May 30, 2025 • 45 mins
Economist Felix Martin joins host Merryn Somerset Webb for this week’s episode of Merryn Talks Money to discuss the common understanding of, well, money. Specifically, why the typical conception of what constitutes it may be inaccurate.
Martin, author of the book Money: The Unauthorized Biography and a former fund manager, says that rather than simply being a token medium of exchange, “money” is in fact “a system of ideas; it is the institution of credits and debts. It is the various technologies which have been developed and deployed for recording credits and debts and for transferring credits and debts from one person or one company to another.”
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:17):
Welcome to Merin Talks Money. The podcast so much people
who know the markets explain the markets. I'm Meren Sum's
that web. This week, I'm speaking with Felix Martin. He's
an economist, he's a fund manager, he's an author. He
was educated in the UK, in Italy, and in the US,
where he was a Fulbright scholar. He's got degrees in classics,
in international relations and in economics. He has worked at
the World Bank, and he has worked in several different
(00:39):
fund management companies. Crucially, he's also an author of a
book called Money, The Unauthorized Biography, and that's in part
what we're going to talk about today. It was published
more than ten years ago, but I'm afraid it is
more relevant than ever today. We talk about that, we
talk about modern monetary systems, ancient monetary systems. We don't
have time to go into everything I would have liked to,
(01:00):
so where I really would urge you to get the
book and when you get it, read the story of
the Money of Yapp and definitely read about the Bank
of England and Tally Stones. We are going to talk
about a variety of other things, Felix, welcome to Merin
talks Money.
Speaker 3 (01:13):
Well, thank you very much for having me, Marin, it's
a pleasure.
Speaker 2 (01:15):
Well you'll find out, won't you. Maybe it will be,
maybe it won't be. Now, you are not the first
person to write a book called money, although everyone has
a different subheading, but yours I got to say it.
It's particularly good, and I do recommend it to everybody listening.
Go up by this book. You think it's just about money,
but that's because you don't really understand what money is.
It's really a very granular history of pretty much everything
(01:38):
you've ever thought of. So I think what I want
to do, Felix, is start by asking you what exactly
it is that money is, and what is the big
mistake that people make when they think about the nature
of money? Going through your book through the way that
you think, there are two things to think about money,
what money actually is and who should control money, manage money,
(02:01):
manipulate money, and for whose benefit? Right, So there's two
parts to the story of money, but you can't talk
about the second unless you've really got a good grip
of the first.
Speaker 3 (02:12):
Absolutely right, you did an excellent summary, Marion. What can
I say and thank you very much, indeed for those
very generous words. I also, of course urge everyone to
go out and get a copy and they'll have a
more comprehensive version. And I'll give here the basic story
which I try to tell in the book, which I
think is very important, is that what I call a
conventional view of money and its history, this is the
(02:34):
one that you can find in every sort of children's book,
and it's the one that's sort of ingrained in people's minds,
is wrong. That conventional story is that in the beginning
there wasn't any money, and people just started with each other.
You know, I had fish and you had corn, and
in order to exchange with one another, you had to
(02:55):
want my fish and I had to want your corn,
and in fact we had more than the same time
as well, what economists call a double coincidence of wants,
and otherwise no trade could take place. And that's all
terribly inefficient. And therefore, at some point in the distant past,
probably a different times, in different places, somebody come up
with a bright idea, which is, why don't we choose
one particular sort of commodity to serve as a so
(03:18):
called medium of exchange, that is to say, something which
people don't want for its own sake, but just so
that it can be used to settle and liquidate exchange.
And that basically was the invention of money. And typically
it was precious metals that were chosen for this use
because they've got lots of nice properties when they last
for a long time, and so and so forth. That
(03:39):
was the invention of coinage. And then people had an
even better idea, which is why didn't we start lending
and borrowing this money commodity? And that was the invention
of credit. And then even later in that there were
institutions that were built up which specialized in organizing credit,
and those were banks. That was the invention of banking.
That's the kind of conventional history that you find throughout
(04:00):
literal money, and it's the way that a lot of
people think about it, but it basically has it all
completely the wrong way round. In reality, money is a
system of ideas. It is the institution of credits and debts.
It is the various technologies which have been developed and
(04:21):
deployed for recording credits and debts and for transferring credits
and debts from one person or one company to another.
It's therefore basically a set of ideas and institutions. I
don't mean that in a sort of wooly sense. There
are very specific ideas which are extremely important in the
(04:41):
development of money and which really constitute what it is
to live in a monetary society. The most important one
of these is the monetary standard, the standard unit economic value.
Monetary value is the key concept in money. It hasn't
always existed in human history. It is an idea, a
(05:04):
concept of value, which was invented at a certain point
in time and has been developed. Most concepts of value
don't have standard units. So esthetic value or religious value,
all kinds of different measures of value that we talk about,
but they don't have standard units. You can't enumerate the
esthetic value or the religious value of something. But the
(05:24):
monetary value, the economic value of things, what distinguishes it
has a standard unit. Just like physical concepts like length
and weight and so on, they have standard units kilogram,
a meter and so on, and this is what The
standard unit in money is, something like a dollar or
a pound or a euro. And that's incredibly important and
the key questions around which all of monetary history revolve,
(05:46):
and you alluded to this at the beginning, are what
is that monetary unit, what does it actually mean in
real terms, what do you get for it? And who
gets to decide today? The answers to those questions for
something like the pound sterling are that we define a
pound sterling according to the rate of change of prices
(06:08):
for a particular basket of goods and services. So we
don't have, say a gold standard, which is where you
define what a pound is by reference to one particular commodity,
gold and a particular weight of it. We do it
with the whole basket of goods and services, the so
called CPI basket, and we do it with the rate
of change of prices. So we say we want prices
(06:28):
to go up at two percent a year. In other words,
we want the pound sterling, this abstract monetary unit, to
depreciate in real terms by two percent a year. So
that's the answer to the first question, what is the
monetary standard today for the pound sterling? And then the
answer to the second question, who gets to decide that
in our current version of the monetary system, Well, that's
(06:49):
actually the Chancellor of the Excheque. He actually, I was
sure she sets what that standard is, but of course
it's it's implemented and operationalized by the Bank of England,
which sits under democratic control.
Speaker 2 (07:00):
Okay, let me just take you back a little bit,
because one of the things that I found fascinating little
side points in the book was when you asked how
it could be that this mistake about what money is
I is in is actually a system not a token,
How this mistake could have been made for so long
by so many historians. And the answer to that, you say,
(07:20):
is because it is the coins that survive, not the
evidence of the system.
Speaker 3 (07:26):
Yes, I think there are several answers to that crucial question,
and one of them is exactly that. When you're doing
monetary history, when you dig into the past and try
and work out how things were back then, of course
what survives is physical evidence. In the case of money,
that means coins, for example. But we actually know that
(07:47):
in many past societies a great deal of monetary credit
and debt and financial balances and transactions were not of
course represented by coinage, and transactions weren't settled in coins.
They were very often settled by entries in ledgers, for example.
But the ledgers don't exist anymore. And there'll be a
(08:08):
whole lot of other transactions and balances which were recorded
simply by word of mouth or in other formats, and
they don't exist. So that can definitely skew and has
skewed the perception of things. But let me take it
back a step. I think in a sense it's sort
of simpler than that. The curious thing about money as
an institution is that from the bottom up, when you
(08:29):
as an individual are interacting with the monetary system, certainly
in the pre digital age, when notes and coins were
the primary form of representation of money, from the bottom up,
of course, money does look like this real thing that
is what you deal with every day. It's only when
you look from the top down, as it were, and
you try to understand the system as a whole, it
(08:51):
becomes completely obvious that notes and coins are just physical
representations tokens, and there are lots of different kinds of
tokens up of an underlying system of credits and debts
which is much larger, much less substantial, and essentially abstract.
I hope that allami just say, there's another important reason,
which I go into in my book, as to sort
(09:13):
of historically in Europe, and in Britain in particular, which
was the financial innovator at the time. Why it is
that this conventional view held sway in the face of
the fact that the economy became much more financialized, banks
became much more important. And even today, you know, when
we live in this digital world where I think from
to mas people is pretty obvious that money is an
(09:36):
abstract thing. And it's because people don't use you know,
coins and notes anymore. Why did it hold such sway?
And there I tell the story of a very important
debate that happened right back immediately after the founding of
the Bank of England, which was a pretty epochal moment
in monetary history generally and certainly in Britain, there was
(09:57):
a genuine huge debate over this very question which we
began with of what the monetary standard should be, How
should a pound sterling be defined? Because with the creation
of this new Bank of England, money was henceforth going
to be issued not by the sovereign and the Mint
as it always had been, but by this bunch of
(10:17):
private in those days, private bankers, the Bank of England.
So this question was crucially important and it all played
into an existing political debate about the constitutional changes that
have been going on in Britain and the shift towards
what we would now call a constitutional monarchy, so political
power being taken away from the absolute monarch into a
(10:39):
system where it was shared with parliament. And as a
result of that, there was a big debate between one
of the most famous philosophers in British history, John Locke,
the great father of political liberalism, and his sort of
Tory opponents, And as a result of that, Locke made
a fateful intervention in which he came down hard on
(11:03):
the side of the conventional view of money, but for
political reasons. It's a big question in my mind whether
he actually believed what he was saying philosophically. But he
made the argument that listened, a pound sterling just is
a certain weight of silver. In those days they were
talking about silver, not gold. That's what it is, that's
what it means. No one can change what that weight is.
