From the history of money to Gandhi: Best non fiction books of 2013

Vivek Kaul
 It is that time of the year when the media goes on an overdrive making top 10 lists on various things that happened in the year that was. So here is my list for the top 10 books in the non fiction category for this year (The books appear in a random order). Also, let me confess at the very beginning that this list is slightly biased towards books on economics and finance, which is what I love reading the most. 
1) The Undercover Economist Strikes Back – How to Run – or Ruin – an Economy – -Tim Harford (Little, Brown Rs 599)
Tim Harford is my favourite writer when it comes to the non fiction category. His entire focus in anything that he writes is to ensure that the reader understands what he is trying to say. Not many writers make that kind of effort. And that possibly explains why Harford’s books like 
The Undercover EconomistThe Logic of Life and Adapt, have been bestsellers.
In his new book, Harford tries to explain macroeconomics and the financial crisis that is currently on to the lay reader, in very simple English. In fact, Henry Hazzlit’s 
Economics in One Lesson (first published in 1946) remains my favourite book, when it comes to books which explain the dismal science in a language that everybody can understand. Harford’s The Undercover Economist Strikes Back now comes a close second.

2) Calcutta – Two Years in the City – Amit Chaudhuri (Hamish Hamilton, Rs 599)
My favourite Bengali author is Mani Shankar Mukherjee. His translations in English, appear under the name of Sankar. I discovered Sankar’s writing a few years back when someone recommended his book Chowringhee to me. Since then I have read a few other translations that have appeared in English. But I have read close to seven or eight translations of Sankar in Hindi. In fact, whenever I discover a bookstore which has Hindi books, the first thing I tend to ask them is do you have any books of Sankar? Nobody writes about life and its frailties like Sankar does.
Amit Chaudhuri, I feel comes a close second to Sankar, when it comes to writing books set in Calcutta. I have tremendously enjoyed reading his novels over the years. His new book Calcutta -Two Years in a City is about the Calcutta that was, the Kolkata that is and the Kolkata that will be. Given the fact that Chaudhuri hasn’t lived in Calcutta all the time (he spent a large part of his childhood in what was Bombay and since then has lived a lot in Great Britain) and neither has he left it completely, only to come back during Durgo Pujo, the book doesn’t get overtly nostalgic (like a lot of Bengali authors tend to) about the city. So, for example you will find very little of Satyajit Ray and Mother Teresa in the book. But you will find a lot about Bihari labourers who come to the city hoping to make it in life.
Chaudhuri also chronicles the change in Kolkata quite well. Older British buildings being demolished to make way for newer apartments. Oxford Book Store, the city’s most famous book store, now storing fewer books and more of CDs and stationery. The famous city eatery Flurry’s also makes an appearance.
If there was a book that I would want to read on a relaxed rainy afternoon (or a chilly foggy morning) with a cup of tea and a couple of samosas by my side, this would be it. (Another book that I would like to mention here is Amitava Kumar’s A Matter of Rats – A Short Biography of Patna. Having grown up in erstwhile Bihar I loved reading the book. My only complain with the book is that it ended just as I was starting to enjoy it) 

3) Who Owns the Future? – Jaron Lanier (Allen Lane – Rs 850)
This is a fascinating book which raises many questions about the digital revolution that is currently on. One of the major questions that Lanier asks is what makes a few websites like Facebook, Instagram, Google, Twitter etc, so valuable? As he writes “its value comes from the millions of users who contribute to their network without being paid for it. Networks need a great number of people to participate in them to generate significant value. But when they do, only a small number of people get paid. That has the net effect of centralising wealth and limiting overall economic growth.”
Lanier also asks whether we are becoming too dependant by concentrating our digital lives around a few companies. As he writes “Suppose Facebook never gets good enough at snatching the ‘advertising’ business from Google. That’s still a possibility as I write this. In that event, Facebook could go into decline, which would present a global emergency…If Facebook starts to fail commercially, suddenly people all over the world would be at the risk of losing old friends and family ties, or perhaps critical medical histories.”
The same argument stands true for Gmail as well. For most of us it is a repository of a large amount of information, communication and documentation, that we need to keep going back to time and again. In that sense, these websites are becoming more like electric utilities as every day goes by. Who Owns the Future raises some fundamental questions that do not have easy answers. 

