Friday, May 15, 2009

The Power of Money

Rather long-winded but I thought interesting and insightful

by Peter T White, Assistant Editor

National Geographic (January 1993)

SAY I'M IN PARIS, it's late evening, and I need money, quickly. The bank I go to is closed, of course, but outside sits an ATM, an automated teller machine - and look what can be made to happen, thanks to computers and high-speed telecommunications.

I insert my ATM card from my bank in Washington, DC, and punch in my identification number and the amount of 1,500 francs, roughly equivalent to $300. The French bank's computers detect that it's not their card, so my request goes to the CIRRUS system's inter-European switching center in Belgium, which detects that it's not a European card. The electronic message is then transmitted to the global switching center in Detroit, which recognizes that it's from my bank in Washington. The request goes there, and my bank verifies that there's more than $300 in my account and deducts $300 plus a fee of $1.50. Then it's back to Detroit, to Belgium, and to the Paris bank and its ATM - and out comes $300 in French francs. Total elapsed time: sixteen seconds.

This intercontinental electronic wizardry is merely the latest chapter in the history of that infinitely influential creation of the human mind, money - meaning something that's accepted as a medium of exchange and a store of value because it exists only in limited quantities and, above all, because people have confidence in it.

Ah, money! I'd long thought about it - what a story it would make, to journey around the globe and across centuries, tracing the beginnings of coinage in antiquity and of modern banking in the late Middle Ages, investigating how today money is created by your bank around the corner, discovering what determines the interest rates you must pay on loans for your house or car and how the Japanese got all those dollars to buy up so much of the United States lately. How money launderers do their dirty work. And with the proliferation of credit cards, are we really headed for a cashless society?

My journey began in Philadelphia, at the United States Mint. In a hall the size of a zeppelin hangar I see high-speed presses strike pennies; yellow sodium-vapor lights and bluish mercury-vapor lights alternating overhead make the outpouring of coins look like a stream of gold.

"Each machine strikes 200 times a minute", says a Mint official. "And we don't call them pennies; we call them cents". They're 97.5 percent zinc; the rest is copper. To make one in 1991 cost .92 cents.

That's $9.20 per thousand, so the Mint makes a profit of eighty cents on every ten dollars' worth? "We don't call it profit. It's seigniorage." Very well, the 1991 seigniorage on all US coins, meaning the difference between their face value and the metal value plus the cost of making them, was 428 million dollars.

In Washington, and of late also in Fort Worth, Texas, the US Treasury Department's Bureau of Engraving and Printing turns out paper money - it's actually 75 percent cotton and 25 percent linen. In 1991 it added up to 108 billion dollars' worth. Nearly half the notes are one-dollar bills; these last an average of eighteen months before they're worn out. Turned in by a bank, they will be destroyed by shredding. But should you have bills that have been carbonized and shrunk in a fire, gnawed by termites, or accidentally bleached in a washing machine, the bureau's Mutilated Currency Section in Washington, DC, may be able to help. Turn in at least 51 percent of a bill and you'll get a full refund.

Bills and coins make up about eight percent of the US money supply - the rest is in bank accounts, including checkbook money; at this writing the sum total is 3.5 trillion dollars, says the Fed - the Federal Reserve System, which is the central bank of the government of the United States - and that is three billion more than a month ago. This is how that happens.

Every business day, after a telephone conference call at 11:15 am, the Federal Reserve Bank of New York, acting on directives from the Federal Open Market Committee at Fed headquarters in Washington, buys US government securities from major banks and brokerage houses, or sells some - usually US Treasury bills, which in effect are government promissory notes. Say today the Fed buys a hundred million dollars in Treasury bills from those big securities dealers, who keep a stock of them to trade with the public. When the Fed pays the dealers, a hundred million dollars will thereby be added to the country's money supply, because the dealers will be credited that amount by their banks, which now have that much more on deposit.

But where did the Fed get that hundred million dollars?

"We created it", a Fed official tells me. He means that anytime the central bank writes a check, so to speak, it creates money. "It's money that didn't exist before", he says.

Is there any limit on that?

"No limit. Only the good judgment and the conscience of the responsible Federal Reserve people".

And where did they get this vast authority?

"It was delegated to them in the Federal Reserve Act of 1913, based on the Constitution, Article One, Section Eight. 'Congress shall have the power... to coin money, regulate the value thereof ...'"

