Funny Money: In Search of Alternative Cash

Funny Money: In Search of Alternative Cash
David Boyle

Only our limited idea of money is keeping us poor. David Boyle introduces us to alternative cash and people who can conjure money – that is, spending power – out of nothing.Until recently, the growth of alternative cash had been the province of big business: phone cards, stamps, air miles and Tesco’s clubcard points all have purchasing power, yet are not cash as we know it. Now, locally created money systems like ‘time dollars’, ‘Womanshare’ and ‘Ithaca hours’ are being invented by communities for communities.With clarity and great humour, Boyle tells the story of this extraordinary revolution: he travels to the USA to visit the people behind local money systems; relates their vision of the future; and describes how to set up your own currency. This is no dry theoretical tome: Boyle writes about his subject in a way that is concrete, illuminating, often very funny and always highly readable.This paperback edition includes a new epilogue with an update on the latest alternative currency ideas: ‘You just have to cast doubt on the real existence of the money markets and they could just shrivel away. Anything could happen.’A revolution is underway now: this book tells the story of its leaders and the ideas that inspired them.

FUNNY MONEY

In Search of Alternative Cash

David Boyle

For my parents

Contents

Cover (#ucccd56f8-7175-55cc-8a9a-80e8d70e1c2a)

Title Page (#ud2537e59-ad65-514d-a298-d18eb25b4a4f)

Dedication (#u8fe5cf59-46fb-531c-b690-37f3edead831)

Introduction: In search of the new alchemists

Chapter 1: Washington: money as time

Chapter 2: Still Washington: money as moral energy

Chapter 3: Philadelphia: money as burden

Chapter 4: New York: money as religion

Chapter 5: Ithaca: money as lifeblood

Chapter 6: Minneapolis: money as information

Chapter 7: Berkshires: money as vegetables

Chapter 8: How to be richer

Epilogue: A funny money world

Index (#litres_trial_promo)

Acknowledgements

Keep Reading (#litres_trial_promo)

About the Author

Find out more

Copyright

About the Publisher

Introduction In search of the new alchemists (#u30ecaea1-edf1-52af-9ef5-8a461409e37b)

‘Like a lot of mothers, Zabau Shepard has some charge cards, but she can’t use them. It’s not that her credit has gone to the dogs; it’s that she is a dog.’ The Daily Progress, Charlottesville, Virginia, 1990, quoted in James Grant’s Money of the Mind.

I

Picture the scene. Millions of people gathered on a rocky island off the northern coast of Europe, and getting hungrier. They only have two fivers and a couple of crumpled dollars between them.

‘What do we do?’ Gordon Brown asks Kenneth Clarke.

‘Make them sit down,’ he says. Then he converts the money into small change and, when he has given thanks, begins to distribute it among the crowd. And by the end the whole crowd was satisfied and there was enough left over to fill twelve large unit trusts.

The cabinet, commentators and economists, needless to say, were astonished. After all, it was quite a different method of creating money from the usual one, which involves taxing the small amount at 25 per cent, carefully allocating the proceeds, together with some words of wisdom about working harder, and carrying on doing so until it all runs out.

Money just isn’t like that, is it. The one thing we learn about money is that it isn’t infinite, and it certainly doesn’t behave like the Feeding of the Five Thousand. Short of winning the Lottery, we are dependent on eking out our small incomes to fit our expanding bills.

But something peculiar is happening to money. There was a time when we knew where we were with it: good solid coins which burned a hole in the pocket just by jiggling up and down, notes which said the Chief Cashier promised ‘to pay the bearer on demand’. You’d earn it, put it in the bank, count it, spend it, then it was gone, and you’d have to earn some more. It was simple and straightforward.

The Prime Minister Sir Alec Douglas-Home was even said to balance the budget using matchsticks. It was an endearing picture of a more innocent age: you could imagine Britain’s First Lord of the Treasury wrapping hot towels round his head and putting off the dire moment when he would have to sit down and work it all out, complaining that he hadn’t been any good at sums at Eton.

Nowadays things seem very different. The number of professionals involved in different aspects of looking after money, the futures dealers, the traders and arbitragers, reads almost like a cast list from The Canterbury Tales, with all its priests, pardoners and summoners. Finance has become a strange complicated global system fuelled by inter-linked computers and burgeoning information. A large institution like Citibank collects all the money in all its branches around the world electronically overnight and invests it until the morning. Tiny slivers of percentages of transactions are bundled together in deals to pay the traders. Nothing is wasted in the financial markets.

