As currency traders, we trade one currency against another currency. Money vs. money.
We trade money.
And, as serious students of the practical activity of currency trading, we should also be serious students of the theoretical aspects of money.
Earlier this month, Agustín Carstens, General Manager of the Bank for International Settlements – the BIS, in Basel, Switzerland – delivered a speech at the Finance and Global Economics Forum of the Americas, convened at the University of Miami Business School.
The title of his address was Money and payment systems in the digital age.
Here’s an excerpt from the Introduction to Mr. Carstens’ speech –
Let me begin with a short informal survey – with a show of hands, how many of you typically carry cash? How many write cheques? How many broadcast payment activity on social media? How many own a cryptocurrency? This exercise highlights, in a small way, the different states of “money” with a limited sample size.
This morning, I would like to share my thoughts on money, payment systems and innovation. I would like to look at what money is, how it has evolved, what some of the payments innovations taking place are, and how cryptocurrencies fit into all of this
If you are one of those serious students I referred to above, you will want to read this speech.
Click on the link below to download the 11-page .pdf of the speech.
Money is any item of record that is generally accepted as payment for goods and services and repay a debt, the amount of active money fluctuates seasonally, monthly, weekly and daily. In the United States, Federal Reserve Banks distribute new currency for the U.S.
In fact he says “private money fails” - but when it is investigated - ALL MONEY IS “Private Money” - since the “Central Banks” are privately owned !
I presume he is thinking of the likes particularly of “John LAw” when he refers to “Private money ?”
And he doesn’t mention the old goldsmiths who acted as the first bankers, issuing frauduent promisory notes as loans against the gold they held on behalf of savers and charging interest on them.
Nor that the banks were required to have Gold to back the first paper money (Gold reserves) - which was abolished and allowed banks (As a whole) to simply have “on deposit” from savers a fraction of the “Paper money” they lent out.
We used to be taught that Governments controlled the “money supply” by a amending this “Fractional reserve” by adjusting the “Reserve ratio”.
Now even that has been abolished and so “banks” can lend what they like and don’t even have to go to the inconvenience of printing banknotes ! They simply type money onto a spreadsheet.
There has been some efforts made to control the excesses of the banks AFTER the 2008 Debacle, and we shall see whether that works ! At the moment it is borrowers who pay huge “Interest rates” fro "spreadsheet money - whilst Savers receive derisory amounts !
It really is quite discouraging how it works in truth ;
Thanks for sharing @Clint. I know the School of Pipsology references the BIS in a couple places. Very interesting speech. The mention of using books and microfiche to learn makes me smile.