Now watch how that Fed-created money lets our commercial banking system create even more. The Fed requires banks to put aside a portion of their depositors' funds as reserves. Say this reserve ratio is set at ten percent - then for every $1,000 in new deposits, a bank must keep at least $100 in reserve but can loan out the rest, namely $900. On the bank's books this loan remains as an asset, earning interest until it is paid off. The customer who got the loan is likely to spend it right away, say for a used car. The car dealer deposits the $900 check in his bank, which then has an additional $900 in reserves and can in turn loan out ninety percent of that - $810. And so on and on, until the original $1,000 put into one bank may enable dozens of banks to issue a total of $9,000 in new loans.

Thus a hundred million dollars injected by the Fed into the commercial banking system could theoretically stimulate the appearance of 900 million dollars in new checkbook money - money that didn't exist before. And it's all built on the assumption that the system is sound.

WE'LL RETURN TO THE FED LATER, but now I'm off to Yemen, where, so I've heard, quite a few people cling to old-fashioned views on what sort of money one can have confidence in, what can be considered sound. At Suq al Talh, the Saturday market not far from the Saudi Arabian border and close to the ancient city of Sadah, I see bearded money changers sitting on concrete steps, curved daggers strapped around their waists, automatic rifles across their laps or propped within reach. In front of them are bundles of bank notes - Yemeni rials - and stacks of coins the size of US silver dollars. These are silver too, but they're all dated 1780, and the large-chested lady portrayed on them is the Austrian empress Maria Theresa. A man just bought a thousand of them for 75,000 rials, and I ask him why.

"It is the main currency", he says. Isn't that what the rial is? He says in this area these coins are omla saaba, meaning hard currency, and off he goes with sixty pounds of silver in a woven bag. "He bought them to make a profit", another man tells me - they've been going up in price; or, one might say, the rial has been going down.

"The people you saw in Sadah may be illiterate, but they know economic affairs", says Mohamed Said Al-Attar, the minister of industry, who has long been active in the country's financial affairs. Back in the capital, Sanaa, he tells me that in the 18th century, when French traders came to the port of Mocha to buy coffee, the Yemenis didn't want French money, but they liked the Austrian coin, called a taler, because of its high silver content. (From "taler", incidentally, comes the word "dollar".)

The reputation of the Austrian taler spread to much of the Arabian Peninsula and to Ethiopia, where the coin circulated until the 1950s. "We introduced the rial bank note", Dr Al-Attar adds, "after the 1962 revolution had ousted the monarchy. But for years we had difficulty getting people to trust paper money".

Today the official Austrian mint in Vienna still turns out Maria Theresa talers, still dated 1780. So do imitators elsewhere, notably in Saudi Arabia, says a merchant in the Sanaa suq. "They have agents in Yemen buy talers, which are 83 percent silver", Dr Al-Attar tells me. "They melt them down, strike new ones, and send them back to Yemen - less than 80 percent silver". Alas, debasing coinage for a bit of profit is almost as old as coinage itself.

Many of today's currencies, the Italian lira, the British pound, the peso and peseta of Spanish-speaking countries, are named for units of weight once used to measure amounts of metal - mostly silver, which along with gold and copper has functioned as money throughout most of recorded history. The earliest documented use of silver for payment appears around 2500 BC in Mesopotamian cuneiform tablets.

SOME OF THE OLDEST known coins were struck, in Asia Minor, in the ancient kingdom of Lydia, in the seventh century BC - tiny to thumbnail-size lumps of electrum, a pale yellow alloy of gold and silver, washed down by streams from limestone mountains. Such Lydian coins, of specific weight, eventually bore the royal emblem of a lion's head.

The late Oxford scholar Colin Kraay surmised that they were conceived as a convenience to the state, as a standard medium for payments to officials and for public expenditures, also for the collection of taxes and fines. But merchants, long accustomed to settling accounts in precious metals, must have found them useful too; by using coins, they didn't have to do as much weighing for each transaction.

The idea of coinage spread from Asia Minor across the Mediterranean world. By the fourth century BC a weight unit called the shekel, used by ancient Babylonians, Phoenicians, and Israelites, had lent its name to silver coins in the Middle East; some weighed half an ounce, slightly heavier than the silver Kennedy half-dollar of 1964. As for gold, it was coined into the aureus of the Roman Empire and the solidus of Byzantium, also the dinar of Muslim lands, the florin of Florence, and the ducat of Venice.