(11:26):
Anyone who tries to change what that weight is is
effectively lying, defrauding the public. So he was arguing very
strongly for a fixed precious metal standard, for the idea
that money is a real physical thing. But he was
doing it basically for political reasons, because he wanted to
tie the hands of this new institution, the Bank of England,
(11:50):
which he thought would otherwise fall into the hands of
revolutionaries and the whole republic would fall to pieces.
Speaker 2 (11:56):
Okay, and so she's just reading that bit in your
book earlier. But that brings us can take us forward
by quite a long way. This idea that money should
be stable, that it should always be worth the same
roughly the same sort of thing, that inflation should constantly
be contained, and the idea that as we know it
(12:18):
came out of New Zealand a couple of decades ago,
that inflation should be kept by central banks at a
level of two percent every year forever. And that's something
that a hasn't worked for a while. And be that
you have taken issue with along the way. And there
is a bit in your book about the financial crisis,
about how it happened where you point out that everything else
(12:41):
was ignored, ignored completely in pursuit of this idea that
nothing mattered except stable inflation. So booming house prices, a
drastic underpricing of liquidity, and as it markets, the emergence
of the shadow banking system that declines in lending standards,
bank capital and liquidity ratios were not given the priority
they merited because unlike low and stable and inflation there
was simply not identified as being relevant. So I don't
(13:04):
think very many people would accuse central banks of being
wedded to sound money. But this is what it is,
is the idea that money must be stable, and if
you put that above everything else in a modern monecary system,
you can run into all sorts of trouble.
Speaker 3 (13:17):
Yeah, but it's very interesting what you just said there,
that no one would accuse central banks of being whaded
to sound money. But that, of course is exactly now.
I think if you are central bankers, they would say
that's exactly what they're wedded to. And most modern important
central banks do operate an inflation targeting standard these days,
which intrinsically is targeting stable value of money. I mean,
(13:38):
to be sympathetic to Lock, let's take him as the
patron saint of stable money for a moment. I mean,
of course, the paradox is that the monetary standard does
have to be stable over time and across space, so
within particular jurisdiction for it to be useful. I mean
that obviously is true to some degree, but one also
(14:02):
has to remember that because it is the unit that
you're using to denominate credit and debt, and because credit
and debt can grow and can go in all kinds
of funny directions, and can become very inequitable, and can
become become very inefficient. And we've seen that over and
over again throughout monetary history. It's the nature of financial
capitalism that can happen. The devaluation of the monetary unit
(14:27):
is also an absolutely crucial escape valve for when things
become unsustainable. Caines John Maynard Knes. He has a great
passage where he talks about this and says, the real
parents of revolution are the absolutists of contract. In other words,
it's people who obsess to the exclusion of everything else
(14:50):
about this important truth that money must be kept stable
to be useful. That are the real people that end
up creating revolutions. Because debt becomes completely unsustainable, one half
of the population is i think he puts, it becomes
enslaved to the other and so on and so forth.
Now this is all a bit hyperbolic, and so and
so forth. But what is totally obvious and what only
(15:11):
becomes clear when you have a clear view of money
as a system of credit and debt rather than as
some sort of physical thing, is that one of the
primary economic forces, and therefore one of the most important
decisions that any government or central bank can make is
over the value of the monetary unit because of its
(15:34):
distributional consequences. It's distributional consequences, and that's what gets missed
and has been i think missed in a lot of
the last thirty years thinking about these things. It was
certainly what was missed in the lead up to financial crisis.
If you're focusing solely upon keeping the value of money
stable in order to make transactions efficient, you lose sight
(15:58):
of the fact that this is the most important distributional
tool that the government.
Speaker 2 (16:02):
Yeah, yeah, Now, this is something that as you talked
about on this podcast quite a lot, the idea that
in many ways what we call monetary policy is effectively
a fiscal policy because it has this distributional mechanism. And
that brings you back to the question of whether really,
really a central bank should be independent of government, because
(16:24):
central bank policies do effectively enact what we would consider
to be the results of fiscal policy or the type
of results of a fiscal policy might have have. So
if that is the case, and it is particularly we
saw that during the Quey period, etc. Is it reasonable
that a central bank should be independent of government.
Speaker 3 (16:45):
Yeah, I mean, of course it's a good question. The
debates got sort of slightly mixed up because it's probably
a bit of a bit on a bit of a
rent when I wrote my book which was published more
than ten years ago now and arguing against central bank independence.
I mean it all comes down, of course, to the
details the principles of delegating power from a sovereign parliament
(17:07):
or from the government that it's chosen to an independent
agency of any sort, a technocratic agency of any sort.
I mean, the central banks are the most important example,
but a lot of other examples in the modern system
of governance. The principle is that you're not delegating these
crucial top level political distributional decisions. Those should be made
(17:31):
by the political authorities, legitimate political authorities, and it's the
operational aspects that should be delegated to the central bank.
And that is the principle of it. And as I
was just describing a few minutes ago. The monetary standard
the inflation type, which is inflation targeting, a two percent
inflation target. In the case of the UK, for example,
it is set by the chancellor. It's not set by
(17:53):
the central bank. They can't choose their own target. So
that would be the defense of central bankers, and it
is legit, but up to a point, because these things
do get a bit fuzzy inevitably in practice.
Speaker 2 (18:06):
Is the answer then to remove the target the target.
Speaker 3 (18:08):
Is wrong, yes, exactly. I mean all.
Speaker 2 (18:11):
Targets will lead to disaster. We know there and those
are the things the target that doesn't lead to some
kind of desire.
Speaker 3 (18:16):
Well, that's a very very important thing you've just mentioned,
because my favorite and I think the most important precept
in all of military policy, and it applies much more broadly,
and it's the topic of my next book, Listeners, is
Part's Law, named for the great British monetary economist Charles Goodheart,
and that law. He voiced it in the context of
monetary policy, and he said, any metric, when it's chosen
(18:38):
as a target, eventually ceases to become a good target.
And what he's talking about is the tendency of systems
economies societies and so on to adapt, of course, around targets,
to game targets so that they cease being useful. An
inflation target is of course an absolutely primary example of that.
So what you were describing and what I write about
(18:58):
in my book in that part about the way that
the focus on inflation targeting and your parentscept not a parent,
I mean the success in targeting inflation for whatever reasons
we can debate those prior to the financial crisis meant
that the system adapted around it, and all the kind
of imbalances which genuine economic and social imbalances which the
(19:20):
inflation target was intended to measure and tame, in fact
just emerge in all kinds of other places. It was
a phenomenon that had been predicted and written about many
years earlier by the American economist Simon Minsky. He said,
stability breeds instability. It's the same idea. So yes, it's
the system as a whole, and not just the particular
(19:41):
system of inflation targeting, but the idea that you can
choose a particular metric and you can then design policy
around that particular metric, using it as a target, and
that that is a sensible, effective way of trying to
govern a complicated modern economy. That's where the problem lies.
Speaker 2 (20:02):
Okay, let's move to the problems of today. Then we
talked to earlier about how when when things go wrong,
you end up with unpleasant distributional impacts. We look across
the Western world at the moment and what we can
see exactly that a distributional problem, particularly intergenerational. Can we
blame money for that system of money? How money has
(20:23):
been managed?
Speaker 3 (20:25):
It's a good question. I mean, are lots of things
which go into it. I mean I always tell the
story about my mother and her sisters and my grandparents
were trying to try to explain this generational aspect and
why monetary policy is important to When I was young,
I would sit around my mother and her sisters. They
were always complaining about the fact that their father had
(20:47):
been He'd been a distinguished fellow, he'd ended up running
a university and vice chancellor. Wasn't quite as well paid
by the way as it is these days being a
vice chanceer. So but nevertheless he'd been a sort of
in there.
Speaker 2 (20:58):
Maybe that may be temporary. By the way, get in
the state of the ukc University is a bullet in
the history of what Chancelett get paid well.
Speaker 3 (21:04):
He certainly would have been absolutely amazed if he'd seen
modern university. Any Way, at the point is that having
done all this, he had retired in about nineteen seventy,
and he'd retired to a tiny little house back in Oxford,
which he'd bought in the thirties, and he'd lived out
his days, and then when he came to expire, there
was nothing left. There was no sort of great inheritance
to pass on. And they were just baffled by this,
(21:27):
and they said, how could this be that this was
a situation now. The reality was that at the same
time that when they were making all these complaints, they
were sitting in their own great, big houses in lovely
university towns in England, which they had bought actually at
the very beginning of the seventies. And my father used
to tell me the story about how when he'd had this,
they'd had their third child, me, and they outgrown their
(21:50):
house and they went to look around bigger houses. And
he'd gone around looking around with the burster of one
of the colleges in Oxford where he lived. He was fretting, way,
I can't afford this big house, he said in the bust,
and don't worry, you know, just go ahead and buy it.
You know, it'll all be fine. And he bought it
and was terrified by the size of the mortgage and
all this. But of course, by the end of the
(22:11):
seventies this mortgage was worth a pittance in real terms. Now,
the point about this story is where I haven't explained
to every well. But the point is, of course these
things were two sides of exactly the same coin. If
you were of my grandfather's generation and you had retired
in nineteen seventy with your handsome pension from your vice
chancellorial job that you'd accumulated, and it.
Speaker 4 (22:33):
Was worth a tb by the way, just everyone's clear
that would be a defined should get the same amount
of money dumped in your bank account every month, and
it should crucially be inflation linked.
