Riding The Money Go Round

When in West Germany first, before we were fool enough to allow it sovereignty, being sent to save the world from the Soviet hordes, the money question was of key interest. Not only did we have little of it but neither did the locals.

There was actual sterling coin and notes for the better off, then Army scrip, bits of scrubby paper valid only in particular British outlets, but which might used with people who could access these, the then Mark, distrusted, inevitably cigarettes and in addition anything which was desirable and could be bartered.

Both we and the Germans were used to barter. For all of us the 1940's had been a time for the resurgence of barter, for those in the UK, to get our hands on things not available or rationed and for a time for the Germans to survive in the collapse of its state.

How did we manage? The answer is that we did because we all knew the basic rules of this money game and if we applied common sense and straight dealing we would both benefit. It could apply to services. I dig your cabbage patch because I have boots, you clean my windows because I do not like ladders.

So when the government permitted the making of more cigarettes it was not just a health matter, the medic's then insisting it was good for us, or helping our sense of identity or social mixing, it was in effect money creation given the multiple effects of the ensuing transactions.

All this began to go in the 1950's and it became the norm to have a cash economy for the great majority of transactions. As our two main political parties in the UK were closely matched the electorate had to be bribed, which meant promises and therefore spending and that meant flows of money and credit.

The theoretical basis for much to this was alleged to be Keynes, albeit the convenient parts. The inconvenient were skipped. Sometimes our rulers got it wrong and other times they took the risks, hoping they could evade the consequences. Inevitably we began the long era of persistent inflation with occasional surges.

Half a century further on as the tribes of economists stalk the land and the statistics, we are still no wiser. Allegedly, a good many have been better off, but whether that has been better technology allied to greatly increased productivity plus greater reliable trade is something we could debate without coming to any real conclusions. There has been the property boom which has entailed transfers of wealth to some.

The losers, acutely aware that the winners have had a great deal of help from the State, directly and incidentally in many ways, understandably want assistance and support as the economy rapidly changes and their futures are uncertain. They also have a lot of votes in key areas.

We have on occasion nearly come off our money go round. But might the next time the gear wheels fail, we all fall off?