Coins may have begun as a convenience, but some of them have taken on fabulous value today. In southwestern Anatolia I found the Turkish countryside crawling with folks bent on finding an ancient bonanza. Coins of Greece and Persia, Rome and Byzantium are often turned up by rain or the plow, and people prowl with metal detectors, seeking a hoard like the one reportedly dug up in a field in 1984.

Near the little town of Elmah, in the valley between the mountain ranges called Ak and Bey, I'm shown the spot where I'm told a detector discovered a terra-cotta jar holding 1,900 pieces of silver, possibly buried by a Greek commander getting ready to battle the Persians around 465 BC. Included were fourteen brilliant ten-drachma coins thought to have been struck by the Athenians to commemorate their victory over the Persians at Marathon.

Most of those decadrachms are said to have wound up with a millionaire investor in Boston, with one piece going to a collector in Beverly Hills for $600,000. Illegally, according to the Turkish government. Turkish law says you must turn in such finds to the local museum; if they're valuable, you'll get a small reward.

The earliest paper currency issued by a government appeared in China in the 11th century. In Persia the Mongol ruler Geikhatu decreed paper money in 1294, but merchants refused to accept it. They closed their shops and hid their goods. Trade stopped. Facing revolt, Geikhatu rescinded his edict; the official who had suggested it in the first place was torn to pieces in the bazaar. The first European bank notes were printed in Sweden in 1661, when coins were in short supply.

But money hasn't always been metal or paper. One of the oldest forms may well be a shiny white or straw-colored mollusk shell, about an inch long, from the Indian Ocean - the cowrie; from it derives the Chinese character cai or kai, standing for wealth, money.

I remember a display of other forms brought to a coin collector's convention in Seattle by John Lenker, then head of the International Primitive Money Society. A bronze drum from Malaysia. A block of salt from Ethiopia. From Fiji a kava bowl with eleven legs. And wampum, once prized by North American Indians - tiny clamshell pieces laboriously drilled and strung together like beads. "All these tell stories just as coins do", said Mr Lenker. (See Money From the Sea, pages 109-117.)

THE HISTORIAN Fernand Braudel has pointed out that for most of recorded history the majority of people, living off the bounty of the land, hardly required money for day-to-day needs, and this was still true for many Americans early in this century when my father-in-law was young. He never forgot the exciting day, once a year after the harvest, when his grandfather hitched up the horses to drive a couple of miles to the little town of Greenfield, Illinois, with the wagon full of wheat.

Fred Heck, the miller, would grind it into flour, keeping a bag for payment. Then to Samuel Wilhite's grocery, to leave flour for a year's supply of sugar and salt, canned goods and candy. Finally Fred Quast, the blacksmith, got flour for shoeing the horses and sharpening the plowshare.

"Everybody knew the flour price", Dad told me, "it was in the paper every day". Payments could have been in those green dollar bills with yellow backs-gold certificates that could be redeemed anytime for gold coins. But it wasn't necessary.

Historian Braudel also delineated how in the Middle Ages the role of money, and hence trade and the entire economy of Europe, got a boost from Italian ingenuity. A new way was found to get around the ban of the church on usury, the lending of money at interest. Merchants of Tuscany, especially from Siena and Florence, employed this new wrinkle at the fairs in the Champagne region of northeastern France in the 13th century. It was called the bill of exchange, and it opened the door to modern banking.

Michele Cassandro, professor of modern economic history at the University of Siena, tells me how it worked: "It would say, for example, 'Signor A, having received so many Sienese scudi, will pay to Signor B so many Florentine florins at such and such a place on such and such a date'. That looks like a currency exchange transaction, but in fact it is a loan agreement, with the interest hidden in the amount of florins Signor A will be paying. But it doesn't say loan, it doesn't mention interest - so, no usury!"

From Siena I drive an hour through the sunny Tuscan countryside to wallow in the state archive of Florence; it's a treasury of neatly written documents chronicling the ups and downs of medieval financial giants. Occasionally they found themselves bancarotta - the words mean "broken bank". Hence our word bankrupt - another Italian contribution to the language of money.

Here are the records from three centuries of the Medici, cloth merchants and bankers who became popes and grand dukes of Tuscany. Where else, I thought, would you find the 1457 tax return of Cosimo de' Medici, one of the greatest of the clan? He paid one-half of one percent. Property tax, that is.

