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Posts Tagged ‘money

“There’s nothing in the world so demoralizing as money”*…

 

The beginning of a MUCH longer infographic

This infographic was initially created to show how much money exists in its different forms. For example, to highlight how much physical cash there is in comparison to broader measures of money which include saving and checking account deposits.

Interestingly, what is considered “money” depends on who you are asking.

Are the abstractions created by Central Banks really money? What about gold, bitcoins, or other hard assets?

Since we first released this infographic in 2015, “All the World’s Money and Markets” has taken on a different meaning to us and many others. It’s a way of simplifying a complex universe of currencies, assets, and other financial instruments in a way that people can understand.

Numbers represented in the data visualization range from the size of the above-ground silver market ($17 billion) to the notional value of all derivatives ($1.2 quadrillion as a high-end estimate). In between those two extremes, we’ve added many other familiar measures, such as the GDP of California, the value of equities, the real estate market, along with different money supply metrics to give perspective…

See the infographic in its entirety– and ponder such take-aways as that the total of all derivatives outstanding today exceeds the total before the crash of 2008 the led to the Great Recession— at “All of the World’s Money and Markets in One Visualization.”

* Sophocles, Antigone

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As we batten down the hatches, we might send careful-calculated birthday greetings to Amartya Kumar Sen; he was born on this date in 1933.  A polymathic economist and philosopher, he has made material contributions to welfare economics, social choice theory, thinking on economic and social justice, economic theories of famines, and indices of the measure of well-being of citizens of developing countries.

Sen’s revolutionary contribution to development economics and social indicators is the concept of “capability” developed in his article “Equality of What”.  He argues that governments should be measured against the concrete capabilities of their citizens. This is because top-down development will always trump human rights as long as the definition of terms remains in doubt (is a “right” something that must be provided or something that simply cannot be taken away?). For instance, in the United States citizens have a hypothetical “right” to vote. To Sen, this concept is fairly empty. In order for citizens to have a capacity to vote, they first must have “functionings”. These “functionings” can range from the very broad, such as the availability of education, to the very specific, such as transportation to the polls. Only when such barriers are removed can the citizen truly be said to act out of personal choice. It is up to the individual society to make the list of minimum capabilities guaranteed by that society. For an example of the “capabilities approach” in practice, see Martha Nussbaum‘s Women and Human Development. [source]

Called the “conscience of his profession,” Sen was awarded the Nobel Memorial Prize in Economic Sciences in 1998; India’s Bharat Ratna in 1999 for his work in welfare economics; and in 2017, the Johan Skytte Prize in Political Science.

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Written by LW

November 3, 2017 at 1:01 am

“if we’re measuring the wrong thing, we’re going to do the wrong thing”*…

 

Money and markets have been around for thousands of years. Yet as central as currency has been to so many civilizations, people in societies as different as ancient Greece, imperial China, medieval Europe, and colonial America did not measure residents’ well-being in terms of monetary earnings or economic output.

In the mid-19th century, the United States—and to a lesser extent other industrializing nations such as England and Germany—departed from this historical pattern. It was then that American businesspeople and policymakers started to measure progress in dollar amounts, tabulating social welfare based on people’s capacity to generate income. This fundamental shift, in time, transformed the way Americans appraised not only investments and businesses but also their communities, their environment, and even themselves.

Today, well-being may seem hard to quantify in a nonmonetary way, but indeed other metrics—from incarceration rates to life expectancy—have held sway in the course of the country’s history. The turn away from these statistics, and toward financial ones, means that rather than considering how economic developments could meet Americans’ needs, the default stance—in policy, business, and everyday life—is to assess whether individuals are meeting the exigencies of the economy…

Eli Cook explains how America pioneered a way of thinking that puts human well-being in economic terms: “How Money Became the Measure of Everything.”

* “GDP is not a good measure of economic performance; it’s not a good measure of well-being.  What we measure informs what we do. And if we’re measuring the wrong thing, we’re going to do the wrong thing.”    – Joseph Stiglitz

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As we muse on metrics, we might spare a thought for Henry George; he died on this date in 1897.  A writer, politician and political economist, George is best remembered for Progress and Poverty, published in 1879, which treats inequality and the cyclic nature of industrialized economies, and proposes the use of a land value tax (AKA a “single tax” on real estate) as a remedy– an economic philosophy known as Georgism, the main tenet of which is that, while individuals should own what they create, everything found in nature, most importantly the value of land, belongs equally to all mankind.

