Most religions have considered the practice of making money from money a sin. Islam, for example, forbids charging or receiving interest -- and the followers of Islamic banking use all kinds of strategies to comply with the letter, if not the spirit, of the Koranic prescription. Even Christianity proscribed interest, or at least usury -- and the Jew money-lender became a hated figure in medieval Europe.

Whatever the religious precepts, in modern economies often more money is made from the price of money than from producing real goods and services.

There are two prices of money (exchange and interest rates) from which the specialists in making money from money -- the commercial and investment banks and the hedge funds -- make their millions and indeed billions.

The pursuit of ever-higher income through speculation on the price of money is referred to by a euphemism, namely "trading profits", in the published accounts.

Hedge funds, of course, do not publish accounts, but recent reports of the five senior fund managers of a medium-sized hedge fund in the UK having been paid almost a hundred million pounds (Rs 800 crore) for their services last year do give us some idea -- so does the wealth and, indeed, philanthropy of George Soros.

If, in an earlier era, Michael Milken of Drexel became notorious for earning $600 million one year, in today's world of investment banking and hedge fund management, compensations running into nine-figure dollars are by no means rare.

Even Michael Lewis of The Liars' Poker fame would be a misfit in this world. In the book, he claims that he earned a half-a-million dollar bonus in his third year as a trader with Salomon Brothers, but did not understand what socially useful work he was doing to deserve so much money, and quit investment banking to write the book -- it is another matter that the book became a best-seller and that he earned millions in royalties.

But perhaps Lewis is entitled to feeling that writing a book is a socially more useful output than speculating on currency and bond prices.

Economics textbooks define money as a medium of exchange and a store for value -- a lot of economics theory is based on the assumption that the second description implies the first, only at a later date.

The implicit assumption, of course, is that the only use of money is for consumption of real goods and services -- now or later. The textbook definitions do not consider its utility as a status symbol and a measure of self-worth.

Count Tolstoy, himself a big land owner, would find few takers in today's world for the answer he provided to the question in the title of his short story, How much land does a man require?

His answer, of course, is six feet. Indeed, what one finds unable to understand is how otherwise intelligent people earning huge legitimate incomes -- whether in Enron, Worldcom, Tyco, CSFB, to quote a few -- could not resist the temptation to steal a few (hundred) million dollars more.

Lord Black, the owner of The Telegraph (in the UK) and other papers, got publicity on two counts -- for his biography of Franklin Delano Roosvelt, and for being sued for $380 million he allegedly stole from his own company.

But to come back to making money from money, is the recent $3 billion issue of Google, the search engine we all use, likely to change investment banking, or at least the intermediation role between companies making initial public offerings and the investors?

Traditionally, investment banks have decided the price of the offering through a book building process, and often used placement of under-priced shares to favour (bribe) some clients.

Google's IPO would be on an auction basis, no investor getting preferential allotments. There are other interesting features as well -- its prospectus claims that the company "has a responsibility to the world" and the corporate ethics statement has a "don't be evil" goal.

The prospectus also cautions investors against the possibility of an immediate price rise post-IPO. Google's corporate governance philosophy is also different: two classes of shares, with promoter holdings having 10 times the voting power. It will not give earnings guidance, or be a slave to quarterly results. It claims that "a management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half hour". It obviously wants the Buffets of this world, and not the day-traders, as its investors.

But coming back to the all-too-prevalent illogicality about the uses of money, research in the US suggests that Americans are no happier now than 50 years ago, although far wealthier. Again, why should somebody like Ernst Welteke, the president of the Bundesbank, have accepted a hospitality worth € 7,000 from a commercial bank?

He was forced to resign recently for his indiscretion. The truth is that most people find it difficult to have a proper perspective on money and its value. It is useful to go back to Tolstoy's short story periodically!

<B>Tailpiece: </B>Chelsea and Liverpool are two old, English premier league football clubs. The first was recently taken over by a Russian oligarch, with not a word of protest. Thaksin Shinawatra, the Thai Prime Minister and businessman, has made a bid for the latter.

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