Back in Siena, outside the Renaissance palace of the Monte dei Paschi di Siena bank - it traces its beginnings to 1472 and is still going strong - I run into more Italian ingenuity: a foreign-exchange machine, operating around the clock for the convenience of tourists. Put in bank notes in any of a dozen European currencies, or Japanese yen, or dollars Canadian, Australian, or US. In no more than fifteen seconds a compartment opens - there's the equivalent in Italian lire, down to the last small coin. An electronic display shows the exchange rates, fluctuating daily.

For many years after World War Two, foreign-exchange rates were pretty much fixed. I recall a Washington, DC, exhibit of bank notes from nearly every country in the world, each with a notation of its value in terms of the US dollar; under the dollar bill it said "equal to one thirty-fifth of a troy ounce of gold". Foreign governments were allowed to redeem dollars for gold at the US Treasury. But eventually the demand increased so much that the "gold-exchange standard" was suspended in 1971 and formally abandoned in 1978.

Not that the world's governments have discarded their gold bars. They keep lots of them as part of their reserves, with some sixty countries storing about 10,000 tons - or a hundred billion dollars' worth, if valued at $350 a troy ounce - in the world's largest gold depository, the subterranean vaults of the Federal Reserve Bank of New York. The US Treasury holds some 9,000 tons, mainly in the legendary vaults of Fort Knox, Kentucky, at West Point, New York, and in Denver, Colorado. Back in 1960 the US had 19,000 tons.

Ever since that direct link of gold to currencies was cut, currencies have been "floating" against one another, at prices reflecting demand and supply. Governments strive to keep such prices within certain limits, but, as recent events have shown, market forces can bring about more drastic fluctuations. In any case, today's worldwide foreign-exchange market is the biggest trading system ever, with an estimated daily turnover of one trillion dollars. In the trading room of an international bank in downtown New York City, I get a whiff of the world of the big-time foreign-currency traders.

"They've got to be young, aggressive, and hungry", says the supervisor. Next to each, four video screens bring economic news, rumors, and price quotations punched up with a tap on a keyboard - Chicago, London, Frankfurt. Half a dozen loudspeakers offer quotes too. Eighty buttons control phone lines to trading partners.

The name of the game is speculation - betting one currency will go up and another will go down. And arbitrage, taking advantage of differences in the price of the same currency in different places - location irrelevant - differences as small as 1/100 of a cent.

You've got to do it fast - a quote more than a few seconds old is history. So, spot a good one. Grab it. But don't get stuck, get out and cut your losses and get in again. Stress, yes, but what a thrill!

I ask a young woman doing British pounds how one can make money on such tiny margins. It's called scalping the market, she says, a matter of volume. She shows me her profit and loss statement for yesterday: On 120 trades - 164 million pounds bought, 160 million sold, a total of 324 million traded - she made $12,000. For the bank, that is. It may not seem like all that much, but that's how thin the margins are.

TRADERS THRIVE on ups and downs; governments seek stability. That's a principal goal of the US central bank, the Fed. Charged by Congress to do what it can to promote price stability domestically, along with steady economic growth, it faces an endless dilemma.

It can influence the money supply, as we've seen, and thereby affect interest rates via "tight money" or "easy money". It can also vary the so-called discount rate - the rate at which commercial banks, savings and loans, and credit unions may borrow from the Fed; when that rises or drops, the loan rates that they charge their customers usually follow suit. But here, as the Fed sees it, is the quintessential problem:

If the Fed provides too little money, interest rates tend to be high, the borrowing of money expensive - business activity may slow, unemployment go up, and there is danger of recession.

If there is too much money, interest rates decline and borrowing can lead to excessive demand - pushing up prices, fueling inflation.

Just what are the right money-supply rates, the right interest rates - the ones most conducive to stability and orderly growth in an ever changing economy?

In an ornate hall in Washington, DC, under the American eagle above the fireplace, meet the seven members of the Board of Governors of the Federal Reserve System. At the head of the great board table sits Chairman Alan Greenspan. Having studied reports of economic conditions across the country, they'll now discuss and vote on what actions the Fed should take.

And what has the Fed done lately? It lowered the discount rate - step by step, from seven to three percent, in order to encourage recovery from the severe recession that began in 1990. At the same time, the increase in the money supply has been kept modest: between 2.5 and 6.8 percent annually, in the hope that inflation can be brought down below two percent a year.