George’s ideas were widely-discussed in his time and into the early 20th century, and admired by thinkers like Alfred Russel Wallace, Jose Marti, and William Jennings Bryan; Franklin D. Roosevelt sang his praises, as did George Bernard Shaw.  But with the rise of neoclassical economics, George’s star began to recede.  Still, more modern thinkers like Albert Einstein and martin Luther King were fans.

In a sequence that mimicked George’s arc of influence, it was George’s work that inspired Elizabeth Magie to create The Landlord’s Game in 1904 to demonstrate his theories; ironically, it was Magie’s board game that became in the 1930s (as recently noted here and here) the basis for Monopoly.

In 1977, Joseph Stiglitz showed that under certain conditions, spending by the government on public goods will increase aggregate land rents/returns by the same amount. Stiglitz’s findings were dubbed “the Henry George Theorem,” as they illustrate a situation in which Henry George’s “single tax” is not only efficient, it is the only tax necessary to finance public expenditures.

Henry George

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Written by LW

October 29, 2017 at 1:01 am

“Cleanliness is next to godliness”*…

 

One woman feeds bills into the washing machine as another collects the clean bills

Long before the term “money laundering” entered the popular lexicon, the U.S. Treasury Department had an actual laundry shop for grimy greenbacks. The mostly female “redemptive division” worked out of the basement and cleaned up to 80,000 soiled bills a day using mechanical scrubbers…

Come clean at: “Treasury Department Laundry.”

And for an insightful look at the dirty business that money laundering has become, see “The Russian Laundromat Exposed.”

* A colloquial expression (used by Francis Bacon, e.g., but popularized by John Wesley), rooted in an interpretation of Acts 9:32-10:23

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As we love the lave, we might recall that it was on this date in 1939 that The Viking Press published John Steinbeck’s The Grapes of Wrath.  The story of the Joads, a poor family of tenant farmers driven from their Oklahoma home by economic hardship– drought, agricultural industry changes, and bank foreclosures forcing tenant farmers out of work– it won the National Book Award and Pulitzer Prize for fiction, and was cited prominently when Steinbeck was awarded the Nobel Prize for Literature in 1962.

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Written by LW

April 14, 2017 at 1:01 am

“To be wealthy and honored in an unjust society is a disgrace”*…

 

What does having money mean for us and for our neighbors? When the art critic John Ruskin took up this question in 1860, he started from the assertion that more money for us means less money for them, and he didn’t have to go much further to conclude that disparity, after all, might be the whole point of the enterprise…

Suppose any person to be put in possession of a large estate of fruitful land, with rich beds of gold in its gravel; countless herds of cattle in its pastures; houses, and gardens, and storehouses full of useful stores; but suppose, after all, that he could get no servants?

In order that he may be able to have servants, someone in his neighbourhood must be poor and in want of his gold—or his corn. Assume that no one is in want of either, and that no servants are to be had. He must, therefore, bake his own bread, make his own clothes, plough his own ground, and shepherd his own flocks. His gold will be as useful to him as any other yellow pebbles on his estate. His stores must rot, for he cannot consume them. He can eat no more than another man could eat, and wear no more than another man could wear. He must lead a life of severe and common labour to procure even ordinary comforts; he will be ultimately unable to keep either houses in repair, or fields in cultivation; and forced to content himself with a poor man’s portion of cottage and garden, in the midst of a desert of wasteland, trampled by wild cattle, and encumbered by ruins of palaces, which he will hardly mock at himself by calling “his own.”

The most covetous of mankind would, with small exultation, I presume, accept riches of this kind on these terms. What is really desired under the name of riches is, essentially, power over men; in its simplest sense, the power of obtaining for our own advantage the labour of servant, tradesman, and artist; in wider sense, authority of directing large masses of the nation to various ends (good, trivial, or hurtful, according to the mind of the rich person).

Via Lapham’s Quarterly, John Ruskin on the Master/Slave paradox: “Blessed are the Poor.” (From Ruskin’s “The Veins of Wealth.”)

[Image above, from here.]

* Confucius, The Analects

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As we wonder about wealth, we might recall that it was on this date in 1940 that Woody Guthrie wrote (the first version, he varied the lyrics over time) of “This Land is Your Land.”; he didn’t record the song until 1944, nor publish it until 1954.

Guthrie wrote the lyrics (to an extant tune) in response to to Irving Berlin’s “God Bless America”, which Guthrie considered unrealistic and complacent. Tired of hearing Kate Smith sing it on the radio, he lifted his pen…as he’d considered writing a retort, he’d thought to name it “God Blessed America for Me”; happily, it surfaced with the title we know.