4) Gandhi Before India – Ramachandra Guha (Allen Lane, Rs 899)
Mahatma Gandhi’s autobiography – The Story of My Experiments with Truth, was one of the first non fictions books that I happened to read. And as a young adult I found it very boring. Over the years I have been told that the Gujarati original is inherently more interesting and the translation in English, doesn’t quite work as well as the original (Gandhi translated the book himself). Also, the other complain that I had with Gandhi’s autobiography was that it does not get into much detail about his years in South Africa.
Ramachandra Guha’s Gandhi Before India addresses both the issues that I had with the autobiography. Guha’s research is top notch and he establishes in great detail that it was the years that Mohandas Karamchand Gandhi spent in South Africa, was what made him Mahatma Gandhi. Interestingly, Guha also tells us that Rabindranath Tagore was not the first man to call Gandhi a Mahatma. It was his doctor turned jeweller friend Pranjivan Mehta. The book also talks about the sacrifices made by Gandhi’s immediate family to help his struggle in South Africa. His eldest son Harilal regularly went to jail. Even his wife Kasturba went to jail for the cause. His nephews were also a part of his struggle.
This book is a must read for every Indian in order to realise how great Gandhi really was. 

5) Battles Half Won – India’s Improbable Democracy – Ashutosh Varshney (Penguin Viking, Rs 599)
The book’s subtitle tells us what the book is all about. As Varshney puts it “the odds against democracy in India were extremely high”.
Democracy came to West after the industrial revolution which ensured that incomes had reached a substantially high level. In the Indian case, democracy as a form of government was adopted when only around 15-17% of the population was literate and the per capita income was very low. In fact, many countries that emerged from decolonization adopted democracy as a form of government. But of these countries democracy survived only in India, Mauritius, Belize, Jamaica, Papua New Guinea, Solomon Islands and Vanuatu. Each of these countries other than India are very small and have a higher income than that of India.
Also, research shows that democracies that have an economic growth rate of lesser than 5% per year collapse at a higher rate than democracies that have an economic growth rate of higher than 5%. As Varshney puts it “India’s economic growth rate has been higher than 5% per annum since 1980, but in the period 1950-1980, Indian economy grew at only 3.5% per annum.” Given these reasons, it is very surprising that democracy in India has not only survived, but is thriving. The recent success of the Aam Aadmi Party clearly proves that.
To know the reasons behind why democracy has survived in India, Varsheny’s book is an excellent read. 

6) Emergency Retold – Kuldip Nayar (Konark Rs 295)
The only period since independence when India has not been a democracy was the period between June 26, 1975 and March 21, 1977, when the then prime minister Indira Gandhi, got the president Fakhruddin Ali Ahmed to declare a state of emergency.
Veteran journalist Nayar writes about the period in Emergency Retold. The book was first published in 1977 under the name The Judgement. The paper back edition was released this year. Nayar’s book reads like a political thriller. It starts on June 12, 1975, when Justice Jagan Mohan Lal Sinha found Indira Gandhi guilty on the charge of misuse of government machinery for her election campaign in the 1971 Lok Sabha election. Two weeks later Indira Gandhi got the President Ahmed to declare a state of emergency.
Nayar goes into great detail about how this was done. One of the interesting things he points out was that a copy of the censorship rules and details of the machinery required to implement them in Philippines, was provided to Sanjay Gandhi, by a businessman fried of his Kuldip Narang, who in turn had got it from his friends in the American embassy. The book is full of such interesting trivia from those times. In the end, it is also a grim reminder of the cost that India has had to pay for keeping the Nehru-Gandhi dynasty in power for large periods of time since independence. My only complain about the book is that there are just way too many typos.