AS ARAB OIL WEALTH was the money phenomenon of the 1970s, so in the 1980s was the Japanese money machine. I learned about it in Tokyo.

True, the Japanese had been selling lots of cars and electronic stuff around the world and saved lots of yen and put them into the banks - but that wasn't the half of it. As is the Japanese way, manufacturing companies and financial institutions paid only minuscule dividends and kept the bulk of their profits as reserves.

With those profits as collateral they borrowed cheaply to buy real estate, which rose to ever higher paper values. With real estate as collateral, they borrowed to buy shares on the Tokyo Stock Exchange, which rose impressively as well, providing collateral for still more borrowing. And then came zaiteku.

"Zai" - the Japanese word for the Chinese character for wealth - was combined with "teku", a word borrowed from English that represents technology. Zaiteku means financial engineering - "new ways of making money with money", I was told by Haruhiko Kuroda, a senior official in the Ministry of Finance. And who was the biggest practitioner of zaiteku? Toyota. They were earning 2.9 billion dollars from cars and 1.2 billion from financial operations in 1989.

How? "Rapid currency trading", said Mr Kuroda, "and issuing securities, say five percent bonds, that will be bought by Belgian dentists ..." I must have looked puzzled. Mr Kuroda smiled - he'd meant to say affluent people who are financially unsophisticated, looking for investments that seem safe and yield good returns. "You paid out five percent on those bonds, and the money you got for them you put into American corporate bonds that then paid twelve percent". Risky, perhaps, but the Japanese were willing to take that risk for the seven percent profit involved.

Something else also helped a lot. Back in September 1985 the finance ministers of Britain, France, West Germany, and Japan agreed with James A Baker III, then the US secretary of the treasury, to push down the value of the US dollar, then worth 241 yen. Baker's purpose was to increase the export of American goods by making them cheaper abroad. Eventually, with the dollar dropping to as low as 120 yen, the Japanese could buy twice as much in the US as before. And they did. Columbia Pictures. Eighty percent of Rockefeller Center. A lot of downtown Los Angeles. Tokyo banks, awash in money based on inflated real estate and stocks, became the world's biggest - and the world's major supplier of capital.

In Tokyo I heard some remarkable figures. A housewife said the cost of an apartment had more than doubled in a year. I passed a downtown office building with rents six times what they were in Manhattan. The grounds of the Imperial Palace in the middle of town were said to be worth all the land in California. A typist said she'd been flying to Hawaii on weekends to play golf - that was cheaper than playing here. Could this go on much longer?

When I visited the Tokyo Stock Exchange on December 5 1989, its Nikkei index was at 37,494.17 yen. I didn't know then, nor did anyone else, that at the end of the month it would reach a historic high - 38,915.87 yen. As of this writing, the Nikkei has dropped more than fifty percent. Land prices are falling too. Zaiteku has faded; the baburu keizai, the bubble economy, has burst. The big Tokyo banks are pulling back on overseas loans.

TOWARD THE END of my money travels, I found myself in the Republic of Nauru, an island on the Equator in the western Pacific. Only four miles long and three miles wide, it has 1,000 to 2,000 foreign corporations and banks. "They come and they go", said Leo D Keke, then Nauru's acting secretary for justice; but that's only in a manner of speaking - they have no offices here, no personnel. Mr Keke had to approve the foreign applications. What Nauru gets out of this, he said, is fees. What do the foreigners get? Secrecy and reduced taxes. "It's arranged through lawyers and accountants in Hong Kong ..."

In Hong Kong a partner in the international accounting firm of Ernst & Young told me that these Nauru banks and corporations exist as computer entries elsewhere, maybe in a bank in New York City. Money can go via electronic transfer directly to New York - say to Citibank for account of Bank XYZ, Nauru. It can then be invested in anything, anywhere.

Nauru, he said, is an extreme example of the worldwide phenomenon of tax havens; others like it are the Cook Islands and Vanuatu in the Pacific and the Turks and Caicos in the Caribbean. Considered more solid are Bermuda, the Bahamas, and the Cayman Islands, and especially Luxembourg, Switzerland, and Liechtenstein. They may all be used not only for commercial transactions but also to keep one's money safe. A trust fund for the children. Or to protect your money against wild inflation or political upheaval.