Speaker 2 (22:44):
But I suspect what we were about to tell us
was it wasn't linked to the actual rate of inflation.
That possibly was capped. It's very good a lot of
ones are capped at sort of three or four percent, yes, exactly.
The inflation goes beyond that. The real value of your
pension income willful to that is what happened to your grandfather.
Speaker 3 (23:00):
Exactly exactly, and so over the course of seventies, of course,
you know, the value of this thing shriveled up to
very little. Hence hence is unfortunate penury by the end
of the decade. And whereas a young parents like my
mother and father, they were on the other end of that.
So this inflation over the course of the decade was
fantastic because they bought some house for a few thousand
(23:20):
quid and by the end of the decade it was
worth one hundred thousand quid and the mortgage of course
had shriveled away because it hadn't gone gone hung value.
Now what was going on a big transfer of wealth
from my grandparents' generation to my parents' generation. So in fact,
my mother and her sisters need not have complained because
they did get this inheritance. It just didn't come down
(23:41):
through being passed down through the family. It came through
this macroeconomic shift. Now you will spot it that that
is very different from what most people understand by inheritance.
And of course it is a matter of chance. Now,
I mean there's different kind of chance that operates through
inheritance through families. It's just where the other lucky to
be born into a family with money, or who happened
(24:02):
to accumulate some money. And this is a different kind
of chance, where if my parents hadn't bought a nice,
big house and stretch themselves and so on at the
beginning of the seventies, well they wouldn't have received the
benefits of this macroeconomic wealth transfer. So it's a different
kind of complete chance involved. But of course the transfer
did happen. But in that case, and this is coming
to your question, it happened through the action or inaction
(24:27):
of monetary policy. That was what led to this great
inflation in the seventies. So it's a really important thing
to keep in mind because it is what has it's
what the focus on inflation targeting, for example, has successfully
ruled out over the last thirty years, that particular kind
of transfer of wealth. But you just alluded to the
(24:48):
fact that nonetheless it appears that you can point the
finger at monetary policy or financial policy more generally for
all kinds of other transfers or accumulation of wealth, which
many people would see as being rather unfair, being bast
cross generations anyway, I come back to Kane's point. The
(25:08):
issue is manatory policy is very powerful at affecting macroeconomic
distributional changes, either by accident, by amission, or by by commission.
We have to focus on that, and one has to
have a deliberate policy about it.
Speaker 2 (25:22):
And one of the things that we have talked about
on the podcast quite a lot is about whether we
do need a generational reset and we need some way
to get to reduce not just private debt, but also
specifically public debt, and that that would require maybe close
to a decade of inflation running at four or five
six percent, which would necessarily mean the removal of the
(25:44):
inflation target. There has been mutterings over the last few
years heaven there about our central bankshid that I'll get
to maybe three percent or something like that. But it
does seem that there isn't any way out for deeply
indebted Western nations at the moment. I mean, look what's
happening in the bond markets across Japan, the US, and
in Europe. At the moment. We see that these locations
beginning had happened in the bond market, there isn't any
(26:04):
obvious way out. Oh I mean either except genny false growth,
which at this point looks relatively unlikely, or a decade
of inflation.
Speaker 3 (26:14):
Yes, there are complications that should be mentioned. I mean,
it's very notable when you suggest the idea that maybe
inflation is not such a bad thing in many respects,
which I've done over the last few years in a
few columns for the reasons that you say. I mean, yes,
of course there are costs to inflation. But it's really
interesting if you look at the economic literature, the actual
(26:37):
costs which are ascribed to inflation are really quite weird
and small, and not the ones which I think most
people would really think of. They are because of the
way that money is conceived of in mainstream economic theory.
They are costs to do with frictions, like there's more
uncertainty about what the price is when you go to
people have to look around more so called shoe leather.
(27:00):
In other words, they wear out the leather on their
shoes walking around finding alternative prices for things. Menu costs,
you know, restaurants have to update their many I mean,
people will think I'm making this up, but these are
actually genuinely in the mainstream economic theories. The main costs
ascribed to inflation, and you set those against what we
(27:22):
were just describing, which are the big macroeconomic distributional effects
of inflation, which might be costly or they might be beneficial.
And of course you're suggesting these imbalances into generation or whatever.
They might be a very unhealthy and inefficient and they
are risk constraining economic growth and innovation, and therefore presumably inflation,
which would be a means of alleviating these would be
(27:43):
a positive thing. Now, that's huge, huge resistance to that.
If you ever talked to anyone from the generation above us,
people who remember the seventies, despite what I just said,
which is that actually it was in some ways very
beneficial for lab Well, it didn't. You know again, I've
got a stress that there's a lot of luck involved.
(28:04):
Like I said, you know, so the story I just
told you, my parents they were lucky because it just
affected actually within the family what might have happened anyway.
But of course many people wait to have been in
that situation. So that's where there's a problem on that front.
But they're very very.
Speaker 2 (28:18):
Resist have to interrupt you to tell you, I have
to interrupt you to tell you that I know our listeners,
and I know what they're thinking right now. They're thinking,
lucky old Felix, he gets that great big house.
Speaker 3 (28:28):
No, no, no, no, I'm afraid not I'm afraid. I mean,
I mean, I wish it would say listeners, But unfortunately,
I'm one of quite a few children, and the inheritance
tax regime is horrendous these days, and as you would
have discovered from the story, and my parents are not
in any way experts in financial planning, so they haven't
done any of the things that all the sensible boomers
will have done to try and avoid all this stuff.
Speaker 2 (28:49):
So no, I'm on min, I'm sure some IFAs can
get in touch now and carry on. Sorry interrupted you,
Sorry we was on their minds.
Speaker 3 (29:00):
Yes, but there are other niggles. Today. You are describing
this as an important and maybe the only way of
getting out of very high levels of public debt. Now,
very high levels of public debt in places like Britain
and the States and Western Europe and so on. They
are clearly a historical anomaly at this level in peace time,
so there's a big challenge there. And it is true
that inflating away debt so devaluing it in real terms,
(29:23):
would seem to be a much less painful way of
doing things than outright defaulting on debt, which seems highly
unlikely and would be very, very disruptive. So that makes
a lot of sense. I think that's right. And you know,
we're not talking about hyperinflation, you're talking about a slightly
higher inflation target, just like you mentioned. However, one of
the important niggles is that we live in a very
(29:43):
financially globalized system today and there are large imbalances between countries. Famously,
of course, the US is an enormous international debtor and
runs a big character counter deficit, and the same it's
true on a smaller scale for the UK, and then
within the Eurozone, for example, there's a lot of imbalances
of that sort. And that's important because back in the seventies,
(30:09):
what we were just talking about that was much much
less true, and therefore the imbalances and their correction and
the redistribution was essentially within a particular political jurisdiction within
the UK, let's say, or within the US, whereas today
there is a big international aspect to it, and there
(30:29):
will be impact on exchange rates and there will be
well geopolitical impact. The whole origin of the massive flare
up in geopolitical tensions and the connections with economics that
we've seen this year is precisely to do with this
issue of international imbalances and the fact that America wants
effectively to extricate itself and to impose some sort of
(30:52):
losses on people who've lent its money. It's not quite
as simple as it might have been in the puzzle.
Speaker 2 (30:56):
That's simple than it used to be. Yeah, all right,
let's move of from that to look at actually at markets,
because you just mentioned various dislocations in the US and
not really. One of the things we talk about endlessly
here is the US market, and one of the things
I've brought up with it with a guest last week
was about the decumulation of the baby boomer generation in
the US and the extent to which that will effect
(31:17):
flows into the market and hence the level of the
market itself. And new used as a wonderful phrase where
people say that bill markets rarely die of old age,
but this one actually might.
Speaker 3 (31:26):
Yes, that's right. I write a column, my column for
am I allowed to mention the competitor.
Speaker 2 (31:32):
Oh, I don't know, probably not.
Speaker 3 (31:34):
Okay, I went my column this week no exactly is
about this. Because I was reflecting, I went back and
had a look. In the late nineties, there was there
was a huge panic over this. This gorely named the
market meltdown hypothesis. And this was actually driven by the
fact that, as some listeners may remember, the US stock
(31:56):
market was on a great role from the sort of
early eighties on, and in particular in the nineties and
into the late nineties, valuations were climbing up and up
every year. The famous Schiller cape cyclically adjusted price earnings ration.
It hit its low in nineteen eighty two seven and
it went up to forty four by the end of
nineteen ninety nine. And a lot of people connected this
(32:19):
and they said, well, well, hang on a minute. The
reason why this is happening is because the Baby Boom
generation is such a historical anomaly. This is true, much
larger than the generation before it and the generation Gen X,
that's our generation which came after it. And they said, well,
I mean, obviously what's going on is they've hit their
peak earnings. They're piling money into the US equity market,
(32:40):
and this is pussing up valuations and that's all great,
but obviously there's going to be a huge problem when
they come into their retirement and decumulation phase, because they're
going to be trying to offload all these assets onto
the much smaller generation X. And this is important. The
whole thesis relies only on the size of the generations.
People argue a lot, correctly in my view, about whether
(33:03):
it's really true that flows drive prices and all kind
of stuff, but this argument is quite simple. It's just
that the next generation is so much smaller, so naturally
than demand must be lower. Anyway, it rose to an
absolute height of panic. But the funny thing was, of
course in the two thousands, there wasn't any big crash,
and the whole sort of panic went away. There was
(33:23):
a crash, of course, from the heights of nineteen ninety nine,
but that just made everyone think, oh, well, it was
all to do with the iggression of abzuber. It's everything
to do with demographics. It was just a sort of
classic bubble. And then it all recovered and started marching
on again. And then there were lots of interesting changes,
like defined contribution pensions started to take off, and that
(33:44):
seemed to provide a sort of new supplemental source of inflows.