 7) 40 retakes – Bollywood Classics You May Have Missed – Avijit Ghosh (Tranqubear, Rs 395)
This book is really the joker in the pack. I read it early October on a day I was very bored and finished reading it under four hours. 
40 Retakes is a book on 40 brilliant movies which flopped or did not pass the critics’ test over the years. Given the number of Hindi movies that get made every year, it would have been very difficult to arrive at the list.
I am no expert on the Hindi cinema of the 50s, 60s and 70s, but have watched a fair bit since the 1980s. Some of my favourite movies like Prakash Jha’s 
Hip, Hip, Hurray set in Ranchi and Vidhu Vinod Chopra’s Khamosh set in Pahalgam are a part of the list.
Kabir Kaushik’s 
Sehar and Tigmanshu Dhulia‘s Haasil, probably two of the finest movies set in the badlands of Uttar Pradesh, also make the cut. Ketan Mehta’s terribly underrated Aar ya Paar, a movie which I fell in love with when I first saw it, even though it was a rip off of a James Hadley Chase novel, is also a part of the list. Anurag Kashyap’s Gulal, Shimit Amin’s Rocket Singh and Sudhir Mishra’s Is Raat Ki Subah Nahi make it to the list as well.
A movie which should have been on the list is Kundan Shah’s 
Kabhi Haan Kabhi Naa, which I feel is the best Shah Rukh Khan movie till date. At the risk of getting booed I would like to say that Kabhi Haan Kabhi Naa is Kundan Shah’s finest film. Jaane Bhi Do Yaaro was made on the editing table.
Navdeep Singh‘s Manorma Six Feet Under, should have been a part of the list. It’s a terrific re-working of Roman Polanski’s China Town
8) When the Money Runs Out – The End of Western Affluence – Stephen D King (Yale University Press, Price not mentioned)
Economists who work for financial institutions are expected to be optimistic about things. But doesn’t seem to be the case Stephen D King, who is the Group Chief Economist at HSBC. In When the Money Runs Out, King points out that there is a lot that is wrong with the way the financial systems all over the Western world have evolved. The fundamental point that he makes in the book is that the ability of the developed countries to keep generating a reasonable economic growth has gone down. There are economic and political implications of the same. When the West was growing the governments promised a lot of benefits to its citizens. They are no longer in the situation where they can afford to pay off these benefits.
Most developing countries instead of getting used to the new low growth scenario have responded to it by printing huge amounts of money, in the hope of creating more economic growth. King calls them stimulus junkies. He discusses in great detail why its not so easy to suddenly stop or go slow on money printing, something which the Federal Reserve of United States has been trying to do for a while.
Anyone looking to understand how the current financial crisis will evolve in the years to come, should be reading this book.

