Elsewhere I tried to write about the levels of software – the 7 (?) levels between the basic bit and what you see on the desktop of you iPad – I then tried to extend this to the levels of thought between the basic neuron and the thoughts and discourses we all actually have in our minds
It’s quite a good parallel, so I though I’d try and do the same in some other areas – first with money
- First, at the lowest level, we have the actual coins and notes in out pockets and wallets (solid money). Traditional “real” money !
- Next we have the money in our bank accounts (liquid assets) which can easily be turned into cash. However, for many people, it would be a burden to have lots of money – a wheelbarrow full in some cases – what would you do with it ? As we go up the levels, this becomes more and more true – people general try to find a safe place for their money, and not have it in cash – in some cultures, they traditionally try to buy gold or precious stones.
- Next comes our personal core assets – our house and some money. As an example, I think a person aged 60 in the UK who owns a house and has half a million £ can be fairly sure that they can live in comfort for the rest of their lives.
- There is the State Pension to consider too.
- Nearly all the other people in the UK will probably be OK too, but may not be able to afford a car, holidays and meals out as much as this person.
- If they have more than this, then I am describing that as investments rather than assets
- Some other stuff might also be included here, such as cars (though they always decrease in value) and insurances, etc.
- More than this is personal investments. Some people invest in property which they rent out for income. Some people invest in collections. Others invest in unit trusts or stocks and shares. Others invest in their own or in other people’s small businesses, and this is one of the few points where there is a direct equivalence between money, time and energy as a way of investing into a small business. I think there is an effective limit to personal investments of about £ 5 million – beyond this you probably need professional help to administer what you have – it becomes too much for a person on their own, and that changes the economics of it.
- Above £5 million, I would describe the money as capital. Almost inevitably it is invested in the stock exchange, commodities or insurance markets, and the owner of the money potentially becomes a member of the relevant boards of directors. Up to about £25 million, I think this level of money would probably remain localised in the persons home country.
- Above £25 million. The person by now probably has investment vehicles of all types to control their investments – investment companies, offshore trusts, etc.
- (I’m slightly artificially making it stretch to 7 levels – I haven’t a clue at this level really !)
- Above £100 million and you get all the strange stuff happening – leveraging, taking “futures” positions, junk bonds, Swiss banks …….. I’ll think of some more. At this level it seems that money really IS an energy with flows and currents, though maybe it is close to liquid still
There is a HUGE amount of money in the world, and it all (sort of) makes sense until the last level, where damage can be done to countries …….. etc. At this level it seems that these guys don’t really know what to do with the money
A number of comments can be made about all of this
- All money appears in this several times (simultaneously) – even the coins in your pocket also appear in your nation’s accounts. More importantly, the money in your bank account can be used in whatever way it pleases by your bank, probably ending up on the global money markets.
- At each level, there may be a surplus, and this is shifted up to the next level – you bank may use most of its deposits to make personal loans, but it is unlikely to use all of its deposits this way (it has to keep some liquidity), That money is then moved onto the level above, and so on.
- Concentration of capital – who, how, why ? This whole process is called the concentration of capital (this is originally a Marxist term), and it seems to be the way things inevitably happen – as long as people want a return on their investments, someone will provide this service. The more important questions are – who is allowed to do this, what are they allowed to do, how can they be controlled to act in the human interest. At the moment the higher levels of this process seem to inevitably be anti-planet and anti-human, even though no-one is doing this deliberately (?), it just seems to be the results of “the logic of the situation” at every turn. It often seems that the wrong people are doing the concentration of capital ! Perhaps this is always the case !
- Inflation. At every level, people want to make a profit, get some interest, or at least not fall behind others, so the whole system is always inflationary. This is worse in some places than others – in Germany the banks invest directly in industry, and they are happy with a solid 2% income every year plus a similar growth in the value of the business. In the UK and USA, this yield would not be acceptable, and this led to the awful spectre of the pension funds of all the main employtee groups forcing their own companies into takeover and liquidations due to their inadequate profitability, thus sabotaging the jobs of their own investers
- At the moment, it seems that capitalism globally is turned up to volume level 11 – it would be great if we could all agree to turn the volume level down to 4 or 5 ! Miraculously, the UK economy has found its own way to zero growth and zero inflation, and surely this should be the aim for all our “old economies” in Europe. Other countries are still catching up, and that’s OK.
I have also written about the 7 Laws of Money, which by a sort of borderline decision is in the spiritual section