How banks make money by borrowing it from the future
Tall ships and tall kings
Three times three
What brought they from the foundered land
Over the flowing sea?
Seven stars and seven stones
And one white tree.
The “sevens stones” in that Rhyme of Lore refer to the palantíri. But these were no ordinary stones! Perfect spheres of dark crystal, a palantír looks almost like solid glass. They were made by the Noldor, the High Elves, in the land of Eldamar.
The Men of old used the palantíri to see far off, and to converse in thought with one another. Or so explained the wizard Gandalf, in J.R.R. Tolkien’s The Lord of the Rings. In that way, he said, they long guarded and united the realm of Gondor.
But when one of them fell into the hands of the Enemy, the same tools that had protected the country now began working for its downfall.
“Perilous to us all are the devices of an art deeper than we posses ourselves.” Gandalf was referring to the palantíri, but he could well have been speaking about Palantir Technologies, a 13-year-old company aiming to prevent crime before it happens.
Palantir is basically a data-mining firm. They watch everything that people do, and try to predict what they’ll do next. They try to calculate what you’re going to do in the future.
Why would one want to see in the future? What’s the point of knowing what’ll happen if you’re going to know it anyway, after a while? Well, there are two reasons people usually want to see the future: to be ready for what’s going to happen, or to change it.
For Palantir Technologies, it’s a mixture of both. They want to find out if you’re planning a crime, and then work to stop you from actually doing it. So they monitor various aspects of your life, such as where you’ve travelled, who you’re sending money to, how fast you drive your car. Then, they tie all that information together, and try to find patterns.
Palantir’s customers base includes many government agencies, mainly from the US. But they also have another branch, Palantir Metropolis, for hedge-funds, banks and financial service firms who want to outsmart each other.
People fear Palantir could become like ‘Precrime’ in Philip K. Dick’s story Minority Report. There, no crime ever happens. People are arrested and jailed before they do anything; often before they even know they were going to do it.
But how does Precrime — or Palantir — know what people are going to do? Their predictions may have been wrong. Perhaps that person wasn’t going to be a criminal at all, but there’ll be no way of knowing.
Palantir says that’s not exactly how they operate. Their work with the Los Angeles Police Department, for example, focuses on when and where a crime will happen next, so the police forces in that area can be ready. Meanwhile, its official example is more about find out more about a criminal after they already know he’s up to something.
The company has no office, instead having a “SCIF” — a “sensitive compartmentalised information facility” — to help make sure their data doesn’t, like the palantíri of Middle-Earth, fall into the wrong hands.
But Palantir uses machine-leaning in its algorithms. That means we’ll never know exactly how the algorithms work. If they are wrong or biased in any way, there’ll be no way of finding out.
Wouldn’t it be nice if we could let the crimes happen, watch who did them, and then go back and make the crimes un-happen? Unfortunately, that would need time-travel — something that, at the moment, we cannot do.
Actually, people can time travel. In fact, they’re always doing it: travelling into the future. But they can’t control it, and it always happens at the rate of one second per second. When people speak of time-travelling, they mean travelling at different speeds. Also, they want to travel into the past as well as into the future.
Needless to say, nobody we know of has ever managed to travel into the past. In fact, we’re not even sure how it would work. Will it be like Mark Zuckerberg and Rachel Franklin’s virtual-reality tour of flooded Puerto Rico, where they can go around to places but can’t actually change what’s happening? will things-of-the-past go through you-of-the-future as if you don’t exist? Or will you be very much there, able to touch and feel and move things as you normally would?
If it’s the latter case, be careful. As Ray Bradbury describes in his short story The Sound of Thunder, even a small change in the past can drastically change the future. What if the rock you displaced led, over the years, to a landslide starting a few seconds earlier? And the people who narrowly missed it don’t escape this time?
What if one of those people happened to be you?
It’s not about you preventing your parents from meeting so you could never have been born: the smallest of changes can have a butterfly effect — even if what changed is just a butterfly. Think of all the things that just-about happened, and all the things that just-about didn’t. What if things were just a bit different? They could be changed for the better, or for the worse.
The story also has a lesson for us, here, right now: What you do in the preset could have great consequences in the future.
But most time-travel stories don’t worry about such things. They allow people to do what they want, even going into complicated relationships like in the movie Predestination—and the short-story by Robert A. Heinlein that is was based on, which goes by the unusual title of “ — All You Zombies” (quotes included).
