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  • Martyn Johnson

Money, it's a gas - part II

In this edition I look at what money is, how it came into being and why we need it. I also reveal the World’s largest and softest bank.

Markets Commentary

UK inflation falling, gradually. House prices falling. Share prices (may even) start going up.

Money - That's What I Want

What is it?

Try asking friends – people know what money is but defining it can be tricky. I describe it as a medium of exchange; other common definitions are a unit of account and a store of wealth. Martyn (son #2 who works with me) reckons it is a means of keeping score.

History of:

Barter was the first stage of the development of money where there is evidence of hunters trading with flint weapons about 40,000 years ago. The Mesopotamian shekel – the first known form of currency – emerged nearly 5,000 years ago. In 118 B.C. banknotes in the form of leather money were used in China – the forerunner of paper money. About 50 B.C. pieces of silver were used in Lydia (Turkey). Whilst Ben Franklin ‘invented’ electricity, not sure who invented crypto.

Why do we need it?

There are several reasons; mainly it is easier than bartering and convenient to store. Money allows two parties to store their wealth and trade at any time. Technically money needs to be durable, divisible, portable, uniform, limited in supply and acceptable.

What's bad for it?

Taxation inevitably followed the invention of money; there are some good reasons for taxation, but just now I am struggling to remember them.

Inflation – where it loses value. In Zimbabwe in the mid-eighties a wheelbarrow full of cash was enough to buy a loaf of bread when you left home but not by the time you got to the shop.

Convenience – not necessarily a good thing - electronic money is too easy to spend - ask my firstborn and indeed most kids under the age of 30.

Default - loss of confidence can lead to runs on banks – remember ‘It’s a Wonderful Life?’

Children – see postscript about BOMAD.


We are lucky in the UK that our banks are relatively stable, being underwritten by the Bank of England. Money is simply a medium of exchange. Having money can provide freedom, autonomy and ‘happiness’ via a feeling of security. Not having it can lead to the reverse. As for crypto – see my 2022 Unbiased article - my views ain’t changed much.


Bank of England, Federal Reserve, European Central Bank. ‘BOMAD’ is an acronym for the renowned ‘Bank of Mom and Dad’. Whereas commercial banks have in common strict lending criteria and charge market rates of interest; BOMAD’s typically have little or no due diligence and zero interest rates. Lorraine and I for example continue to act as lender of last resort to son number one. Still, most of us chose to have kids, I suppose...

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