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Written by LW

February 23, 2017 at 1:01 am

“The best way to destroy the capitalist system is to debauch the currency”*…

 

In a world full of smartphone payments and cryptocurrency, 85% of all transactions are still done in cash. Australia actually sees cash demand rising at a steady 6% to 7% per year with no decline on the horizon.

As printers and scanners become more sophisticated, the government has moved to ensure that its currency is safe. “What we noticed in recent years, with the availability of technology—particularly around reproduction technology like scanners and printers—counterfeiting in Australia had started to increase. We’re in the fortunate position where it’s still pretty low but it is rising,” says James Holloway, deputy head of note issue at Reserve Bank of Australia. “We thought we just don’t want it to keep rising in a sustained fashion, so the time had come around upgrading security”…

How Australia means to frustrate counterfeiters: “The Painstaking, Secretive Process Of Designing New Money.”

* Vladimir Lenin

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As we bite our coins, we might recall that it was on this date in 1789 that President George Washington named Alexander Hamilton as the first U.S. Secretary of the Treasury.  A founding Father, Hamilton created the Federalist Party, the world’s first voter-based political party, the the United States Coast Guard, and the The New York Post newspaper.  As Treasury Secretary Hamilton stabilized the nation’s economy and paid back the mountainous debt resulting from the Revolutionary War.  He established the first national bank and created the U.S. Mint in (the precursor of) the form in which we know it today.

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Written by LW

September 11, 2016 at 1:01 am

“Money doesn’t talk, it swears”*…

 

In 1858, the United States was an industrializing nation with a banking system stuck in frontier times… Heated battles over ‘the money question’ came to dominate the country’s politics, but no matter how unsatisfied the people, any solution that tended toward centralization was, due to the prevailing prejudice, off the table.

America was a monetary Babel with thousands of currencies; each state regulated its own banks and they collectively provided the country’s money. Officially, America was on a hard-money basis, but the amount of gold in circulation was insignificant…

And therein hangs a terrific tale, “Printing Money,” an excerpt from America’s Bank: The Epic Struggle to Create the Federal Reserve in the always worthy Delancey Street; read it here.

* Bob Dylan

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As we bite our coins, we might recall that it was on this date in 1982 that money market deposit accounts were first offered by banks and S&Ls across the U.S.  Pioneered in the early 70s by brokerage houses, the accounts were a way around the Regulation Q prohibition on interest payments n demand accounts.

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Written by LW

December 14, 2015 at 1:01 am

“Making money is art”*…

 

Back in the 1890s, there was a conscious effort to turn American money into pocket-sized works of art. It resulted in the creation of what is still regarded as the most beautiful set of bank notes ever issued in the United States: the Educational Series of silver certificates…

The Bureau of Engraving and Printing (BEP)—the government agency that controls what designs appear on the nation’s paper currency—was open to the idea of a money makeover. With the United States innovating and industrializing, it seemed an apt time for the nation’s progress to be reflected on the art of its bank notes. And the standard dead-president design was getting a bit tired: a New York Times article from March 3, 1896 acknowledged that “there has been for a long time a desire to make a change in the inartistic and stiff paper currency of the years that have gone.”

In an effort to bring more artistic merit to the silver certificate, the BEP approached Edwin Blashfield, Will H. Low, and Walter Shirlaw, three artists known for their elegant allegorical paintings. As muralists, Blashfield and Low were accustomed to working at a much larger scale than the 3.125-by-7.4218-inch dimensions of a silver certificate. But the painters’ flair for eye-pleasing composition and their ability to translate principles of national character into gorgeous tableaus of women in flowing robes was paramount. They were encouraged to submit large paintings, which a team of skilled engravers could then translate to currency-compatible format. According to the aforementioned Times article, 15 to 20 engravers worked on each note, each one assigned to a particular section of the design.

The resulting three artworks formed the basis for the $1, $2, and $5 silver certificates that came to be known as the 1896 Educational Series…

Flip through them at “Object of Intrigue: the Most Beautiful Banknote in U.S. History.”

* Andy Warhol

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As we consider the corporate logos on our credit cards, we might recall that it was since this date in 1908 that the motto “In God We Trust” has been stamped onto all gold coins and silver dollar coins, half-dollar coins, and quarter-dollar coins struck by the U.S. Mint.

1908 P Indian Head Gold $2.50 “Quarter Eagle”

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Written by LW

July 1, 2015 at 1:01 am

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