Interview About Money

Following is the recent interview with Mr Kouba Molenaar from Abang-abang Leman.

The interview was conducted in Malaysian English


FR (me): Can you tell me how to make money?
KM (Kouba Molenaar): First, you need a piece of paper and a scissor. Then you cut it into wallet size shape and draw good picture of landmark/s. If possible also add picture of well known people. Remember to draw on both side and possible use color. Now, the hardest part is to get Zeti or Ben to sign the money.

FR: Err... I meant how you get the "real" money not to make one...

KM: ooo... you need to ask carefully young man. Well illegally you can ste..

FR: Wait... tell me the legal way please..
KM: ....al, haa... the legal way is only two ways which are someone give it to you or you involve in business.

FR: But, do I have to open my own company?
KM: NO... what I meant by "in business" is whether you help someone in the business or you have your own business.

FR: Helping someone in business? how about getting money from bank or loan?
KM: That's considered helping bank laa... you think you get money from bank is free huh? Does not matter either you investing or borrowing are consider helping the business. But be careful either investing or borrowing, you may get burn out.

FR: How does the bank lending money can help them in business?
KM: Aiya... kawan (friend), look here when you borrow from bank, bank will charge you interest or what they called.. interest fee which they actually interested in your money. You have to remember the bank also created money, finance people called it money creation.

FR: huh? money creation, so bank print their own money?
KM: Yes in some country like Hong Kong you can find money printed by HSBC and Standard Charted. But in Malaysia cannot la.. only Bank Negara can print money.

FR: So, what do you mean by creating the money?
KM: Well let say you deposit the money in the bank, say 10,000 the banks are allowed to lend the money in 80% of the depository money to be loan out which is 8,000

FR: Is ok what... that how bank make money
KM: OK? Let say when the depository want back their money while the loan is not fully paid or the people cannot payback the loans...

FR: Right. Sub prime....
KM: not only sub prime crisis, the Great Depression, the American Latin and so on. When the depository want back their money and the bank cannot afford to provide it to them, the bank go into bankruptcies. Where do you think the word of "bank"ruptcies come from?

FR: Really meh?
KM: I did my project paper in Global Financial Crisis la.... this what they call banks run in Great Depression. Just look at my other brother Lehman, that's what happen to him.

FR: I thought the money is back up by Gold
KM: Aiya.. you don't live in 70's anymore.

FR: What?
KM: After WWI, most of the country tried to backup their currency using gold. So, the system was created by backing up the currency with gold or exchangeable with gold bullion

FR: So the money is still backup by gold?
KM: Not any more, let me finish la......... The gold bullion exchange was under Bretton Woods system where US dollar can be converted into 1/35 once of gold. But the system collapsed in 1970 and the money now only back up by "promise" from the central bank.

FR: How about our reserve?
KM: That is to control the value of the currency

FR: That is why you need "someone" to sign on the money like the cheques
KM: Not someone... people like Zeti or Ben can only sign it. If you put your signature, it don't have any value.

FR: So in other words, it is just piece of paper that have a value which backup by the government
KM: Yes, it is called Fiat Money. So if you have any argument about money, just think that it just piece of paper

FR: So, we do not need money
KM: Long time ago people still live without money, but today you can see many people become slave of money, quarrel about money, yet we do need money since we live in the world that been created around this system

FR: But don't hard up for the money right?
KM: Now you get it son, you just need to know how the game of money work and how it evolve. That's why I start with money created using piece of paper and scissor.

The Interview will continue to Part 2 (about investing)