It is a peculiar shadowy world, where rumour and mood can shift billions of pounds in a few minutes. And where Chancellor Norman Lamont, looking at the fragments of his European exchange-rate policy after Black Wednesday, could describe himself as being ‘overwhelmed by a whirlwind’. This view was echoed by former Citibank chairman John Reed, who famously described the financial markets as ‘a little like the physicist who created the bomb’.

‘We see about 400 billion dollars every day of foreign exchange transactions going through the system,’ he said, and that was a good decade ago. By the end of the 1980s, $800 billion a day in electronic payments were going from bank to bank through the Clearinghouse Interbank Payments System in the USA, known as CHIPS – in Britain, we have a similar overheating system called CHAPS – and that figure rises every year. The daily flows in the currency exchanges are now running at an estimated $1,300 billion, and the World Bank reckons that 95 per cent of them are speculative, which means that only 5 per cent is actually related to the real trade which keeps our economies moving along. The rest is froth, but froth with terrifying power over ordinary lives.

If you knock politely at your bank manager’s office door and ask actually to see your money, it’s not going to be there. It will appear on your bank statements, of course, with bizarre fractions charged in interest and service. But you know it will probably be off travelling the globe, investing in massive dam projects, or dabbling in the Tokyo Futures Markets while you’re asleep.

Actually, your money doesn’t exist at all. Money is now blips on computer screens; its value can disappear overnight, it pops up unexpectedly in the form of credit or pseudo-money like air miles or supermarket loyalty cards. Its total demise is widely reported. ‘Cash is dirty, cash is heavy, cash is quaint, cash is expensive, cash is dying,’ said the New York Times magazine recently on its front cover, hailing the advent of sophisticated computer debit cards.

While some people seem to be able to surf this new world of money easily, others don’t. When he fell off his yacht into the Atlantic, Robert Maxwell owed twice as much as Zimbabwe. The rest of us are stuck with the old idea. We believe there is a finite amount of money, which comes to us from employers and occasionally from the government, and we spend it just a little faster than we should. Why aren’t our coins and notes as flexible as they are for what Tom Wolfe called the ‘Masters of the Universe’ in the City of London or Wall Street?

For most of us, money stays irritatingly concrete. It runs out, and we all feel increasingly fearful about it. In the world of glass towers, on the other hand, it is much more flexible: if you don’t have it, you borrow it, discount it, arbitrage it, trade it, ride the market with it, knowing that money increasingly gets its changing value from the psychology of the international market: our hopes, fears, weather patterns, mood swings all effect the value of their money.

Money has become a psychological construct. So why can’t we find psychological ways of getting more of it? Maybe we can put aside the narrow world of chancellors, bank managers and balance sheets, and work out ways to tap into this infinity of wealth for ourselves – as our prehistoric ancestors did when they wandered along beaches picking up shells to use as currency. Maybe we can take Monopoly money and somehow make it real: like the economics editor of The Independent Diane Coyle, who in her book The Weightless World describes using ‘pretend money’ from an old board game to pay her neighbours in her local baby-sitting circle.

Is DIY money possible? It is an idyllic dream by any stretch of the imagination, but it’s what this book is all about. It is a journey to discover people who claim to have founds ways of conjuring money out of nothing, the so-called ‘new alchemists’ who can take the modern equivalent of base metal and turn it into gold – and with it turn all our ideas about money upside-down.

II

Why America? Partly because of Zabau Shepard.

Zabau Shepard was a dog from Virginia, who in 1990 suddenly started receiving free credit cards through the post. Her two-pronged name, in a nation where many people choose the most peculiar names, probably confused the computers. She was used as a symbol of the American financial malaise in a fascinating book by the financial journalist James Allen called Money of the Mind. If credit is endlessly available, he said, then there is nothing real about money. It means that anyone can buy almost anything.

Sometimes they do; sometimes they nearly do. The Cincinnati investment advisor Paul Herrlinger claimed to be bidding for the Minneapolis store chain Dayton-Hudson for $6.8 billion in 1987 – about $6.7 billion more than the assets of his company. In those heady days, when anyone could borrow anything, he was widely believed on Wall Street and Dayton-Hudson shares climbed $10. After his lawyer tried to head off disaster by explaining that his client was ill, Herrlinger was asked by TV interviewers on his lawn whether the bid was a hoax. ‘I don’t know,’ he said. ‘It’s no more a hoax than anything else.’