Money – The Unauthorised Biography – Felix Martin ( The Bodley Head, Rs 599)
Over the last few years, the history of money has fascinated me a lot and I have read scores of books trying to understand how money actually evolved. But my journey on the history of money ended with this book. It’s a must read for anyone wanting to understand on what money really is?
Mofussil Junction – Indian Encounters 1977-2012 (Penguin Viking, Rs 599)
As they say, save the best for the last. If there was one book that I would have read this year, it would have to be Ian Jack’s 
Mofussil Junction. The book is a fantastic collection of short write-ups and essays on India. In fact, Jack’s prose at times makes you feel that you are reading some classic fiction.
My favourite essay in the collection is Somewhere 
to Call Their Own. The essay deals with Anglo Indians who decided to settle down around 1500 feet up in the Chota Nagpur hills, in this town called McCluskiegunje, near Ranchi. The most interesting character in this essay is an Anglo Indian girl called Kitty Memsahab, who actually sells fruits at the McCluskiegunje railway station to make a living.
As the concluding lines of the essay go “Down at the station I saw Kitty again…Now she was preparing a basket of oranges for the evening train and joking in Hindi with brewers of country liquor. She seemed to have made her peace – perhaps not with India, which is too large and complicated an idea, but at least with that small part of it where she was born.”
Reading about Kitty reactivated an old memory about a story that the India Today magazine had done around her sometime in the late 1980s. I have vague memories of the magazine carrying a photograph taken from inside a train showing a white woman selling bananas. 
This 2013 story that appeared in the Mint suggests that Kitty might still be selling bananas.
I also loved the epilogue of the book tremendously. Here Jack talks about a person called Major that he used to know in what was Calcutta. As the concluding lines of the book go “I got divorced soon after and with no in-laws to visit I didn’t see Kolkata again for nearly twenty years. The Major died – I’m not sure how. Smoking while walking could have been a contributory cause, it being a rule he often ignored. I miss his uncomplicated, upcountry curiosity: why, how, where, when? I miss his mischief. I mourn those figures slithering in the Hooghly’s mud, happy to make fools of themselves, once upon a time.” As I said, fantastic prose.
PS: If I could extend this list, the two books that I would put in are Jagdish Bhagwati and Arvind Panagariya’s 
India’s Tryst With Destiny and Jean Drèze and Amartya Sen‘s An Uncertain Glory: India and its Contradictions. Another book that I would like to add to the list Neil Irwin’s The Alchemists – Inside the Secret World of Central Bankers.
An edited version of this article appeared on on December 27,2013
 (Vivek Kaul is a writer. He tweets @kaul_vivek)