Those stories can run into other problems. Suppose you go into the future, and get some cool new idea from there. You come home and tell everyone about it, and they all start using it because you told them. Even in the future, they continue to use the idea that you told them about. So then, where did the idea come from?
Regular readers of Calvin and Hobbes will remember the time when Calvin decided to go to the future to get his homework. It was now 6:30, so all he had to do was go to 8:30, his bedtime, and get it from his future self who would have finished writing it by then. Except that, being Calvin, his 8:30 self hadn’t finished the work either.
While people can’t send physical things back and forth in time, there is something that they send, in a way. That thing is: money.
They can do that because money is not a physical thing. It doesn’t have to follow the rules of space and time. It only has to follow the rules that people make up And, though they didn’t realise it, people have made rules that allow money to travel in time.
It all starts when a bank gives somebody a loan.
The bank, of course, has many accounts, which many people have put their money into. But for now, let’s pretend this is a very small bank, with only one small account. And that small account is owned by a very small person: an aphid.
Aphids are small creatures that live on plants. They suck the plant juices to make something called ‘honeydew’, which other insects like to eat. Ants like it so much that some species ‘herd’ the aphids like cows or sheep, and ‘milk’ them for honeydew when they’re hungry.
But this aphid is the entrepreneurial type. Instead of letting ants take all his honeydew, he makes them pay for it. And, over the time, he’s earned some money: 100 bucks (not to be confused with 100 bugs). Bucks have their own special symbol: β.
To keep it safe, our Aphid has just put his 100 bucks into the bank. The bank has β100 in notes, but it’s Aphid who owns the money. So let’s make out a list of who owns the money, and who has the notes.
β100 owned = β100 in cash. All OK.
That’s all very well, but why go into so much detail? Stay with me for a moment, because here comes someone who wants to borrow money. Let’s call him Beetle.
The bank gives β50 in cash for Beetle to borrow. Does Beetle own the money? Let’s say “no”, because he’ll have to pay it back later.
So everyone together owns β100, and there’s β100 of cash in total. All well and good.
But Beetle didn’t borrow the money for nothing. He borrowed it to pay someone — in this case, Caddisfly, for providing house-building services. Now, Caddisfly does own the β50, because she earned it.
But now there’s a mismatch! Everyone together owns a total of β150, even though the actual cash only comes to β100. Where did that extra fifty come from‽
The problem is solved when Digger Wasp flies in, with a β50 from outside to pay Beetle. Beetle returns that fifty to pay back his loan, and everything works out.
Everyone has β150, and there’s a total of β150 in cash. It matches. But there’s still the question remaining: in the time before Beetle got paid, where did the extra money come from?
The answer? It came from the future!
The bank’s job was to keep Aphid’s money safe. So how could it lendh out some of that money to Beetle? Probably because it knew the money would eventually come back. But, until that time, thebank didn’t have all the money in cash. It was using money it hadn’t yet got.
You can also look at it another way. You can say that the bank was only helping the Beetle, and it was Beetle who was spending money that he hadn’t yet got.
But from the money’s point of view, everything’s perfectly clear. It went from Digger Wasp to Beetle to the bank, to Beetle again, and on to Caddisfly. Only, it travelled in time somewhere in between, so some of the things seemed to happen before the others. The money was also in two places at the same time: with Beetle who was paying Caddisfly, and with Digger Wasp who was yet to pay Beetle.
Neil Gaiman once wrote a Dr. Who story called Nothing O’Clock. It describes the Kin, a creature — or type of creature, depending on your perspective.
There is actually just one Kin. But it goes back and forth in time, looping back to the same moments. Just like Calvin could meet his future self, so the Kin goes to meet its slightly-future self, and its more-future self, and its even-more-future self, going on till it has as many copies of itself as it wants. It could continue, if it liked, to fill the whole world!
The money in the bank was working like that, too.
Usually, even when loans are paid back, there are always more being taken out. So there’s always more money in the world than actually exists in cash. People imagine it’s the government that makes money, by printing banknotes. But most money is actually made by banks, who send money travelling through time by giving it out as loans.
Most countries have a rule that the bank should have a certain amount of its money — say, 10% — in cash at all times. So there’s a limit to how much money there can be; it can’t go on forever like the Kin. But still, there’s many times more money in the world that what governments print.
Looking for more? The time-travel in this article is just a start. To read more about money and how it travels in time, see the follow-up piece:
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