A book excerpt from Slow Money, by Woody Tasch

Excerpts from "Reconnoitering" in Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered by Woody Tasch. Reprinted with permission of the publisher, Chelsea Green Publishing.

Woody Tasch | November 2008 issue

“Money only knows one speed,” the scion of one of America’s wealthiest families said during a public discussion. “Money only goes fast, faster, fastest. Try to slow it down, and you’ll just end up with sloppy investing.”

To which someone responded, “I couldn’t agree more with the first half of your statement. Left to its own devices, money will go fast, faster, fastest. It is up to us to design ways to slow it down. That would not be sloppy investing, in my book. That would be wonderfully intelligent investing.”

In relation to what, in comparison to what, would slow money be . . . slow?

Consider this: From the beginning of human history to the year 1900, the world economy grew to $600 billion in annual output. Today, the world economy grows by this amount every two years; global output reached $66 trillion in 2007. Here are some of the numbers:

$3 trillion circulate through currency markets every day.
Trading volume on the New York Stock Exchange, which averaged 3 million shares per day in 1960, crossed the 100-million share mark in 1982, the billion-share mark in 1997, the 2-billion-share mark in 2001, and the 5-billion-share mark in 2007.
Revenues of Wall Street broker-dealers rose from $20 billion in 1980, to $76 billion in 1990, to $325 billion in 2000.
To make the list of the top twenty-five hedge-fund managers in 2002 required personal compensation of at least $30 million; in 2006, $240 million.
A share of Berkshire Hathaway that cost $8 in the 1960s was worth over $100,000 in 2007.
Mickey Mantle’s salary for the 1968 season was $100,000; in 2007, Roger Clemens got paid $20,000 per pitch.
In 1982, the world had 12 billionaires; in 2000, 298; in 2008, 1,125 with a combined net worth of $4.4 trillion.
In the United States, the wealth gap has nearly doubled since 1980, hitting levels not seen since the 1920s. The top 0.1% of Americans collectively enjoy almost as much income as the bottom 50%, with the average income in the top group 440 times that of the bottom half.3 In China, the wealthiest 10 percent own more than 40 percent of all private assets, and inequalities are widening.4 On a global scale, the richest 2% own more than half of all household wealth.
U.S. foundation assets grew from $32 billion in 1980 to $550 billion today.
The U.S. venture capital industry exploded from an average of $3 billion invested per year in the 1980s to a peak of $100 billion invested in 2000, and then settled in the range of $20 billion per annum, with this money invested in three or four thousand high-tech companies out of the more than 500,000 new corporations started every year—that is, invested only in those with a shot at being “the next Google,” growing to billions of dollars of market capitalization in a few years.
We have passed the billions-of-computer-instructions-per-second barrier, on our way, by 2015, to the rarified atmosphere of ten tera-instructions per second.

The analogy of a rocket accelerating to reach escape velocity from Earth’s gravitational field has some relevance. Venture capital targets companies that are ready to “take off.” But this is only a small part of the overall acceleration in financial markets:

Computerization mothered a new dimension of financialization. . . . Just as rocket science took men into space in the 1950s, another exotic mathematics—in this case, capital asset pricing, options theory, and price and volatility models—took finance into a hitherto unexplored galaxy of profits. Turning money into equations and digital impulses—shifting to the megabyte standard, in economic journalist’s Joel Kurtzman’s term—allowed it to jump time and geography, creating the transnational netherworld in which traders in New York, London, and Paris warred electronically over Belgian francs and Thai baths and global arbitrage fed on shoals of cyberdecimals.

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