It values everything, but costs nothing.

Child's play

Where money comes from is unknown to most people, including most who work in the world's financial centres. If you asked most finance ministers where money comes from they would be loath to admit to the truth: that they are not really sure. People rarely think about it. Like many things in life, using money doesn't usually require any understanding of how it works or even where it comes from. My young daughter is no different. She would prefer it if I was a policeman. “Hedge fund manager” doesn't mean much to her. But our system of money and banking has one property that intrigues even young and impatient minds: it functions mysteriously, almost magically; its origins are clandestine. The banking system is usually stable and disregarded, even though it ties all our activity together. It is intrinsically fragile because it depends on confidence, although no one is really conscious of this. Most mysteriously of all, when destabilized by panic – our sudden awareness of this fragility – it is usually costless to stabilize, requiring little more than pressing a button on a keyboard and speaking a few words. That is why it is easier to explain money's origins to children: it is too simple for adults to accept.

My daughter likes magic and mystery, so I try explaining banking to her. I leave hedge funds for another occasion, when I can think of a way to cast them in a positive light.