And the boomer generation themselves they turned out to live
much longer, and they were much healthier, and they didn't
actually accumulate nearly as quickly as everyone said. So the
whole sort of panic went away for a long, long,
long type. But but meren, you're bringing it back for
(34:05):
the purposes of my column. I went and I ferreted
away in the Z one flur of funds of the
United States Federal Reserve, and I've discovered a horrifying fact,
which is that bang on Q, it is actually true
that the US private pension system, just in the last
couple of years has gone into decumulation. It is no
(34:27):
longer a net by of assets. It's gone into net
selling territory. And of course it's just as true as
it ever was that gen X is indeed much much
smaller than gen Y. So if you look at the
so called old age dependency ratio or the inverse of it,
you know it was the case in nineteen ninety that
there were five and a half or six working age
(34:48):
people for every retire and it's now about thirty or
forty percent lower than that. So all the conditions are
actually there in place. It is in fact happening just
as was predicted. And then there's a couple of other
problems which people hadn't spotted in the nineties. One is that,
of course these international inflows, all this globalization, and the
(35:10):
fact that in the two thousands, when people thought this
was going to start, what actually happened was this so
called global savings galut appeared. You know, there was all
the Chinese and the Europeans when they were saving up
in the Japanese and they were piled into the American market.
So they sort of bailed out, you know, the boomers then.
But unfortunately they're all in exactly the same or even
(35:30):
worse demographic position now than the US, so you can't
rely on them anymore. And as we know, capital flows
are reversing from the US, they're all starting to seek
back out again, So that's a big problem. And then
the icing on the cake. The icing on the cake
is the following It is that the Boomers, this big generation,
(35:50):
of course, they didn't just have economic power. What it
gave them was political clout. They were for the longest
period of any generation, they were the largest voting cohort
in the US system. So they were the biggest block
of US voters and that also has just changed. About
(36:12):
ten years ago came the crossover point, and Maren, I'm
sorry to tell you it's not our generation that have
displaced them, because we're the small gen X. It is
the millennials and younger.
Speaker 2 (36:23):
Oh god.
Speaker 3 (36:24):
Since twenty sixteen, they have taken over as the biggest
and most important voting block from the boomers. So it's JD.
Vance and his cohort that are now. They are the
political center of gravity in the US. And of course
they do not have a vested interest in the types
of policies which kept this whole show on the road
(36:46):
for the boomers, which staved off the market meltdown hypothesis
for the extra ten or fifteen years that had happened. No,
they're not interested. That's why they're railing back all this
stuff like globalization. They don't care that the compan these
and Europeans and the Chinese no longer want to buy
the US stock market. They're actively trying to stop it.
Half the time.
Speaker 2 (37:06):
So I reckon it's here, Okay, that is really interesting,
good hypothesis. I love it when things come through twenty
years after they were supposed to us was fascinating. But
it's something we must talk about, which is going back
to our millennials. It's private currencies. The way we've been
discussing money is as though it's always a power of
the state and instrument of policy, etc. But given the
(37:28):
way that you've described money as a system rather than
a token, it's far from the case that money should
be something that is state sponsored. And there's a huge
history of private money, is back to the Endless Siege,
moneies and built of sale. There's so much, there's so
much private money. But now we have a private money
that is beyond the scale of any previous private money
(37:51):
because of the way it crosses borders. Right, So previous
private money has been limited to particular societies, particular groups.
They've always been physically limited. But bitcoin and the other
cryptocurrencies are a private money that has no border. And
this is a very interesting dynamic, right, And one of
the makes that I've made for years now is to
assume that governments would not allow a private currency to
(38:13):
become so widely spread that they would interfere at somebody.
Hasn't happened. What do you think is going on here
and would you be a buyer of bitcoin.
Speaker 3 (38:21):
Well, when you say it hasn't happened, I mean I
think your instincts were right, which is that governments are
very interested in guarding jealously their monetary sovereignty, and I
think they are very concerned and worried about the potential
for macroeconomic disruption caused by widespread use across all the
(38:42):
uses of money, of private currencies and cryptocurrencies. They are
quite right to be so concerned because if you look
at the history of many emerging markets, for example, these
are countries which have long experience of only limited control
grip on the franchise of money by the state. I mean,
(39:05):
the most obvious example is in many emerging markets, as
any listener who's ever been to one will know, over
the last thirty years, you will find that US dollars
circulate alongside the national currency. And there's a prime example. Okay,
that's another state currency in that case, but it's a
prime example of where you know, the state in question
doesn't have full control over the institution of money, and
(39:25):
you've got another competitor in there, and that makes managing
targeting inflation or managing the distributional content. Any of these
aspects of monetary policy we've been describing much more difficult,
because whilst you might control the issuance of your own
currency and the regulation of it, you don't control the
issuance and regulation of the US dollar. So that's why
they are worried about all of that, and their right
to be worried about it. Clearly, the novel aspect of cryptocurrencies,
(39:50):
exactly as you said, is not the fact that they
are private moneies. It's not the fact that these are
private monetary units operating on their own. Monetary standards define
them in lots of different ways. It can be a
very hard monetary standard like bitcoins, where you've got a
set number that can ever be issued and you're going
to assimpate towards set over time. But they're all kinds
of rather in principle of any old kind of standard
(40:11):
that you could use and specify for these private crypteircurrencies.
It's not that private aspect of it, which is new,
existed all throughout history, like you said. No, No, it's
the technology, of course. It's the technology of recording these
things on a digital ledger, and the fact that you've
got the Internet, which is global, which is twenty four
to seven, three hundred and sixty five days a year,
(40:32):
and therefore can facilitate transactions all that time. And the
fact of course that it displaces operates outside of doesn't
use the conventional banking system. So that's what's new about it.
And it's like everything else to do with the Internet.
You know, you can have a very small proportionate constituency
who are interested and want to use something, and it's
(40:53):
massive in absolute terms, in absolute numbers, because that's the
nature of the Internet. The key thing to say, however,
is in terms of the use of money for transactions,
to settle trade, commerce, trade in assets, and so on
and so forth. It is still the case that most
(41:14):
of these cryptocurrencies are of only limited use and are
rather constrained, so mostly they are used for speculative purposes.
The killer app, I think, which has been identified and
seems to me people are correct about in this area
for transactions is stable coins. That is to say, that's
(41:36):
just essentially a particular type of cryptocurrency for which the
standard is an existing fiat currency. So most of them
are pegged to the dollar. But there's no reason why
in principle you couldn't have one that was pegged to
the Sterling or the EU or the All that's doing
is it's marrying together that incredibly useful digital technology available
twenty four, seven, three and sixty five days a year
(41:57):
wherever you are in the world, two the existing national
currency units. And I think that's a very powerful marriage.
And obviously I'm not alone in thinking that everyone thinks
that it is.
Speaker 2 (42:09):
But that does not interfere with the sovereignty of the
currency issue.
Speaker 3 (42:14):
In principle note because it's pegged to the sovereign currency issue. However, again,
look back over the history of money and the history,
for example of the euro dollar market, which is in
many ways analog not in all ways, but in many
ways it's an analogous development. So this was developed in
the nineteen sixties in Europe and it's absolutely huge market today.
(42:35):
This is dollar denominated liabilities which are issued by banks
and institutions which are not under the jurisdiction of the
US federal reserves, so they are a bit like stable.
They're dollars dollar denominated instruments, but they're not real dollars
in the sense that you're deposit in the US banking
system is. But the question you're effectively asking when you say,
(42:57):
or the hypothesis you're putting forward, is that the existence
of the eurodollar market does not have any real blowback
onto monetary management by the FED. And yeah, that's not
quite right. I mean, it does, unfortunately have a bit
of a blowback because when when the crisis happens, usually
the central banks have to bail out half of these
shadow banking systems, and that would be the worry about
(43:18):
stable coins. I would have thought from the central bank side.
Speaker 2 (43:22):
Okay, all right, brilliant, it doesn't sound to me like
you're a buyer of bitcoin. So let me ask you this.
It's gold, under the definitions we've been discussing today, is
not money, but it's conceivably a store of value.
Speaker 3 (43:35):
Well, it's not conceivably a store of value. It's definitely
a store of value.
Speaker 2 (43:38):
I mean, that's definitely a store of that.
Speaker 3 (43:40):
That's quite obvious.
Speaker 2 (43:41):
But it's not money, but it's no money. Should we
be buyers of gold today as we see monetary up
people around us?
Speaker 3 (43:48):
Well, I think that goes back to the earlier discussion
about the scale of imbalances, the scale of inequalities, the
scale of debt in these economies, and what conceivable policy
you can see to get out of it if you believe,
and I think it's perfectly reasonable to believe on a
long term scale that the only way out of this
(44:09):
is the devaluation of the national monetary units like sterling dollar,
pounds on then quite obviously gold, but I mean any
real asset, but you know, goals Wilf by some convenient
ify one knows that is going to be a pretty
good bet.
Speaker 2 (44:25):
Brilliant Felix. Thank you so much, Thank you, Bren. Thanks
for listening to this week's Marin Talks Money. If you
like us, share, rate, review, and subscribe wherever you listen
to podcasts, and keep sending questions and comments to Merin
Money at Bloomberg dot net. You can also follow me
in John on Twitter or ex I'm at Mariness w
(44:47):
and John is John Underscore Stepek. This episode was hosted
by me Maren'sumset Web. It was produced by Somersidi and
Moses and sound designed by Blake Maples and special thanks
of course to Felix Martin.
