Fraud – it's all a cruel trick anyway

The ‘world’s biggest frauds’ were documented in a television programme last night. The narrator detailed how the heads of WorldCom and Enron had been engaged in covert and unpleasant deals. These deals, it claimed, were designed to push up their companies’ share prices. The company heads were given options as incentives. The value of these options increased with company share price, so the heads would try to artificially boost the share price to pocket more cash.

Enron made money out of moving gas about or something. The narrator showed how money was moved from Citibank to a bogus company. The money was then used by the bogus company to buy gas from Enron – seemingly increasing Enron profit and turnover, and hence boosting Enron share price. The money was later given back from Enron to the bogus company, and from there to Citibank, with interest. The narrator explained that most people would understand this as a loan, whereas these transactions were actually fraudulent. The transactions were disguised as gas sales. The narrator complained that money changed hands without gas changing hands. He continued, saying nothing was actually produced, yet something was sold. This was a very bad thing.

This is where I take issue with the story. The world is full of people making money without producing anything. Look at currency traders. As far as I can see, their job is to make money by swapping things back and forth – yen in one hand and dollars in the other. How ridiculous is that? Imagine trying to teach children about money:

“Okay class, imagine many centuries ago, you could swap five ducks for one pig. Money is like that only it’s green. So today, this little girl can give this boy five ducks and the boy will give back fifty pieces of green paper to this litle girl. Money is bits of green paper. Now. Some people are allowed to print green paper…”

“Miss, can I print green paper?”

“No, Raphael, only certain countries’ banks are allowed to print money…”

“Miss, can I be a country?”

“No, Margeret, you can’t be a country..”

“Miss, the Vatican’s a country, and my dad says that only the Pope and his cronies live there.”

“Barnaby, you’re dad is almost right, but before you ask, you can’t be Pope…”

“Can I be Pope, miss?”

“No, Margeret, only old men can be Popes. Back to money. Money is about allowing people to trade…”

“My dad’s a trader. He makes money out of swapping yellow money for green money. Did people use to do that centuries ago? Cos if they did, they could just keep swapping ducks and pigs. So if a man took five ducks, he could get one pig. Then swap that for six ducks, and then swap that for two pigs. Then those two pigs could be eleventy ducks…”

“Not exactly, Margeret…”

“Does there have to be two people to do the swapping, or could one man do it on his own in a field? He could start in the morning in his field with one pig, and by noon-time, he could have generated hundreds of pigs. Where do they all come from?”

“No there has to be more people for that to work. You also need a market.”

“What’s a market miss? My mummy says that a market is where some people go in with six ducks, and come out with only four ducks.”

“Yeah, my daddy says that markets need losers for there to be winners, and nowadays, we call them share holders.”

“Exactly Gemima. That’s why your teacher is an anarcho-syndicalist.”

Boycott the dollar I say. See what happens.

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