Daily Wisdom

When money used to be gold or silver or cowrie shells that had to be dug out of the ground or dived for under the sea then its value represented the hard work that had already gone into it. Since governments nationalised money and produced it without effort by issuing bonds to pay for their bureaucrats and armies, then it is no wonder that major currencies are now worth about 1/40th of what it was a century ago. Since about the 1980s, major governments, worried about inflation, enhanced their confidence trick by pretending that their central banks were independent. But, since then, inflation has continued apace, albeit invisibly to most consumers, being hidden within property prices and astronomical sums being daily ricocheted in electronic form around the world by speculators and investors. But major governments are now so frightened by the prospect of inflation broadening out again into the general marketplace that central bank interest rates are perforce having to rise even at the risk of bringing world economic growth to an end. The only legislative way out of this looming disaster would be if governments merged their national currencies into a world currency and allowed a truly independent central bank to issue it. But this will never happen because of the tribalistic nature of nation-states. However, another solution could be the rise of an independent world currency such as EBay's PayPal system, the winner so far of several different electronic currencies that have been tried on the Internet. The increasing number of PayPal transactions now going on means that governments cannot possibly keep track of it for taxation purposes and if they were to try to do so then their revenue departments would become even more overwhelmed with complexity than they are already. Once launched on the back of national currencies via credit cards, PayPal has the potential to become independent in tomorrow's world -- just as nationalised currencies were launched on the back of gold-based currencies a century ago. The possibly of a new independent currency outside the control of national governments has been underlined in recent days by the announcement that Google is shortly going to announce its own new currency for its searchers and advertisers.
Keith Hudson, Bath, England,