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:17):
Welcome to Merin Talks Money. The podcast so much people
who know the markets explain the markets. I'm Meren Sum's
that web. This week, I'm speaking with Felix Martin. He's
an economist, he's a fund manager, he's an author. He
was educated in the UK, in Italy, and in the US,
where he was a Fulbright scholar. He's got degrees in classics,
in international relations and in economics. He has worked at
the World Bank, and he has worked in several different
(00:39):
fund management companies. Crucially, he's also an author of a
book called Money, The Unauthorized Biography, and that's in part
what we're going to talk about today. It was published
more than ten years ago, but I'm afraid it is
more relevant than ever today. We talk about that, we
talk about modern monetary systems, ancient monetary systems. We don't
have time to go into everything I would have liked to,
(01:00):
so where I really would urge you to get the
book and when you get it, read the story of
the Money of Yapp and definitely read about the Bank
of England and Tally Stones. We are going to talk
about a variety of other things, Felix, welcome to Merin
talks Money.
Speaker 3 (01:13):
Well, thank you very much for having me, Marin, it's
a pleasure.
Speaker 2 (01:15):
Well you'll find out, won't you. Maybe it will be,
maybe it won't be. Now, you are not the first
person to write a book called money, although everyone has
a different subheading, but yours I got to say it.
It's particularly good, and I do recommend it to everybody listening.
Go up by this book. You think it's just about money,
but that's because you don't really understand what money is.
It's really a very granular history of pretty much everything
(01:38):
you've ever thought of. So I think what I want
to do, Felix, is start by asking you what exactly
it is that money is, and what is the big
mistake that people make when they think about the nature
of money? Going through your book through the way that
you think, there are two things to think about money,
what money actually is and who should control money, manage money,
(02:01):
manipulate money, and for whose benefit? Right, So there's two
parts to the story of money, but you can't talk
about the second unless you've really got a good grip
of the first.
Speaker 3 (02:12):
Absolutely right, you did an excellent summary, Marion. What can
I say and thank you very much, indeed for those
very generous words. I also, of course urge everyone to
go out and get a copy and they'll have a
more comprehensive version. And I'll give here the basic story
which I try to tell in the book, which I
think is very important, is that what I call a
conventional view of money and its history, this is the
(02:34):
one that you can find in every sort of children's book,
and it's the one that's sort of ingrained in people's minds,
is wrong. That conventional story is that in the beginning
there wasn't any money, and people just started with each other.
You know, I had fish and you had corn, and
in order to exchange with one another, you had to
(02:55):
want my fish and I had to want your corn,
and in fact we had more than the same time
as well, what economists call a double coincidence of wants,
and otherwise no trade could take place. And that's all
terribly inefficient. And therefore, at some point in the distant past,
probably a different times, in different places, somebody come up
with a bright idea, which is, why don't we choose
one particular sort of commodity to serve as a so
(03:18):
called medium of exchange, that is to say, something which
people don't want for its own sake, but just so
that it can be used to settle and liquidate exchange.
And that basically was the invention of money. And typically
it was precious metals that were chosen for this use
because they've got lots of nice properties when they last
for a long time, and so and so forth. That
(03:39):
was the invention of coinage. And then people had an
even better idea, which is why didn't we start lending
and borrowing this money commodity? And that was the invention
of credit. And then even later in that there were
institutions that were built up which specialized in organizing credit,
and those were banks. That was the invention of banking.
That's the kind of conventional history that you find throughout
(04:00):
literal money, and it's the way that a lot of
people think about it, but it basically has it all
completely the wrong way round. In reality, money is a
system of ideas. It is the institution of credits and debts.
It is the various technologies which have been developed and
(04:21):
deployed for recording credits and debts and for transferring credits
and debts from one person or one company to another.
It's therefore basically a set of ideas and institutions. I
don't mean that in a sort of wooly sense. There
are very specific ideas which are extremely important in the
(04:41):
development of money and which really constitute what it is
to live in a monetary society. The most important one
of these is the monetary standard, the standard unit economic value.
Monetary value is the key concept in money. It hasn't
always existed in human history. It is an idea, a
(05:04):
concept of value, which was invented at a certain point
in time and has been developed. Most concepts of value
don't have standard units. So esthetic value or religious value,
all kinds of different measures of value that we talk about,
but they don't have standard units. You can't enumerate the
esthetic value or the religious value of something. But the
(05:24):
monetary value, the economic value of things, what distinguishes it
has a standard unit. Just like physical concepts like length
and weight and so on, they have standard units kilogram,
a meter and so on, and this is what The
standard unit in money is, something like a dollar or
a pound or a euro. And that's incredibly important and
the key questions around which all of monetary history revolve,
(05:46):
and you alluded to this at the beginning, are what
is that monetary unit, what does it actually mean in
real terms, what do you get for it? And who
gets to decide today? The answers to those questions for
something like the pound sterling are that we define a
pound sterling according to the rate of change of prices
(06:08):
for a particular basket of goods and services. So we
don't have, say a gold standard, which is where you
define what a pound is by reference to one particular commodity,
gold and a particular weight of it. We do it
with the whole basket of goods and services, the so
called CPI basket, and we do it with the rate
of change of prices. So we say we want prices
(06:28):
to go up at two percent a year. In other words,
we want the pound sterling, this abstract monetary unit, to
depreciate in real terms by two percent a year. So
that's the answer to the first question, what is the
monetary standard today for the pound sterling? And then the
answer to the second question, who gets to decide that
in our current version of the monetary system, Well, that's
(06:49):
actually the Chancellor of the Excheque. He actually, I was
sure she sets what that standard is, but of course
it's it's implemented and operationalized by the Bank of England,
which sits under democratic control.
Speaker 2 (07:00):
Okay, let me just take you back a little bit,
because one of the things that I found fascinating little
side points in the book was when you asked how
it could be that this mistake about what money is
I is in is actually a system not a token,
How this mistake could have been made for so long
by so many historians. And the answer to that, you say,
(07:20):
is because it is the coins that survive, not the
evidence of the system.
Speaker 3 (07:26):
Yes, I think there are several answers to that crucial question,
and one of them is exactly that. When you're doing
monetary history, when you dig into the past and try
and work out how things were back then, of course
what survives is physical evidence. In the case of money,
that means coins, for example. But we actually know that
(07:47):
in many past societies a great deal of monetary credit
and debt and financial balances and transactions were not of
course represented by coinage, and transactions weren't settled in coins.
They were very often settled by entries in ledgers, for example.
But the ledgers don't exist anymore. And there'll be a
(08:08):
whole lot of other transactions and balances which were recorded
simply by word of mouth or in other formats, and
they don't exist. So that can definitely skew and has
skewed the perception of things. But let me take it
back a step. I think in a sense it's sort
of simpler than that. The curious thing about money as
an institution is that from the bottom up, when you
(08:29):
as an individual are interacting with the monetary system, certainly
in the pre digital age, when notes and coins were
the primary form of representation of money, from the bottom up,
of course, money does look like this real thing that
is what you deal with every day. It's only when
you look from the top down, as it were, and
you try to understand the system as a whole, it
(08:51):
becomes completely obvious that notes and coins are just physical
representations tokens, and there are lots of different kinds of
tokens up of an underlying system of credits and debts
which is much larger, much less substantial, and essentially abstract.
I hope that allami just say, there's another important reason,
which I go into in my book, as to sort
(09:13):
of historically in Europe, and in Britain in particular, which
was the financial innovator at the time. Why it is
that this conventional view held sway in the face of
the fact that the economy became much more financialized, banks
became much more important. And even today, you know, when
we live in this digital world where I think from
to mas people is pretty obvious that money is an
(09:36):
abstract thing. And it's because people don't use you know,
coins and notes anymore. Why did it hold such sway?
And there I tell the story of a very important
debate that happened right back immediately after the founding of
the Bank of England, which was a pretty epochal moment
in monetary history generally and certainly in Britain, there was
(09:57):
a genuine huge debate over this very question which we
began with of what the monetary standard should be, How
should a pound sterling be defined? Because with the creation
of this new Bank of England, money was henceforth going
to be issued not by the sovereign and the Mint
as it always had been, but by this bunch of
(10:17):
private in those days, private bankers, the Bank of England.
So this question was crucially important and it all played
into an existing political debate about the constitutional changes that
have been going on in Britain and the shift towards
what we would now call a constitutional monarchy, so political
power being taken away from the absolute monarch into a
(10:39):
system where it was shared with parliament. And as a
result of that, there was a big debate between one
of the most famous philosophers in British history, John Locke,
the great father of political liberalism, and his sort of
Tory opponents, And as a result of that, Locke made
a fateful intervention in which he came down hard on
(11:03):
the side of the conventional view of money, but for
political reasons. It's a big question in my mind whether
he actually believed what he was saying philosophically. But he
made the argument that listened, a pound sterling just is
a certain weight of silver. In those days they were
talking about silver, not gold. That's what it is, that's
what it means. No one can change what that weight is.
(11:26):
Anyone who tries to change what that weight is is
effectively lying, defrauding the public. So he was arguing very
strongly for a fixed precious metal standard, for the idea
that money is a real physical thing. But he was
doing it basically for political reasons, because he wanted to
tie the hands of this new institution, the Bank of England,
(11:50):
which he thought would otherwise fall into the hands of
revolutionaries and the whole republic would fall to pieces.