The Complexity of Money

indian rupees

Vivek Kaul

Over the last two weeks I have come to realise that people share a very complex relationship with money. A friend of mine who makes more than Rs 50 lakh a year, owns two homes, a couple of cars, and holidays abroad in exotic locations ever year, has constantly been cribbing about the 10% increment he got after the yearly performance appraisal.
“So were you expecting more?” I asked him. “Not really. The company hasn’t been in a great shape, so even 10% is very good. The average increments this year have only been around 6-7%,” he replied.
“So then what is the issue?” I asked.
“Well you know,” he said, such and such person, “who I tend to compete with got an increment of 11%.” This difference of 1%(actually I should be saying 100 basis points, but that sounds too technical) had been bothering him no end.
I tried telling him that his salary was nearly 50% more than the other person he was talking about. “So in absolute terms your increment is greater than his,” I explained.
“Yeah. But it would have been better if I made more in percentage terms as well,” my friend replied.
What this little story tells us is that people share a complex relationship with money. How else do you explain what my friend earning more than Rs 50 lakh per year was going through? There is no doubt that money motivates. An experiment carried out in 1953, showed just that. As Margaret Heffernan writes in 
Wilful Blindness – Why We Ignore the Obvious At Our Peril “Patients were asked to hang on horizontal bars for as long as they could; most could take it for about 45 seconds. When subjected to power of suggestion and even, in some cases, hypnosis, they could stretch to about 75 seconds. But when offered a five dollar bill the patients managed to hang from the bar for 110 seconds.”
So money does motivate people to work longer. And in many organisations that is equivalent to working harder. But as Heffernan puts it “money has a more complex influence on people than just making them work longer.”
Experiments carried out by behavioural psychologist Dan Ariely suggest that the less appreciated we feel our work is, the more money we want to do it. Ariely gave research participants a piece of paper that was filled with random letters. The participant were divided into three groups, and had to find pairs of identical letters on the sheets of paper given to them and mark them out.
While returning their papers, the the participants in the first group wrote their names on the sheets of paper and handed it back to the experimenter. He took the sheet, looked it over, said “Uh huh” and put it in a pile.
The participants in the second group did not write their names on the sheets of paper. The experimenter took their sheets without looking at them and without saying anything. He placed them in a pile. The sheets handed over by the participants of the third group were immediately shredded, as soon as they handed them over.
In order to be a part of another round of the experiment, those in the third group whose sheets were shredded wanted twice the amount of money in comparison to those in the first group, whose sheets were simply put in a pile. Those in the second group whose work was saved but ignored wanted as much as participants of the third group whose sheets were shredded.
As Ariely put in a blog on “Ignoring the performance of people is almost as bad as shredding their effort before their eyes.” And when that happens people want to be paid more.
The next question that crops up is that does paying people more money make them work smarter?This question is of utmost importance given the fact that some of the highest paid people in the world brought it to the verge of economic collapse a few years back in late 2008.
Ariely and a group of researchers tested this out in an experiment they carried out in India (to control the costs involved in running the experiment). In this experiment, research participants were asked to play memory games and assemble puzzles while they were throwing tennis balls at a target. One third of the participants were promised one day’s pay, if they performed well. Another one third were promised two weeks pay. And the final third were promised five months pay (the real reason behind conducting the experiment in India), if they did well.
The results were surprising. Those who were promised a day’s pay and two weeks pay as a financial reward, performed equally well. But those who were offered five months pay, performed the worst.
Ariely explained this surprising finding in an article he wrote for 
The New York Times. Very high financial rewards act as a double edged sword, Ariely wrote. “They provide motivation to work well, but they also cause stress and preoccupation with the reward that can actually hurt performance.”
Of course this in no way means that people don’t want to paid more, even though the prospect of earning more money starts hurting their performance beyond a point. Also, more money doesn’t always make people happier.
Research carried out by economist Angus Deaton and psychologist Daniel Kahneman (who won the Noble Prize in economics) in 2010 found that more money makes people happier upto an income of $75,000 per year. As Kahneman writes in 
Thinking, Fast and Slow “The satiation level beyond which experienced well being no longer increases was a household income of $75,000 in high cost areas (it could be less in areas where the cost of living is lower). The average increase of experienced well-being associated with incomes beyond that level was precisely zero…Higher income brings with it higher satisfaction, well beyond the point at which it ceases to have any positive effect on experience.”
So earning more money is not always directly proportional to greater happiness. But then why does money continue to bother people (as we saw in my friend’s case) so much? Nassim Nicholas Taleb perhaps has an explanation for it in 
Anti Fragile “The worst side of wealth is the social association it forces on its victims, as people with big houses tend to end up socialising with other people with big houses.”
Beyond a point the need for more money is an essential part of being seen at the top of the rat race. More money is also equated with higher intelligence and leads to greater respect from the society at large. As John Kenneth Galbraith, one economist who thoroughly deserved a Nobel prize, but never never got it, put it in 
A Short History of Financial Euphoria: “Individuals and institutions are captured by the wondrous satisfaction from accruing wealth. The associated illusion of insight is protected, in turn, by the oft-noted public impression that intelligence, one’s own and that of others, marches in close step with the possession of money.” Hence, money after a point becomes a measure of intelligence and success and that creates problems of its own.
The article originally appeared in the Wealth Insight magazine dated August 1, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek) 

