Watch the origin of money playing out in real-time in Cyprus

Credit-backed money could be passed around the nation after the implementation of capital controls.

The origins of money are frequently fought over. Classical economics textbooks frequently cite the idea of a barter economy switching to money for the efficiency gains. Adam Smith, in 1776, was well aware of the problems with barter economies, writing that:

One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former consequently would be glad to dispose of, and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them.

The problem is, that didn't happen. David Graeber's book Debt: The First 5000 Years contains a pretty thorough demolition of the idea, noting that no anthropologist ever has found a pre-monetary society which operates a barter economy in that fashion. A few societies which have lost money for other reasons have reverted to barter, but that's a whole different thing.

Instead, Graeber writes, money arose from debt. Its first role is as a unit of account, a way of tabulating that the person who you lent a cow owes you something; then, as the amount of outstanding debt in society grows, those IOUs become tradable, and eventually standardised. You can even see that on British bank notes – they are, strictly speaking, promissory notes, representing not a sum of money, but a sum of debt. "I promise to pay the bearer, on demand…" reads the text on the front.

And now, as David Keohane excerpts over at FT Alphaville, we could be seeing that route to money creation re-occurring in Cyprus. Citi's William Buiter writes that the capital controls imposed on the country:

Will, if they persist for more than a few weeks, likely lead to a search for alternative media of exchange for internal transactions. IOUs of large, respected enterprises could for example be countersigned and start to circulate more widely as media of exchange and means of payment. This was the case, for instance, during the 1970 bank strike in Ireland, uncleared cheques were made negotiable (like bills of exchange) and pubs and shops served as credit verifiers. These could later develop into more full-fledged parallel currencies, if internal euro liquidity in Cyprus remains very scarce.

It's also another example of how private money creation – à la Bitcoin and so many other initiatives – isn't that new or trendy at all. But the problem for groups of citizens making their own private money is that eventually they have to contend with a government.

That's not, as some of the more alarmist bitcoiners and goldbugs would have it, because the Government comes in and seizes your money if you start to rival its power. (That said, most countries do have laws on the books preventing you from minting your own coinage.) It's the more prosaic matter of taxes.

Governments have the power to demand payment of taxes in whatever currency they want – and usually, the currency they control. So while private money might grow relatively sizeable in Cyprus, no matter how organised it gets, people will always need to hold onto euros – and Bitcoin is going to struggle to get a foothold as a "real" currency if you need to convert back to pounds every April to pay HMRC.

Still, one of the few fun things about living in these interesting times is that those of us who know basic economics get to watch our textbooks played out in front of us. Northern Rock was a bank run with real queues outside the front of the building; Bitcoin lets us have a more up-to-date example of a speculator's bubble than tulip madness; and now we're seeing the origin of money in real-time.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Just you wait – soon fake news will come to football

No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

So it is all settled: Cristiano Ronaldo will be arriving at Carlisle United at the end of the month, just before deadline day. It all makes sense. He has fallen in love with a Herdwick sheep, just as Beatrix Potter did, and like her, he is putting his money and energy into helping Cumbria, the land of the Herdwick.

He fell out with his lover in Morocco, despite having a private plane to take him straight from every Real Madrid game to their weekly assignation, the moment this particular Herdwick came into his life. His mother will be coming with him, as well as his son, Cristiano Ronaldo, Jr. They want to bring the boy
up communing with nature, able to roam free, walking among the lakes and fells.

Behind the scenes, his agent has bought up CUFC and half of Cumbria on his behalf, including Sellafield, so it is a wise investment. Clearly CUFC will be promoted this year – just look where they are in the table – then zoom-zoom, up they go, back in the top league, at which point his agent hopes they will be offered megabucks by some half-witted Chinese/Russian/Arab moneybags.

Do you believe all that? It is what we now call in the trade fake news, or post-truth – or, to keep it simple, a total lie, or, to be vulgar, complete bollocks. (I made it up, although a pundit on French TV hinted that he thought the bit about Ronaldo’s friend in Morocco might not be too far-fetched. The stuff about Beatrix Potter loving Herdwicks is kosher.)

Fake news is already the number-one topic in 2017. Just think about all those round robins you got with Christmas cards, filled with fake news, such as grandchildren doing brilliantly at school, Dad’s dahlias winning prizes, while we have just bought a gem in Broadstairs for peanuts.

Fake news is everywhere in the world of politics and economics, business and celebrity gossip, because all the people who really care about such topics are sitting all day on Facebook making it up. And if they can’t be arsed to make it up, they pass on rubbish they know is made up.

Fake news has long been with us. Instead of dropping stuff on the internet, they used to drop it from the skies. I have a copy of a leaflet that the German propaganda machine dropped over our brave lads on the front line during the war. It shows what was happening back in Blighty – handsome US soldiers in bed with the wives and girlfriends of our Tommies stuck at the front.

So does it happen in football? At this time of the year, the tabloids and Sky are obsessed by transfer rumours, or rumours of transfer rumours, working themselves into a frenzy of self-perpetuating excitement, until the final minute of deadline day, when the climax comes at last, uh hum – all over the studio, what a mess.

In Reality, which is where I live, just off the North Circular – no, down a bit, move left, got it – there is no such thing as fake news in football. We are immune from fantasy facts. OK, there is gossip about the main players – will they move or will they not, will they be sued/prosecuted/dropped?

Football is concerned with facts. You have to get more goals than the other team, then you win the game. Fact. Because all the Prem games are live on telly, we millions of supplicant fans can see with our eyes who won. No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

I suppose the Russkis could hack into the Sky transmissions, making the ball bounce back out of the goal again, or manipulating the replay so goals get scored from impossible angles, or fiddling the electronic scoreboards.

Hmm, now I think about it, all facts can be fiddled, in this electronic age. The Premier League table could be total fiction. Bring back pigeons. You could trust them for the latest news. Oh, one has just arrived. Ronaldo’s romance  with the Herdwick is off! And so am I. Off to Barbados and Bequia
for two weeks.

Hunter Davies’s latest book is “The Biscuit Girls” (Ebury Press, £6.99)

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 12 January 2017 issue of the New Statesman, Putin's revenge