Speaker 2 (11:56):
Okay, and so she's just reading that bit in your
book earlier. But that brings us can take us forward
by quite a long way. This idea that money should
be stable, that it should always be worth the same
roughly the same sort of thing, that inflation should constantly
be contained, and the idea that as we know it
(12:18):
came out of New Zealand a couple of decades ago,
that inflation should be kept by central banks at a
level of two percent every year forever. And that's something
that a hasn't worked for a while. And be that
you have taken issue with along the way. And there
is a bit in your book about the financial crisis,
about how it happened where you point out that everything else
(12:41):
was ignored, ignored completely in pursuit of this idea that
nothing mattered except stable inflation. So booming house prices, a
drastic underpricing of liquidity, and as it markets, the emergence
of the shadow banking system that declines in lending standards,
bank capital and liquidity ratios were not given the priority
they merited because unlike low and stable and inflation there
was simply not identified as being relevant. So I don't
(13:04):
think very many people would accuse central banks of being
wedded to sound money. But this is what it is,
is the idea that money must be stable, and if
you put that above everything else in a modern monecary system,
you can run into all sorts of trouble.
Speaker 3 (13:17):
Yeah, but it's very interesting what you just said there,
that no one would accuse central banks of being whaded
to sound money. But that, of course is exactly now.
I think if you are central bankers, they would say
that's exactly what they're wedded to. And most modern important
central banks do operate an inflation targeting standard these days,
which intrinsically is targeting stable value of money. I mean,
(13:38):
to be sympathetic to Lock, let's take him as the
patron saint of stable money for a moment. I mean,
of course, the paradox is that the monetary standard does
have to be stable over time and across space, so
within particular jurisdiction for it to be useful. I mean
that obviously is true to some degree, but one also
(14:02):
has to remember that because it is the unit that
you're using to denominate credit and debt, and because credit
and debt can grow and can go in all kinds
of funny directions, and can become very inequitable, and can
become become very inefficient. And we've seen that over and
over again throughout monetary history. It's the nature of financial
capitalism that can happen. The devaluation of the monetary unit
(14:27):
is also an absolutely crucial escape valve for when things
become unsustainable. Caines John Maynard Knes. He has a great
passage where he talks about this and says, the real
parents of revolution are the absolutists of contract. In other words,
it's people who obsess to the exclusion of everything else
(14:50):
about this important truth that money must be kept stable
to be useful. That are the real people that end
up creating revolutions. Because debt becomes completely unsustainable, one half
of the population is i think he puts, it becomes
enslaved to the other and so on and so forth.
Now this is all a bit hyperbolic, and so and
so forth. But what is totally obvious and what only
(15:11):
becomes clear when you have a clear view of money
as a system of credit and debt rather than as
some sort of physical thing, is that one of the
primary economic forces, and therefore one of the most important
decisions that any government or central bank can make is
over the value of the monetary unit because of its
(15:34):
distributional consequences. It's distributional consequences, and that's what gets missed
and has been i think missed in a lot of
the last thirty years thinking about these things. It was
certainly what was missed in the lead up to financial crisis.
If you're focusing solely upon keeping the value of money
stable in order to make transactions efficient, you lose sight
(15:58):
of the fact that this is the most important distributional
tool that the government.
Speaker 2 (16:02):
Yeah, yeah, Now, this is something that as you talked
about on this podcast quite a lot, the idea that
in many ways what we call monetary policy is effectively
a fiscal policy because it has this distributional mechanism. And
that brings you back to the question of whether really,
really a central bank should be independent of government, because
(16:24):
central bank policies do effectively enact what we would consider
to be the results of fiscal policy or the type
of results of a fiscal policy might have have. So
if that is the case, and it is particularly we
saw that during the Quey period, etc. Is it reasonable
that a central bank should be independent of government.
Speaker 3 (16:45):
Yeah, I mean, of course it's a good question. The
debates got sort of slightly mixed up because it's probably
a bit of a bit on a bit of a
rent when I wrote my book which was published more
than ten years ago now and arguing against central bank independence.
I mean it all comes down, of course, to the
details the principles of delegating power from a sovereign parliament
(17:07):
or from the government that it's chosen to an independent
agency of any sort, a technocratic agency of any sort.
I mean, the central banks are the most important example,
but a lot of other examples in the modern system
of governance. The principle is that you're not delegating these
crucial top level political distributional decisions. Those should be made
(17:31):
by the political authorities, legitimate political authorities, and it's the
operational aspects that should be delegated to the central bank.
And that is the principle of it. And as I
was just describing a few minutes ago. The monetary standard
the inflation type, which is inflation targeting, a two percent
inflation target. In the case of the UK, for example,
it is set by the chancellor. It's not set by
(17:53):
the central bank. They can't choose their own target. So
that would be the defense of central bankers, and it
is legit, but up to a point, because these things
do get a bit fuzzy inevitably in practice.
Speaker 2 (18:06):
Is the answer then to remove the target the target.
Speaker 3 (18:08):
Is wrong, yes, exactly. I mean all.
Speaker 2 (18:11):
Targets will lead to disaster. We know there and those
are the things the target that doesn't lead to some
kind of desire.
Speaker 3 (18:16):
Well, that's a very very important thing you've just mentioned,
because my favorite and I think the most important precept
in all of military policy, and it applies much more broadly,
and it's the topic of my next book, Listeners, is
Part's Law, named for the great British monetary economist Charles Goodheart,
and that law. He voiced it in the context of
monetary policy, and he said, any metric, when it's chosen
(18:38):
as a target, eventually ceases to become a good target.
And what he's talking about is the tendency of systems
economies societies and so on to adapt, of course, around targets,
to game targets so that they cease being useful. An
inflation target is of course an absolutely primary example of that.
So what you were describing and what I write about
(18:58):
in my book in that part about the way that
the focus on inflation targeting and your parentscept not a parent,
I mean the success in targeting inflation for whatever reasons
we can debate those prior to the financial crisis meant
that the system adapted around it, and all the kind
of imbalances which genuine economic and social imbalances which the
(19:20):
inflation target was intended to measure and tame, in fact
just emerge in all kinds of other places. It was
a phenomenon that had been predicted and written about many
years earlier by the American economist Simon Minsky. He said,
stability breeds instability. It's the same idea. So yes, it's
the system as a whole, and not just the particular
(19:41):
system of inflation targeting, but the idea that you can
choose a particular metric and you can then design policy
around that particular metric, using it as a target, and
that that is a sensible, effective way of trying to
govern a complicated modern economy. That's where the problem lies.
Speaker 2 (20:02):
Okay, let's move to the problems of today. Then we
talked to earlier about how when when things go wrong,
you end up with unpleasant distributional impacts. We look across
the Western world at the moment and what we can
see exactly that a distributional problem, particularly intergenerational. Can we
blame money for that system of money? How money has
(20:23):
been managed?
Speaker 3 (20:25):
It's a good question. I mean, are lots of things
which go into it. I mean I always tell the
story about my mother and her sisters and my grandparents
were trying to try to explain this generational aspect and
why monetary policy is important to When I was young,
I would sit around my mother and her sisters. They
were always complaining about the fact that their father had
(20:47):
been He'd been a distinguished fellow, he'd ended up running
a university and vice chancellor. Wasn't quite as well paid
by the way as it is these days being a
vice chanceer. So but nevertheless he'd been a sort of
in there.
Speaker 2 (20:58):
Maybe that may be temporary. By the way, get in
the state of the ukc University is a bullet in
the history of what Chancelett get paid well.
Speaker 3 (21:04):
He certainly would have been absolutely amazed if he'd seen
modern university. Any Way, at the point is that having
done all this, he had retired in about nineteen seventy,
and he'd retired to a tiny little house back in Oxford,
which he'd bought in the thirties, and he'd lived out
his days, and then when he came to expire, there
was nothing left. There was no sort of great inheritance
to pass on. And they were just baffled by this,
(21:27):
and they said, how could this be that this was
a situation now. The reality was that at the same
time that when they were making all these complaints, they
were sitting in their own great, big houses in lovely
university towns in England, which they had bought actually at
the very beginning of the seventies. And my father used
to tell me the story about how when he'd had this,
they'd had their third child, me, and they outgrown their
(21:50):
house and they went to look around bigger houses. And
he'd gone around looking around with the burster of one
of the colleges in Oxford where he lived. He was fretting, way,
I can't afford this big house, he said in the bust,
and don't worry, you know, just go ahead and buy it.
You know, it'll all be fine. And he bought it
and was terrified by the size of the mortgage and
all this. But of course, by the end of the
(22:11):
seventies this mortgage was worth a pittance in real terms. Now,
the point about this story is where I haven't explained
to every well. But the point is, of course these
things were two sides of exactly the same coin. If
you were of my grandfather's generation and you had retired
in nineteen seventy with your handsome pension from your vice
chancellorial job that you'd accumulated, and it.
Speaker 4 (22:33):
Was worth a tb by the way, just everyone's clear
that would be a defined should get the same amount
of money dumped in your bank account every month, and
it should crucially be inflation linked.
Speaker 2 (22:44):
But I suspect what we were about to tell us
was it wasn't linked to the actual rate of inflation.
That possibly was capped. It's very good a lot of
ones are capped at sort of three or four percent, yes, exactly.
The inflation goes beyond that. The real value of your
pension income willful to that is what happened to your grandfather.