What the humble electric toaster tells us about the global financial system

Vivek Kaul
Tim Harford writer of such excellent books like The Undercover EconomistThe Logic of Life and Adapt, once wrote a blog discussing the perils of a design student trying to make an electric toaster from scratch.
Harford discusses the experience of Thomsan Thwaites, a postgraduate design student, who decided to embark on what he called “The Toaster Project”. “
Quite simply, Thwaites wanted to build a toaster from scratch,” writes Harford.
The toaster was first invented in 1893 and is a household good in Great Britain and almost all other parts of the developed world. It costs a few pounds and is very reliable and efficient. But building it from scratch was still not a joke. “To obtain the iron ore, Thwaites had to travel to a former mine in Wales that now serves as a museum. His first attempt to smelt the iron using 15th-century technology failed dismally. His second attempt was something of a cheat, using a recently patented smelting method and a microwave oven – the microwave oven was a casualty of the process – to produce a coin-size lump of iron,” writes Harford.
Next Thwaites needed plastic. Plastic is made from oil. But Thwaites never made it to an oil rig. He finally settled at scavenging plastic from a local dump, which he melted and then moulded into a toaster casing.
More short cuts followed. As Harford writes “Copper he obtained via electrolysis from the polluted water of an old mine… Nickel was even harder; he cheated and bought some commemorative coins, melting them with an oxyacetylene torch. These compromises were inevitable.”
A simple toaster has nearly 400 components and sub components which is made from nearly 100 different materials. So imagine the difficulty if everything had to be procured and made from scratch. As Thwaites told Harford “I realised that if you started absolutely from scratch, you could easily spend your life making a toaster.

