MONEY is the root of much evil. That’s not St Paul talking about the love of money. It’s the carefully considered opinion of the economics profession.

For centuries, it has at once captivated and appalled economists. They understand it is necessary and that it can hold the economy together but they also know it is extremely dangerous.

I was delighted to see that The National has given the Scottish Currency Group space to set out again the arguments for Scotland having its own currency if she is to become independent and then succeed as a country, the Group’s contributions to laying the path to independence are inevitably technical but they have gradually moved the argument towards a realistic appraisal of what needs to be done.

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Currency is concrete – a £20 note in your wallet, or a credit balance in your bank account. Money is much more slippery. Trying to get hold of it is like trying to catch a bar of soap in a bath.

It sits between the “real” economy and the “financial economy”. In the real economy, people work for a living, shop in supermarkets, have families, buy cars, elect politicians to provide public services, and take holidays abroad. For economists, the problem is how society can do as well as it can, given limited resources and capabilities. Most of the time, economists can forget about money.

The financial economy is very different from the real economy. There is still plenty of buying and selling and people want to do as well as possible by acquiring financial assets. These assets are ultimately legal rights to income in the future.

Large financial institutions pay very clever people obscenely large amounts of money – does that make me sound jealous? – to work out new ways of creating, acquiring, managing, and disposing of these rights.

It sounds complicated. And often it is. During the financial crisis of 2008, it became clear that almost no one in the financial economy had any idea of the true value of the financial assets they owned.

Money moves between these two worlds. It is a financial asset. But unlike other financial assets, it can be exchanged for goods and services in the real economy.

Its value is nearly certain and that makes it acceptable everywhere. Hand over money – or even make a credible promise to hand some over in a few days – and you can walk out of a shop with your new purchases.

Many commodities have been used as money – tobacco, tea, salt, sea shells, and, of course, metals – especially copper, silver, and gold.

In the 19th century, with globalisation, sterling became the predominant currency in international trade.

The commitment of the Bank of England to ready convertibility – allowing anyone to go to Threadneedle Street and ask for notes to be turned into bullion – supported the emergence of a complex financial economy, which channelled capital into the investments needed to build the first industrial societies.

Money, then, is about mutual confidence, and trust – even faith. You believe that when I offer you a carefully designed piece of paper, you will be able to pass it on to someone else in exchange for something which is of value to you.

You believe that when you click a button on a website, an online merchant will start to prepare your order and arrange its delivery. By instructing your bank, you arrange the transfer of funds to the merchant.

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Bank deposits are just as much money as the coins struck by the Mint. For economists, money was never just a legal right to acquire some metal. It has always been a store of future happiness, representing the ability to command economic resources.

What could possibly go wrong? Well, money requires banks. Banks write two types of financial contracts. Deposits are typically entirely liquid, and certain in value. They are money. Loan accounts are typically set up for fixed terms, and as long as the bank customers stick to the conditions the bank set in lending money, they will be repaid slowly. They are most certainly not money.

Think about what happens when you borrow money to buy a house. Your bank will open a mortgage account. Its (debtor) balance will be an asset for the bank; a financial contract which is a claim on your future wealth.

It will pay money to the seller of the house (or at least, the seller’s lawyer). The seller can do exactly whatever she wants with the money: buy another house, set up a business, or donate it to charity.

Before, there was nothing. But now you have a debt to pay off, and there is more money circulating in the economy.

Sometimes banks get this completely wrong. The subprime crisis in the US was the result of banks giving money to people to buy houses – in ways, which, with the benefit of hindsight, could never have worked.

For a while, housing prices soared. The market boomed. Then they collapsed, and the market froze, in the global financial crisis.

Credit-financed asset-price inflation. For economists, and for central bankers, it’s a phrase with dreadful connotations, telling us that a bubble is forming in the financial economy.

Left to expand, it will eventually burst, its toxic waste coursing through the real economy, and poisoning it, destroying businesses, jobs and livelihoods.

Strict control of money and banks is a prerequisite of prosperity.