Speaker 3 (23:00):
Exactly exactly, and so over the course of seventies, of course,
you know, the value of this thing shriveled up to
very little. Hence hence is unfortunate penury by the end
of the decade. And whereas a young parents like my
mother and father, they were on the other end of that.
So this inflation over the course of the decade was
fantastic because they bought some house for a few thousand
(23:20):
quid and by the end of the decade it was
worth one hundred thousand quid and the mortgage of course
had shriveled away because it hadn't gone gone hung value.
Now what was going on a big transfer of wealth
from my grandparents' generation to my parents' generation. So in fact,
my mother and her sisters need not have complained because
they did get this inheritance. It just didn't come down
(23:41):
through being passed down through the family. It came through
this macroeconomic shift. Now you will spot it that that
is very different from what most people understand by inheritance.
And of course it is a matter of chance. Now,
I mean there's different kind of chance that operates through
inheritance through families. It's just where the other lucky to
be born into a family with money, or who happened
(24:02):
to accumulate some money. And this is a different kind
of chance, where if my parents hadn't bought a nice,
big house and stretch themselves and so on at the
beginning of the seventies, well they wouldn't have received the
benefits of this macroeconomic wealth transfer. So it's a different
kind of complete chance involved. But of course the transfer
did happen. But in that case, and this is coming
to your question, it happened through the action or inaction
(24:27):
of monetary policy. That was what led to this great
inflation in the seventies. So it's a really important thing
to keep in mind because it is what has it's
what the focus on inflation targeting, for example, has successfully
ruled out over the last thirty years, that particular kind
of transfer of wealth. But you just alluded to the
(24:48):
fact that nonetheless it appears that you can point the
finger at monetary policy or financial policy more generally for
all kinds of other transfers or accumulation of wealth, which
many people would see as being rather unfair, being bast
cross generations anyway, I come back to Kane's point. The
(25:08):
issue is manatory policy is very powerful at affecting macroeconomic
distributional changes, either by accident, by amission, or by by commission.
We have to focus on that, and one has to
have a deliberate policy about it.
Speaker 2 (25:22):
And one of the things that we have talked about
on the podcast quite a lot is about whether we
do need a generational reset and we need some way
to get to reduce not just private debt, but also
specifically public debt, and that that would require maybe close
to a decade of inflation running at four or five
six percent, which would necessarily mean the removal of the
(25:44):
inflation target. There has been mutterings over the last few
years heaven there about our central bankshid that I'll get
to maybe three percent or something like that. But it
does seem that there isn't any way out for deeply
indebted Western nations at the moment. I mean, look what's
happening in the bond markets across Japan, the US, and
in Europe. At the moment. We see that these locations
beginning had happened in the bond market, there isn't any
(26:04):
obvious way out. Oh I mean either except genny false growth,
which at this point looks relatively unlikely, or a decade
of inflation.
Speaker 3 (26:14):
Yes, there are complications that should be mentioned. I mean,
it's very notable when you suggest the idea that maybe
inflation is not such a bad thing in many respects,
which I've done over the last few years in a
few columns for the reasons that you say. I mean, yes,
of course there are costs to inflation. But it's really
interesting if you look at the economic literature, the actual
(26:37):
costs which are ascribed to inflation are really quite weird
and small, and not the ones which I think most
people would really think of. They are because of the
way that money is conceived of in mainstream economic theory.
They are costs to do with frictions, like there's more
uncertainty about what the price is when you go to
people have to look around more so called shoe leather.
(27:00):
In other words, they wear out the leather on their
shoes walking around finding alternative prices for things. Menu costs,
you know, restaurants have to update their many I mean,
people will think I'm making this up, but these are
actually genuinely in the mainstream economic theories. The main costs
ascribed to inflation, and you set those against what we
(27:22):
were just describing, which are the big macroeconomic distributional effects
of inflation, which might be costly or they might be beneficial.
And of course you're suggesting these imbalances into generation or whatever.
They might be a very unhealthy and inefficient and they
are risk constraining economic growth and innovation, and therefore presumably inflation,
which would be a means of alleviating these would be
(27:43):
a positive thing. Now, that's huge, huge resistance to that.
If you ever talked to anyone from the generation above us,
people who remember the seventies, despite what I just said,
which is that actually it was in some ways very
beneficial for lab Well, it didn't. You know again, I've
got a stress that there's a lot of luck involved.
(28:04):
Like I said, you know, so the story I just
told you, my parents they were lucky because it just
affected actually within the family what might have happened anyway.
But of course many people wait to have been in
that situation. So that's where there's a problem on that front.
But they're very very.
Speaker 2 (28:18):
Resist have to interrupt you to tell you, I have
to interrupt you to tell you that I know our listeners,
and I know what they're thinking right now. They're thinking,
lucky old Felix, he gets that great big house.
Speaker 3 (28:28):
No, no, no, no, I'm afraid not I'm afraid. I mean,
I mean, I wish it would say listeners, But unfortunately,
I'm one of quite a few children, and the inheritance
tax regime is horrendous these days, and as you would
have discovered from the story, and my parents are not
in any way experts in financial planning, so they haven't
done any of the things that all the sensible boomers
will have done to try and avoid all this stuff.
Speaker 2 (28:49):
So no, I'm on min, I'm sure some IFAs can
get in touch now and carry on. Sorry interrupted you,
Sorry we was on their minds.
Speaker 3 (29:00):
Yes, but there are other niggles. Today. You are describing
this as an important and maybe the only way of
getting out of very high levels of public debt. Now,
very high levels of public debt in places like Britain
and the States and Western Europe and so on. They
are clearly a historical anomaly at this level in peace time,
so there's a big challenge there. And it is true
that inflating away debt so devaluing it in real terms,
(29:23):
would seem to be a much less painful way of
doing things than outright defaulting on debt, which seems highly
unlikely and would be very, very disruptive. So that makes
a lot of sense. I think that's right. And you know,
we're not talking about hyperinflation, you're talking about a slightly
higher inflation target, just like you mentioned. However, one of
the important niggles is that we live in a very
(29:43):
financially globalized system today and there are large imbalances between countries. Famously,
of course, the US is an enormous international debtor and
runs a big character counter deficit, and the same it's
true on a smaller scale for the UK, and then
within the Eurozone, for example, there's a lot of imbalances
of that sort. And that's important because back in the seventies,
(30:09):
what we were just talking about that was much much
less true, and therefore the imbalances and their correction and
the redistribution was essentially within a particular political jurisdiction within
the UK, let's say, or within the US, whereas today
there is a big international aspect to it, and there
(30:29):
will be impact on exchange rates and there will be
well geopolitical impact. The whole origin of the massive flare
up in geopolitical tensions and the connections with economics that
we've seen this year is precisely to do with this
issue of international imbalances and the fact that America wants
effectively to extricate itself and to impose some sort of
(30:52):
losses on people who've lent its money. It's not quite
as simple as it might have been in the puzzle.
Speaker 2 (30:56):
That's simple than it used to be. Yeah, all right,
let's move of from that to look at actually at markets,
because you just mentioned various dislocations in the US and
not really. One of the things we talk about endlessly
here is the US market, and one of the things
I've brought up with it with a guest last week
was about the decumulation of the baby boomer generation in
the US and the extent to which that will effect
(31:17):
flows into the market and hence the level of the
market itself. And new used as a wonderful phrase where
people say that bill markets rarely die of old age,
but this one actually might.
Speaker 3 (31:26):
Yes, that's right. I write a column, my column for
am I allowed to mention the competitor.
Speaker 2 (31:32):
Oh, I don't know, probably not.
Speaker 3 (31:34):
Okay, I went my column this week no exactly is
about this. Because I was reflecting, I went back and
had a look. In the late nineties, there was there
was a huge panic over this. This gorely named the
market meltdown hypothesis. And this was actually driven by the
fact that, as some listeners may remember, the US stock
(31:56):
market was on a great role from the sort of
early eighties on, and in particular in the nineties and
into the late nineties, valuations were climbing up and up
every year. The famous Schiller cape cyclically adjusted price earnings ration.
It hit its low in nineteen eighty two seven and
it went up to forty four by the end of
nineteen ninety nine. And a lot of people connected this
(32:19):
and they said, well, well, hang on a minute. The
reason why this is happening is because the Baby Boom
generation is such a historical anomaly. This is true, much
larger than the generation before it and the generation Gen X,
that's our generation which came after it. And they said, well,
I mean, obviously what's going on is they've hit their
peak earnings. They're piling money into the US equity market,
(32:40):
and this is pussing up valuations and that's all great,
but obviously there's going to be a huge problem when
they come into their retirement and decumulation phase, because they're
going to be trying to offload all these assets onto
the much smaller generation X. And this is important. The
whole thesis relies only on the size of the generations.
People argue a lot, correctly in my view, about whether
(33:03):
it's really true that flows drive prices and all kind
of stuff, but this argument is quite simple. It's just
that the next generation is so much smaller, so naturally
than demand must be lower. Anyway, it rose to an
absolute height of panic. But the funny thing was, of
course in the two thousands, there wasn't any big crash,
and the whole sort of panic went away. There was
(33:23):
a crash, of course, from the heights of nineteen ninety nine,
but that just made everyone think, oh, well, it was
all to do with the iggression of abzuber. It's everything
to do with demographics. It was just a sort of
classic bubble. And then it all recovered and started marching
on again. And then there were lots of interesting changes,
like defined contribution pensions started to take off, and that
(33:44):
seemed to provide a sort of new supplemental source of inflows.