Much tax-haven activity is completely aboveboard - but some is not. Dirty money cries out to be laundered, and I caught a glimpse of how that's done from the Centre for International Documentation of Organised and Economic Crime in Cambridge, England. This is a real-life example:

A US organized crime group with a lot of hot cash forms a cozy relationship with the central bank of a British Commonwealth country. Diplomats of that country carry the cash out of the US. If it's $10,000 or more, they are supposed to report that to US Customs, but they don't; they "externalize" the cash. It goes into the central bank and then into various dummy companies in different countries in return for shares in those companies. The money is thus "agitated", so it'll be just about impossible for investigators to follow. Then, to "repatriate" the money, dummy companies in the US sell their worthless shares to investors in Britain - who are in fact in on the scam - and behold, the money is back in the US, clean! Now it buys legitimate businesses, banks, political power.

An operation like this, involving highly placed officials and businessmen, will cost quite a bit, maybe 35 percent, but once the system is in place, people will want to use it - not only drug profiteers but also arms dealers, terrorist organizations, intelligence agencies ...

A prime haven for such shady customers was BCCI, the Bank of Credit and Commerce International, headquartered in Luxembourg and the Cayman Islands with branches in 72 countries. It is said to have secretly controlled the First American Bank of Washington, DC. After BCCI collapsed in 1991, having defrauded depositors of several billion dollars, it became known as the Bank of Crooks and Criminals International.

BACK HOME I RUN ACROSS a little formula that bankers and financial analysts know, that everybody should know - the rule of 72. No one is certain who first developed the rule, but the principle is quite simple: Divide any number into 72 and the answer tells how long it will take for a sum to double in financial terms.

Are you charged eighteen percent interest on the unpaid balance of your credit-card account? Eighteen goes into 72 four times - so the debt would double in four years. Say your annual raise is six percent; that number goes into 72 twelve times, so in twelve years your salary will double. The same will be true of any investment. And what if inflation runs at six percent a year? Then after a dozen years your money will be worth half as much - so in a sense you'll be back where you started.

But look what can happen when inflation runs wild, when governments simply issue more and more currency to cover increasing obligations as prices rise.

In 1986 Peru's currency - the sol, which is Spanish for sun - fell to 14,000 to the US dollar, so the government lopped off three zeroes and called it the inti, which means sun in Quechua, a language spoken by more than half the Peruvians. By mid-1991 a cup of coffee cost 500,000 intis. The government lopped off six zeroes and called it the sol again. Over five years the inflation rate was 2,200,000 percent!

The most drastic inflation ever? Hungary 1946, after World War Two, when Germany had taken away the national bank's gold reserves. By June the Hungarian pengo appeared in notes of a million million billion, which would look like this: 1,000,000,000,000,000,000,000. Then the gold came back, confidence returned, and in August Hungary had a stable new currency, the forint.

FROM THE EARLY 1950s ON, a new means for payment in place of currency began to spread from the US to much of the world - the use of what's been called plastic money, meaning charge cards and credit cards. Currently some 250 million MasterCard and Visa cards have been issued in the US alone. Occasionally these cards go to unlikely recipients, such as Tommy Mullaney of Crownsville, Maryland. He was eleven years old when he got a gold MasterCard from a bank in Wilmington, Delaware, with a $5,000 credit limit, even though on his application he had stated his income - his allowance, that is - as five dollars a week. The bank called it an error.

ATM cards, for use in automated teller machines, are also proliferating. More than 150 million are now used in the US, not only to draw cash from banks but also to make payments. At gas stations, for instance. And increasingly in supermarkets - with your ATM card and a "point of sale terminal" at the checkout lane, your grocery bill will be deducted from your bank balance.

Are we, as all this might suggest, headed for a cashless society? The answer is yes, but slowly. ATM gadgetry is expensive. Nevertheless, new uses for it are being tried, such as letting ATM cards pay for fast food. And one day you may need neither cash nor a card for highway tolls; your car may get electronic tags, and as it passes a tollgate, it will be automatically identified without your having to slow down. The toll will later appear on your bank statement. But for the foreseeable future you'll still have to have currency to pay for a newspaper or a candy bar.

As for me, I'm still amazed that I can go to Paris, stick a plastic card into a machine, and sixteen seconds later pull out enough money for a pleasant evening. Not that this electronic marvel has reached perfection, mind you. A newspaper in England reported that when a man punched in his request for GBP 30, the ATM did its beeping and blinking, and then disgorged GBP 2,670.

To an average fallible human, that's comforting.

Bill Totten

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