast of Yap. The stone sank
Note:CARTOLARIZZATO LA ROCCIA IN FONDO ALL OCEANO
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Yap’s monetary system sounds pretty close to insane, if you ask me.
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For many years the monetary systems of the developed world were based on gold.
Note:ANALOGIA CON L ORO
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The gold, like the stone rai, rarely moved. It stayed in the bank
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Kublai Khan, Chinese emperor in the thirteenth century, introduced a system of purely paper money that astounded the visiting Italian merchant Marco Polo.)
Note:MARCO POLO E LA CARTA PURA
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But modern currency is no longer linked to gold at all
Note:OGGI
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So why do English banknotes still say, ‘I promise to pay the bearer on demand’?
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‘Public trust in the pound is now maintained by the operation of monetary policy,’
Note:IL CONTROLLO SULLE STAMPANTI SOSTITUISCE L ORO
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True, gold and rai were valued for much the same reason: they were beautiful and rare.
Note:COSA SERVE
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All that is necessary for money to have value is for everyone to believe that it has value.
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PUBBLICA FEDE
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keeping track of transactions.
Note:PRIMA FUNZIONE DELLA MONETA
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The second function of money is to store value.
Note:SECONDA FUNZIONE
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Money is a unit of account.
Note:TERZA FUNZIONE
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Of course. Whichever way you say it, you still weigh just the same.
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Lucky me.
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the most valuable way of tracking your net worth is to find out what unit of account is stable relative to the kind of things you want to buy.
Note:COME CAPIRE QUANTO SONO RICCO
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For example, salt was used in early contracts – it’s the basis of the word ‘salary’ and it seems likely that Roman soldiers were originally paid in salt. This makes sense, because salt had a very stable value.
Note:UN BENE DALLA DOMANDA E OFFERTA STABILE....DIVENTÒ UNITÀ DI CONTO
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account. But this all seems mind-bogglingly obvious – why on earth wouldn’t a US citizen think of her salary as dollars rather than jelly beans, or apples, or salt? Or a German citizen think of his salary as euros, not bratwurst?
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Bitcoin was developed in 2008 by a mysterious person or group of people with the pseudonym Satoshi Nakamoto. He, she or they developed a way by which Bitcoins could be produced, or mined, slowly – a bit like gold. Some people love Bitcoin for the same reason that some people love gold – it’s independent from any government, and there’s a hard limit on how many Bitcoins can ever exist. But just like gold, Bitcoin is not money for a very simple reason: it’s far too volatile.
Note:BITCOIN. TROPPO VOLATILE X ESSERE UNA BUONA MONETA
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When my tutor Tony Courakis was a young boy in post-war Greece, he played Monopoly with real money
Note:MONETE CHE CESSANO DI ESSERE MONETE
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Another example is when the dollar wasn’t good enough money to use in contracts to pay the soldiers fighting for Massachusetts in the US Revolutionary War.
Note:ALTRO ESEMPIO
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Colchester, a journalist at the Financial Times, pointed out that the Mars Bar was a fantastically stable unit of account
Note:MARS
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this discussion of money would help us to understand why it isn’t always a good idea to try to solve your economic problems by printing more banknotes.
Note:RECESSIONE E STAMPANTE...NN SEMPRE UNA BUONA IDEA...QUALCHE ESEMPIO?
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Zimbabwe had so much inflation that they had to knock three zeros off the end of their currency, so the billions became millions
Note:ZIMBAWE
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they had to knock off another ten zeros shortly afterwards.
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turn a ten trillion dollar bill into a one dollar bill.
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One sextillion Zimbabwean dollars is written Z$1,000,000,000,000,000,000,000,
Note:ISYRUTTIVO GUARDARLO SCRITTO
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inflation rate of over 50 per cent a month.
Note:IN Z
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But in October 1923 in Germany, monthly inflation was nearly 30,000 per cent, as prices more than doubled every four days.
Note:GERMANIA
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they used cigarettes instead of currency,
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Yugoslavia in 1994, where monthly inflation topped 300 million per cent; by Zimbabwe in 2008; and in particular by Hungary in 1946. Hungary holds the unenviable world record for the highest ever monthly rate of inflation at 41,900,000,000,000,000 per cent – a rate at which prices more than treble every day,
Note:ESEMPI
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A few weeks of hyperinflation and you’d find your citizens adopting the Mars Bar as a currency before you could say Fintlewoodlewix.
Note:L ESITO DI OGNI IPER
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The story starts in the 1990s. Brazil had been suffering from bouts of inflation for decades, and prices in the country were increasing by 80 per cent a month
Note:STORIA RECENTE DEL BRASILE....CME SI COMBATTE L IPER
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President Sarney, in the mid-1980s, made it illegal to raise prices. This is a common response to inflation,
Note:GRIDA MANZONIANA
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sellers took their products off the shelves until prices increased again. (Beef farmers even hid their cows.
Note:MERCATO NERO
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The few sales that did occur were at black-market prices.
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Another attempt at a solution was to replace the currency with a new, improved, non-inflationary currency.
Note:VALUTA ALTERNATIVA E KMERCATO NERO
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The new plan relied on separating out the three functions of money.
Note:SEPARARE LE FUNZIONI...SECONDA SOLUZIONE TENTATA...PEGGARE A UNA MONETA ESTERA
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But why would you think about the loaf in terms of cruzeiros? It is much more natural to think of the loaf in terms of its price in URVs.
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This is the remarkable achievement of the ghost currency: without ever taking any kind of physical form, it became the way in which Brazilians instinctively thought about what things were worth.
Note:CAMBIARE LA MENTE. PEGGARE IL DOLLARO ALMENO NELLE VETRINE. INDICIZZAZIONE AUTOMATICA DI TUTTO...ACCLIMATAZIONE PSICOLOGICA
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It seems like a bizarre psychological conjuring trick, but perhaps the trick was not so hard to pull off.
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This wasn’t the only change in policy, of course. The Brazilian government was turning off the printing presses, balancing its budget, clamping down on wage inflation, and so on.
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But the key was the psychological fixed point of the URV, which helped everybody figure out what everything was really worth.
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One day, 1 July 1994, the Brazilian government simply abolished the cruzeiro and replaced it with the long-stable URV, now called the real.
GRAN FINALE
