The Invention of Money

Episode 423 of This American Life features insightful analysis of money and the economy. I made the following notes whilst listening to the podcast to help it sink in. Well worth a listen!

When x number of dollars are lost on the stock market or when the housing market collapses, where does that money go? The answer: money is fiction, it's value can simply disappear. Money is simply worth what people agree it is.

Can we track how much money is in circulation? It would be an infinite series of calculations between savers, banks and lenders.

Money started with the exchange of gold, then came paper bills which represented the amount of gold held in banks. In 1933 the gold standard ended and paper bills simply became the idea of money. Now money often does not change hands or even exist, we just exchange electronic numbers or information when we are paid or buy things online.

In Brazil in 1990 inflation was 80% a month. Prices were increasing every day. To pay for the building of Brasilia in 1950 the government began printing money and inflation began. Successive governments made attempts to fix the problem such as price freezes or confiscation of money. Four economists were approached in 1993 to address the root causes of the problem: the printing of money and importantly people's faith in money. People needed to be tricked into thinking money had value. A new virtual currency URV Unit of Real Value was introduced. People were paid in URV and prices were in URV. The rate to exchange URV to cruzeiros would change daily as advertised by the bank, but prices would stay the same so that people would start to think in URV. Once things settled down the Real was introduced with the same value as URV and from that day the virtual currency became real and the people believed in it's value stabilising the economy.

In most modern countries the people who decide how much money there should be by creating or removing money is the central bank e.g. the Federal Reserve in USA, the Bank of England in the UK. This is an independent institution and cannot be controlled by the government. The balancing act between sufficient money to loan to businesses and create jobs and not too much money as to increase inflation is voted upon and decided by the central bank. To increase the amount of money in the economy treasury bonds are purchased from the banks by the central bank. The banks will then loan this newly created money out to people typically at a lower interest rate. The central bank also has the power to become the lender of last resort "opening the fed window" by providing emergency loans to banks
and large corporations to prevent the banking system from collapse. The central bank will demand assets in return for these emergency loans, however recently the central bank has taken on potentially toxic assets such as mortgage backed securities. Any losses occurred from the central banks risky investments do not become part of the
government deficit as they are separate entities. In fact the central bank always make a profit and any reserves are granted to government to reduce the deficit. The creation of money via the central bank comes with the risk of devaluing money causing huge inflation like in Brazil pre-URV and the Real.

Wedding Directions and Hotel

Hotels in Carlisle City Centre

Travelodge, Carlisle Central
http://www.travelodge.co.uk/search_and_book/hotel_overview.php?hotel_id=362

Hotel Ibis
http://www.ibishotel.com/gb/hotel-3443-ibis-carlisle/index.shtml

County Hotel

http://www.countycarlisle.com/

Crown & Mitre

http://www.peelhotels.co.uk/hotels/crown-and-mitre-hotel-carlisle-cumbria-england/

Hallmark Hotel

http://www.hallmarkhotels.co.uk/carlisle/default-en.html

Hotel in Longtown

Graham Arms Hotel, Longtown

http://www.grahamarms.com/

Directions from Arthuret Church, Longtown to Tithe Barn, Carlisle
http://maps.google.co.uk/maps?f=d&source=s_d&saddr=Unknown+road&daddr=West+Walls,+Carlisle+CA3+8UF+(Methodist%40tithebarn)&hl=en&geocode=FUk6RwMdvanS_w%3BCcLsQJYD29k4FWmbRQMdZSvT_yGvOPJDqyFYuQ&mra=pe&mrcr=0&sll=54.874068,-2.943241&sspn=0.455916,1.234589&ie=UTF8&ll=55.023889,-2.91069&spn=0.113556,0.308647&t=h&z=12

Using Google Calendar Sync with Outlook 2010

Thanks to various sources for this hack:

• Close Outlook 2010
• Open C:\Program Files\Microsoft Office\Office14\Outlook.exe in Notepad++ using the Hex-Editor plugin
• On line 72923 change the value "14.0.0." to "12.0.0."
• Save the changes then re-open Outlook 2010

4 Steps to Making a Change?

An interesting approach to changing the world in which we live in taken from Tony Benn's Letters to My Grandchildren:

1. Who gave one person the right make things this way?
2. What is going on? You need to understand the situation before you can influence it
3. Why is it going on? Think about the how it works (the nature of society)
4. What can you do about it? How can you challenge the current situation

The Golden Rule of Major Religions

A thought provoking extract from Tony Benn's Letters to My Grandchildren:

• Christianity - we are all brothers and sisters and should love one another as neighbours
• Judaism - what is hateful to you do not to your fellow men
• Islam - no one of you is a believer until he desires for his brother that which he desires for himself
• Buddhism - hurt not others in ways that you yourself would not find hurtful

Why do we need stock markets?

