6 October 2022
By Robert Kilconner
It has certainly been a confusing week in terms of the markets. With the government’s failure to produce a full financial plan making me feel as nervous as everybody else, I decided to have a look at how sterling had moved against the dollar. Well, good news as far as it went, a small percentage increase. Then I looked further down the BBC website and was astonished to see that the dollar had also increased against sterling. For a moment I was nonplussed. How had the two currencies increased against each other and, if they had, did that make it more or less expensive to go on holiday in the USA?
It was all very mysterious and it still is. Presumably the measurements were taken over different periods and those who use the table are aware of the complex algorithm by which it operates. Except for me, of course. The only knowledge I gained from looking at the table was that I didn’t understand it, and probably had never understood it in the past either. In a sense of course it doesn’t matter because I have no real grasp of the various factors which push interest rates up and down so even full information as to the actual movements would not tell me much useful. Still, perhaps I will be more careful before commenting expansively on the exchange rate after the third brandy at Islington dinner parties.
The trouble is that it isn’t just the exchange rates which I don’t understand. How do crypto currencies work, for example? Oh yes, you can find plenty of people who will explain how the value of a currency is merely a matter of confidence but can they really clarify what is involved in mining and why it requires such immense computer power? Well, try them and see.
It all gets worse when you step into the technical arena. Nuclear fission and nuclear fusion, for example. One involves pulling atoms apart the other involves combining them together. Both processes seem to release energy so maybe you could take a single atom and use it as a power generation yo yo. Pull it apart and, zing, energy is released. Put the bits back together and, bang, more energy is created. It really doesn’t sound right, does it, so presumably what is put together is not quite the same as what is pulled apart? Okay, but answer me this. If someone zips off into space on a rocket at a speed approaching the speed of light they will, according to the theory of relativity, get older faster (or is it slower?) than people still sitting on the planet. That seems easy to understand if one has seen enough sci-fi films, but why is it the man on the rocket who ages faster or slower? His speed relative to those on earth is the same as the speed of those on earth relative to him. Why haven’t they got older faster or slower too? It’s just like the wretched interest-rates again.
Now one tends to put all this confusion down to modern thinking, too subtle for old minds; but that won’t really do. The theory of relativity has been with us for almost a century and anyway there have always been problems which no one normal could understand. What was it that Palmerston said of the Schleswig-Holstein question?
“Only three people have ever really understood the Schleswig-Holstein business – the Prince Consort, who is dead – a German professor, who has gone mad – and I, who have forgotten all about it.”
It is sometimes reassuring to know that although the problems may change, our capacity to deal with them remains fundamentally the same.