Thwaites finally did manage to make an electric toaster, but it was nowhere as good as the ones easily available in the market. As Harford writes “Thwaites’s home-made toaster is a simpler affair, using just iron, copper, plastic, nickel and mica, a ceramic. It looks more like a toaster-shaped birthday cake than a real toaster, its coating dripping and oozing like icing gone wrong. “It warms bread when I plug it into a battery,” he says, brightly. “But I’m not sure what will happen if I plug it into the mains.””
So dear reader, you might be reading this piece sitting in the air-conditioned comforts of your office on an ergonomically designed chair (hopefully). Or you might be sitting at home reading this on your laptop. Or you must be travelling in a bus/metro/local train hanging onto your life and reading this on your android smartphone. Or you must be waiting for your aircraft to take off and must be quickly glancing through this on your iPad.
The question that crops up here is that how many of the things mentioned in the last paragraph, would you dear reader, be able to make on your own? The answer is none. So then where did all these things that make life so comfortable come from?
Dylan Grice answers this question in the latest issue (dated March 11, 2013) of the
Edelweiss Journal. “So where did it all come from? Strangers, basically. You don’t know them and they don’t know you. In fact virtually none of us know each other. Nevertheless, strangers somehow pooled their skills, their experience and their expertise so as to conceive, design, manufacture and distribute whatever you are looking at right now so that it could be right there right now.”
Estimates suggest that cities like London and New York offer ten billion distinct kinds of products. So what makes this possible? “Exchange. To be able to consume the skills of these strangers, you must sell yours,” writes Grice. It is impossible for a single human being to even make something as simple as a toaster from scratch. But when many people specialise in their respective areas and develop certain skills, only then does a product as simple as a toaster become possible.
Let me take my example. I sell my writing skills. With the compensation that I get I buy goods and services that I need for my existence. From something as basic as food, water and electricity, which I need to survive or comforts like buying a washing machine to wash clothes, a refrigerator so that I don’t need to cook on a day to day basis, hiring a taxi to travel in or catching the latest movie at the local multiplex.
At the heart of any exchange is trust. As Grice puts it “we must also understand that exchange is only possible to the extent that people trust each other: when eating in a restaurant we trust the chef not to put things in our food; when hiring a builder we trust him to build a wall which won’t fall down; when we book a flight we entrust our lives and the lives of our families to complete strangers.”
So for any exchange to happen, there needs to be trust. But trust is not the only thing that facilitates exchange. There is another important ingredient. And that is money.
Money has been thoroughly abused all over the world in the aftermath of the financial crisis which broke out officially in September 2008. Central banks egged on by governments all over the world have printed money, in an effort to revive their respective economies. The idea being that with more money in the financial system, banks will lend more which will lead to people spending more and that will help revive the economy.
But all this comes with a cost. “
So when central banks play the games with money of which they are so fond, we wonder if they realize that they are also playing games with social bonding. Do they realize that by devaluing money they are devaluing society?” asks Grice.
Allow me to explain. In the aftermath of the financial crisis, government expenditure all over the world has shot up dramatically. This expenditure could have been met by raising taxes. But when economies are slowing down this isn’t the most prudent thing to do. The next option was to borrow money. But there was only so much money that could be borrowed. So the governments utilised the third possible option. They got their central banks to print money. Central banks used this printed money to buy government bonds. Thus the governments could meet their increased expenditure.
When a government increases tax to meet its expenditure, everyone knows who is paying for it. It’s the taxpayer. But the answer is not so simple when the government meets its expenditure by printing money. As Grice puts it “
When the government raises revenue by selling bonds to the central bank, which has financed its purchases with printed money, no one knows who ultimately pays.”
But then that doesn’t mean that nobody pays.
With the central bank printing money, the money supply in the financial system goes up. And this benefits those who are closest to the “new” money. Richard Cantillon, a contemporary of Adam Smith, explained this in the context of gold and silver
coming into Spain from what was then called the New World (now South America).
As he wrote: “
If the increase of actual money comes from mines of gold or silver… the owner of these mines, the adventurers, the smelters, refiners, and all the other workers will increase their expenditures in proportion to their gains.” These individuals would end up with a greater amount of gold and silver, which was used as money, back then. This money they would spend and thus drive up the prices of meat, wine, wool, wheat etc. This rise in prices would impact even people not associated with the mining industry even though they wouldn’t have seen a rise in their incomes like the people associated with the mining industry had.
So is this applicable in the present day context?
The money printing that has happened in recent years has benefited those who are closest to the money creation. This basically means the financial sector and anyone who has access to cheap credit. Institutional investors have been able to raise money at close to zero percent interest rates and invest them in all kinds of assets all over the world. As Ruchir Sharma writes in Breakout Nations – In Pursuit of the Next Economic Miracles:
What is apparent that central banks can print all the money they want, they can’t dictate where it goes. This time around, much of that money has flown into speculative oil futures, luxury real estate in major financial capitals, and other non productive investments…The hype has created a new industry that turns commodities into financial products that can be traded like stocks. Oil, wheat, and platinum used to be sold primarily as raw materials, and now they are sold largely as speculative investments.”
While financial investors benefit, the common man ends up paying more for the goods and services that he buys, something that is not always captured in the inflation number. As Grice puts it: “
So now we know we have a slightly better understanding of who pays: whoever is furthest away from the newly created money. And we have a better understanding of how they pay: through a reduction in their own spending power. The problem is that while they will be acutely aware of the reduction in their own spending power, they will be less aware of why their spending power has declined. So if they find groceries becoming more expensive they blame the retailers for raising prices; if they find petrol unaffordable, they blame the oil companies; if they find rents too expensive they blame landlords, and so on. So now we see the mechanism by which debasing money debases trust. The unaware victims of this accidental redistribution don’t know who the enemy is, so they create an enemy.”
And people all over the world are doing a thoroughly good job of creating “enemies”. “The 99% blame the 1%; the 1% blame the 47%. In the aftermath of the Eurozone’s own credit bubbles, the Germans blame the Greeks. The Greeks round on the foreigners. The Catalans blame the Castilians. And as 25% of the Italian electorate vote for a professional comedian whose party slogan “
vaffa” means roughly “f**k off ” (to everything it seems, including the common currency), the Germans are repatriating their gold from New York and Paris. Meanwhile in China, that centrally planned mother of all credit inflations, popular anger is being directed at Japan.”
This is only going to increase in the days and years to come. As Grice writes in a report titled
Memo to Central Banks: You’re debasing more than our currency (October 12, 2012)History is replete with Great Disorders in which social cohesion has been undermined by currency debasements…Yet central banks continue down the same route. The writing is on the wall. Further debasement of money will cause further debasement of society. I fear a Great Disorder.”
The article originally appeared on on March 21, 2013 

Vivek Kaul is a writer. He tweets @kaul_vivek