Companies are legal entities which exist to co-ordinate the production of the goods and services - they are where many of us work and from which we buy many of the products we consume. Wherever there are companies, there are shareholders. Shares are traded in a stock market to raise funds. 

They are not the only form a business organisation can take. Government-owned companies would be called public corporations. Small businesses may be "sole traders" or partnerships, which are not companies.

A key reason for forming a company is that the shareholders of a modern company have "limited liability". This means that a shareholder can lose what they paid for their shares in a company but they are not liable for the debts of the company beyond that.

Many companies have taken the decision in the past that they want to sell shares on an open market and the largest of these companies will have their shares traded on an organised stock exchange. The benefit to companies from having their shares publicly traded is that they can issue new shares to raise capital for future investment. The only alternative source of funding would be to increase debt (by borrowing more from banks or issuing bonds). The benefit to investors from having shares traded is that they are not locked into the investment for an indefinite period. Shares held can be sold at their current market price whenever the markets are open.

The value of all shares outstanding in a company (the "market cap") is the current market value of the future profit stream that that company is expected to generate. For example, when oil prices rise sharply, investors will calculate that profits of oil companies are likely to rise in future, so prices of shares in companies like Shell and BP will jump up.

Source: Why do we need stock markets?

Workout Routines

Weights

• 1 second lift, 1 second pause, 2 second lower
• 1 week low-rep (8), high-weight then high-rep (15) low-weight

Stretching

• 30 second stretches - quads, hamstrings, calf, groin, toe-touch, glutes, sides, shoulders, triceps

Legs & Shoulers

• Squats, shoulder press, lunges, calf raises, deadlifts

Chest & Triceps

• Press ups, chest fly, triceps extension, dips, back extension

Biceps & Back

• Dumbell row, lateral raise, front raise, bicep curl, superman raise

Pies & Prejudice - In Search of the North

An excellent read for anyone with an interest in the English North-South divide. Some topics which I enjoyed relating to included:

• p26 - Museums
• p39 - Dinner, Tea and Supper
• p40 - Chippy Run 
• p42 - Greggs
• p47 - Rugby League vs. Union
• p142 - Wigan Pie-eaters
• p157 - Black Pudding
• p216 - Wealth

Stuart Maconie - Pies & Prejudice

New York

Me and the Wee Man in NY.

Great Cumbrian Run 2008

Finished it in 478th place in a time of 01:48:11. Winning time was 01:10:40.

Parable of the Prodigal Son

The Prodigal Son appears in the New Testament in the Gospel of Luke and by tradition it is usually read on the third Sunday of Lent. It is the third and final member of a trilogy, following the Parable of the Lost Sheep and the Parable of the Lost Coin.

The story is found in Luke 15:11-32. Jesus tells the story of a man who has two sons. The younger demands his share of his inheritance while his father is still living, and goes off to a distantcountry where he "waste[s] his substance with riotous living", and eventually has to take work as a swine herder (clearly a low point, as swine are not kosher in Judaism). There he comes to his senses, and decides to return home and throw himself on his father's mercy, thinking that even if his father does disown him, that being one of his servants is still far better than feeding pigs. But when he returns home, his father greets him with open arms, and hardly gives him a chance to express his repentance; he kills a fatted calf to celebrate his return. The older brother becomes jealous at the favored treatment of his faithless brother and upset at the lack of reward for his own faithfulness. But the father responds "Son, thou art ever with me, and all that I have is thine. It was meet that we should make merry, and be glad: for this thy brother was dead, and is alive again; and was lost, and is found".

The story has famously been covered in many forms of modern media including songs such as Billy Idol - Prodigal Blues, U2 - The First Time, Iron Maiden - Prodigal Son and films such as We Own The Night.

Happy Families

"All happy families resemble one another, each unhappy family is unhappy in its own way" Anna Karenina by Leo Tolstoy

http://en.wikiquote.org/wiki/Leo_Tolstoy