I argued at the beginning of this book that there seems to be something magical about money. Like the magician’s trick where something seems to be moving independently under a square of cloth, money appears to move around without anyone pulling the strings. However, when the magician shakes the cloth there is nothing there. Similarly, when it is examined more closely, money seems to vanish into thin air. This is particularly true of modern fiat money. It is nothing from nowhere. There are trillions of dollars, pounds, euros and other currencies in bank accounts across the globe that exist only as numbers. There is nothing in the money system ‘backing’ those numbers. No superior or ‘real’ form of money. Is this fiat money an illusion, like the magician’s sleight of hand?

Is money magic?

The answer must be no. Unless we believe in fairies – or fairy tales. So why does money look and behave like magic? The main reason is its elusive nature. Like a magic trick, it is hard to see how it is done. This is not to imply that there is a magician conjuring the illusion. There is no manipulator behind the curtain – as was the case in The Wizard of Oz. If there were, he, she or they would have been discovered (quite literally) by now. Such a magician would have needed to be in place during the emergence of human societies, as all known communities appear to have something that approximates money. All seem to need some tangible or intangible yardstick to act as a comparative measure of value. There is also usually some mechanism to transfer that value around.

I have stressed that the measurement is comparative rather than absolute. Money cannot give a value: what is a Yap stone worth, or a Lele cloth? What it can say is that a particular injury or dowry payment is worth this stone rather than that stone, or fifty cloths as against one hundred cloths.

Some of the seeming magic of money is because traditional and historical forms can be enchanting in themselves: gold, silver, stones, shells. Even more magical is money’s immateriality in modern economies.