To me, what is at the root of money in all its various forms is agreement. Money is essentially about agreements between parties. You can see it written on the bank notes - called promissory notes because they ‘promise to pay the bearer’. A promise is an agreement. A bank agrees to deliver on demand to whoever has the note. If I’m right, traditionally what was to be delivered on demand was gold which the owner would have previously deposited with the bank for safe-keeping. The promissory note vouched for the fact that the gold was being held and would be given back any time on demand. Over time, the gold part of the deal became less important and what mattered more was the promise to deliver, to deliver nothing really, as the notes themselves could be traded and used to pay debts without any actual gold having to change hands. Notes became valuable in themselves as enablers which allowed for infinite transactions to take place. The basis of the promissory agreement was trust, trust that the note represented something meaningful that could settle a debt with no further questions asked. Thus, I am arguing that the essential factor at the heart of money, and the system that makes and maintains the agreements (banking), is trust.

Consider borrowing: A bank loan is simply an agreement which allows a transaction to take place quicker than it otherwise would. By borrowing one is able to access goods or services now rather than waiting till sufficient promissory notes have been gathered by some other means. One large promissory note in the form of a debt agreement allows a trade of some kind to go ahead. In this sense the loan is just a different kind of agreement than having cash is. All credit cards, bank loans, mortgages etc are no different to cash in the sense that they are all basically agreements. Loans are agreements based on future commitments and as such contain a strong trust element that the borrower will be able to fulfil the terms of the commitment in some appropriate way. The lender trusts that the future will be secure enough for the individual, the wider economy and the society in general for those terms to be met. Debt is now widely available where it never used to be. More and more people can join in and participate in transactions for the procurement of goods and services then ever before.

We constantly hear complaints about this, the easy securing of debt, and that it is a bad thing. I think it's no bad thing but effectively an extension of the franchise. Not everyone agrees. Recently I heard someone on the radio say credit should be made more difficult in order that crime be made more difficult. This was with respect to identity fraud, one of the myriad examples of abuse of the agreement system. This argument was, in other words, advocating the restriction of freedom to enter into agreements in order to stop criminals. This, another of these poor responses to a problem that jeopardises the legitimate in order to sanction the illegitimate. Those who would suffer from restricting credit are the ones who probably need it most that they might live some kind of quality of material life consistent with the modern age. The system already challenges these people by having them pay more for making the agreement. Another idiot response. Credit is already easily got by those who don’t really need it and made more difficult for those who do. One of the benefits of widening the credit franchise is that it mitigates against such inequalities which are already widespread enough. Participation is allowed where it would not have been the case for past generations. I consider this an example of progress in the modern era.

In a credit arrangement both parties take a risk. Both suffer if the arrangement fails. The lender loses the money and the borrower faces repercussions. So there’s a risk element and a trust element all tied up in an agreement. This is quite in-keeping with a world working well, delivering as it should, not an example of a kind of moral decadence at all as many seem to believe. No doubt the man on the radio was harbouring such a view. To roll back such an advantage ostensibly to deal with the rogue element is retrograde.