Snippings

A thousand years ago the people of England were going about their daily business of growing sheep and suchlike and probably didn’t realise that, these being days long before universal suffrage and representative democracy, they were about to become part of a Scandinavian empire (and without a referendum). This happened when the Saxon King Edmund Ironside died, which led to no end of trouble, because the Saxons of middle England had already chosen Cnut as their king but the cosmopolitan inhabitants of London opted out and went with Ethered’s grandson Edmund Ironside. Then, as now, London was another country but when Ironside died, London couldn’t hold out and Cnut the Great became the King of England. He was the Son of Sweyn Forkbeard a daughter of the King of Poland (bloody Polish kings coming over here and taking all of our monarch’s jobs). He was a grandson of Harald Bluetooth. He became the king of Denmark in 1018 and the King of Norway in 1028, forming the Anglo-Scandinavian North Sea Empire. This Empire, it has to be said, did not last very long but following Brexit, who knows!

Five hundred years ago the Polish-Lithuanian Commonwealth was on the way to becoming biggest country in Europe. It eventually stretched from the Baltic down to the Black Sea and was powerful enough to invade Russia and occupy Moscow. I’m sure the inhabitants of the Polish-Lithuanian Commonwealth (which, by the way, had a very interesting constitution that included proto-democracy) thought that it would last for ever and found it very difficult to imagine any other form of government or, indeed, sovereignty.

Two hundred years ago, in the newly independent United States of America (which was having another go at forming a central bank), the last-ever Federalist Party candidate had lost the election to previous Secretary of State Monroe. America instituted a series of tariffs against British goods, deciding that following the war of 1812 it no longer wanted to be in a free trade alliance with us.

One hundred and fifty years ago there was a Latin Monetary Union, or “Victorian Euro” as I think about it. It was created by France, Belgium, Italy and Switzerland  but was later adopted by countries ranging from Peru and Venezuela to Serbia and Bulgaria. Another late joiner was Greece, in 1867. Greek economic problems meant that they began debasing their version of the currency and they were chucked out in 1908 and then let back in 1910. Ultimately the whole thing fell apart because countries printed paper money that wasn’t backed by a bimetallic reserve and it formally ended in 1927 (although the Swiss continued to mint coins to the LUM standards for size, weight and fineness until 1967). In 1866, people must have thought advantages of a single currency unarguable.

A hundred years ago the last Emperor or Russia must have found it very difficult to imagine any other Russia than the feudal state he ruled, but it (and he) was gone in a flash. When Lenin (who once said that the best way to destroy the capitalist is to debauch the currency) led the October Revolution, overthrew the government and established a one-party state the average Russian must have been utterly astonished at the turn of events. Sometimes, things change really quickly.

Now we have Brexit. I’m not for one moment suggesting that Brexit is a revolution but sometimes profound change can come along relatively quickly, as things tumble out of control following a long period of stasis. Punctuated equilibrium, they call it in biology. Post-Brexit I favour going back to the beginning and re-establishing the North Sea Empire but other people will, no doubt, favour new and unexplored alternatives. The United Kingdom may not survive the fall-out and Sterling may follow. Change is in the air.

A generation from now who knows where we will be. It seems to me, though, that one plausible scenario is that set out in Gill Ringland’s report for Long Finance. She envisages a world dominated by cities rather than countries (which fits with my world view, the Jane Jacobs “Cities and the Wealth of Nations” perspective of economies as cities and their hinterlands). The World Economic Forum came out with a sympathetic paper on this last year. In such a city-centric world, where the mayor of London has more power than the Prime Minister and London’s trade deal in services with Beijing is more important than the UK’s trade in goods with China, we will probably remember the European Union much as we remember the Polish-Lithuanian Commonwealth and Sterling as we remember the Latin Monetary Union. Neither the United Kingdom nor the Pound Sterling are laws of nature.

What might be the trigger for the new world order? I think there is a plausible case to me made of digital currency as the change agent. Suppose there is a Chinese digital currency, traded in London, used all the way along the “belt and road”, that begins to eat away at the U.S. Dollar’s share of word finance? What if there is an Islamic digital currency based on gold that people around the world begin to hodl (sic) instead of Bitcoin? What if New York State decides to have its own digital currency that has it’s own rules, mores and community values? Oh, wait… in November New York State Assembly member Ron Kim, Senator Julia Salazar, and Cornell law professor Robert Hockett announced the Inclusive Value Ledger (IVL) proposal. If passed, it would create the America’s first publicly-owned payments platform as well as a digital currency that could be exchanged for goods and services within the state. All New York has to do is to require taxes to be paid in this new currency and it would become a rival to the Canadian Dollar and the Swedish Crown on the world stage.

If you think Facebook’s Libra is the future of money, then you are almost certainly wrong. But if you think that Facebook’s Libra may be a catalyst for others to create new currencies that could threaten the U.S. Dollar’s position at the top of the currency totem pole, then you are almost certainly right. 

What a good idea for a book.

(The title, by the way, is another quote from Lenin.)