And the boomer generation themselves they turned out to live
much longer, and they were much healthier, and they didn't
actually accumulate nearly as quickly as everyone said. So the
whole sort of panic went away for a long, long,
long type. But but meren, you're bringing it back for
(34:05):
the purposes of my column. I went and I ferreted
away in the Z one flur of funds of the
United States Federal Reserve, and I've discovered a horrifying fact,
which is that bang on Q, it is actually true
that the US private pension system, just in the last
couple of years has gone into decumulation. It is no
(34:27):
longer a net by of assets. It's gone into net
selling territory. And of course it's just as true as
it ever was that gen X is indeed much much
smaller than gen Y. So if you look at the
so called old age dependency ratio or the inverse of it,
you know it was the case in nineteen ninety that
there were five and a half or six working age
(34:48):
people for every retire and it's now about thirty or
forty percent lower than that. So all the conditions are
actually there in place. It is in fact happening just
as was predicted. And then there's a couple of other
problems which people hadn't spotted in the nineties. One is that,
of course these international inflows, all this globalization, and the
(35:10):
fact that in the two thousands, when people thought this
was going to start, what actually happened was this so
called global savings galut appeared. You know, there was all
the Chinese and the Europeans when they were saving up
in the Japanese and they were piled into the American market.
So they sort of bailed out, you know, the boomers then.
But unfortunately they're all in exactly the same or even
(35:30):
worse demographic position now than the US, so you can't
rely on them anymore. And as we know, capital flows
are reversing from the US, they're all starting to seek
back out again, So that's a big problem. And then
the icing on the cake. The icing on the cake
is the following It is that the Boomers, this big generation,
(35:50):
of course, they didn't just have economic power. What it
gave them was political clout. They were for the longest
period of any generation, they were the largest voting cohort
in the US system. So they were the biggest block
of US voters and that also has just changed. About
(36:12):
ten years ago came the crossover point, and Maren, I'm
sorry to tell you it's not our generation that have
displaced them, because we're the small gen X. It is
the millennials and younger.
Speaker 2 (36:23):
Oh god.
Speaker 3 (36:24):
Since twenty sixteen, they have taken over as the biggest
and most important voting block from the boomers. So it's JD.
Vance and his cohort that are now. They are the
political center of gravity in the US. And of course
they do not have a vested interest in the types
of policies which kept this whole show on the road
(36:46):
for the boomers, which staved off the market meltdown hypothesis
for the extra ten or fifteen years that had happened. No,
they're not interested. That's why they're railing back all this
stuff like globalization. They don't care that the compan these
and Europeans and the Chinese no longer want to buy
the US stock market. They're actively trying to stop it.
Half the time.
Speaker 2 (37:06):
So I reckon it's here, Okay, that is really interesting,
good hypothesis. I love it when things come through twenty
years after they were supposed to us was fascinating. But
it's something we must talk about, which is going back
to our millennials. It's private currencies. The way we've been
discussing money is as though it's always a power of
the state and instrument of policy, etc. But given the
(37:28):
way that you've described money as a system rather than
a token, it's far from the case that money should
be something that is state sponsored. And there's a huge
history of private money, is back to the Endless Siege,
moneies and built of sale. There's so much, there's so
much private money. But now we have a private money
that is beyond the scale of any previous private money
(37:51):
because of the way it crosses borders. Right, So previous
private money has been limited to particular societies, particular groups.
They've always been physically limited. But bitcoin and the other
cryptocurrencies are a private money that has no border. And
this is a very interesting dynamic, right, And one of
the makes that I've made for years now is to
assume that governments would not allow a private currency to
(38:13):
become so widely spread that they would interfere at somebody.
Hasn't happened. What do you think is going on here
and would you be a buyer of bitcoin.
Speaker 3 (38:21):
Well, when you say it hasn't happened, I mean I
think your instincts were right, which is that governments are
very interested in guarding jealously their monetary sovereignty, and I
think they are very concerned and worried about the potential
for macroeconomic disruption caused by widespread use across all the
(38:42):
uses of money, of private currencies and cryptocurrencies. They are
quite right to be so concerned because if you look
at the history of many emerging markets, for example, these
are countries which have long experience of only limited control
grip on the franchise of money by the state. I mean,
(39:05):
the most obvious example is in many emerging markets, as
any listener who's ever been to one will know, over
the last thirty years, you will find that US dollars
circulate alongside the national currency. And there's a prime example. Okay,
that's another state currency in that case, but it's a
prime example of where you know, the state in question
doesn't have full control over the institution of money, and
(39:25):
you've got another competitor in there, and that makes managing
targeting inflation or managing the distributional content. Any of these
aspects of monetary policy we've been describing much more difficult,
because whilst you might control the issuance of your own
currency and the regulation of it, you don't control the
issuance and regulation of the US dollar. So that's why
they are worried about all of that, and their right
to be worried about it. Clearly, the novel aspect of cryptocurrencies,
(39:50):
exactly as you said, is not the fact that they
are private moneies. It's not the fact that these are
private monetary units operating on their own. Monetary standards define
them in lots of different ways. It can be a
very hard monetary standard like bitcoins, where you've got a
set number that can ever be issued and you're going
to assimpate towards set over time. But they're all kinds
of rather in principle of any old kind of standard
(40:11):
that you could use and specify for these private crypteircurrencies.
It's not that private aspect of it, which is new,
existed all throughout history, like you said. No, No, it's
the technology, of course. It's the technology of recording these
things on a digital ledger, and the fact that you've
got the Internet, which is global, which is twenty four
to seven, three hundred and sixty five days a year,
(40:32):
and therefore can facilitate transactions all that time. And the
fact of course that it displaces operates outside of doesn't
use the conventional banking system. So that's what's new about it.
And it's like everything else to do with the Internet.
You know, you can have a very small proportionate constituency
who are interested and want to use something, and it's
(40:53):
massive in absolute terms, in absolute numbers, because that's the
nature of the Internet. The key thing to say, however,
is in terms of the use of money for transactions,
to settle trade, commerce, trade in assets, and so on
and so forth. It is still the case that most
(41:14):
of these cryptocurrencies are of only limited use and are
rather constrained, so mostly they are used for speculative purposes.
The killer app, I think, which has been identified and
seems to me people are correct about in this area
for transactions is stable coins. That is to say, that's
(41:36):
just essentially a particular type of cryptocurrency for which the
standard is an existing fiat currency. So most of them
are pegged to the dollar. But there's no reason why
in principle you couldn't have one that was pegged to
the Sterling or the EU or the All that's doing
is it's marrying together that incredibly useful digital technology available
twenty four, seven, three and sixty five days a year
(41:57):
wherever you are in the world, two the existing national
currency units. And I think that's a very powerful marriage.
And obviously I'm not alone in thinking that everyone thinks
that it is.
Speaker 2 (42:09):
But that does not interfere with the sovereignty of the
currency issue.
Speaker 3 (42:14):
In principle note because it's pegged to the sovereign currency issue. However, again,
look back over the history of money and the history,
for example of the euro dollar market, which is in
many ways analog not in all ways, but in many
ways it's an analogous development. So this was developed in
the nineteen sixties in Europe and it's absolutely huge market today.
(42:35):
This is dollar denominated liabilities which are issued by banks
and institutions which are not under the jurisdiction of the
US federal reserves, so they are a bit like stable.
They're dollars dollar denominated instruments, but they're not real dollars
in the sense that you're deposit in the US banking
system is. But the question you're effectively asking when you say,
(42:57):
or the hypothesis you're putting forward, is that the existence
of the eurodollar market does not have any real blowback
onto monetary management by the FED. And yeah, that's not
quite right. I mean, it does, unfortunately have a bit
of a blowback because when when the crisis happens, usually
the central banks have to bail out half of these
shadow banking systems, and that would be the worry about
(43:18):
stable coins. I would have thought from the central bank side.
Speaker 2 (43:22):
Okay, all right, brilliant, it doesn't sound to me like
you're a buyer of bitcoin. So let me ask you this.
It's gold, under the definitions we've been discussing today, is
not money, but it's conceivably a store of value.
Speaker 3 (43:35):
Well, it's not conceivably a store of value. It's definitely
a store of value.
Speaker 2 (43:38):
I mean, that's definitely a store of that.
Speaker 3 (43:40):
That's quite obvious.
Speaker 2 (43:41):
But it's not money, but it's no money. Should we
be buyers of gold today as we see monetary up
people around us?
Speaker 3 (43:48):
Well, I think that goes back to the earlier discussion
about the scale of imbalances, the scale of inequalities, the
scale of debt in these economies, and what conceivable policy
you can see to get out of it if you believe,
and I think it's perfectly reasonable to believe on a
long term scale that the only way out of this
(44:09):
is the devaluation of the national monetary units like sterling dollar,
pounds on then quite obviously gold, but I mean any
real asset, but you know, goals Wilf by some convenient
ify one knows that is going to be a pretty
good bet.
Speaker 2 (44:25):
Brilliant Felix. Thank you so much, Thank you, Bren. Thanks
for listening to this week's Marin Talks Money. If you
like us, share, rate, review, and subscribe wherever you listen
to podcasts, and keep sending questions and comments to Merin
Money at Bloomberg dot net. You can also follow me
in John on Twitter or ex I'm at Mariness w
(44:47):
and John is John Underscore Stepek. This episode was hosted
by me Maren'sumset Web. It was produced by Somersidi and
Moses and sound designed by Blake Maples and special thanks
of course to Felix Martin.
Host
Merryn Somerset Webb
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