More than 50 years ago most of us thought of as money was limited to hard cash, travelers checks, and bank deposits. A few adventurous souls had a credit card of one kind or another, but their wide spread use ran counter to our Depression culture. Having expended five years of our lives in the Second World War, my generation wanted the appliances now and was prepared to borrow the money to get them. This new attitude contributed to a sea change in the way many Americans looked at money, credit, and markets. The postwar boom at home and the expansion of trade abroad required broader and faster markets.

Immediately after the war, all markets and payment systems relied on manual systems. There were a few handcranked adding machines around and one of the largest departments in most banks was the messengers. A whole new system had to be invented and put in place.

Not only is the sheer volume of turnover today an order of magnitude different from yesterday, but telecommunications has so closely linked the world's nervous system that distant markets often move in sympathy with one another. A similar globalization has taken place in the foreign-exchange market. When I started at Citibank, our head trader estimated that the total turnover in the New York market was about $50 million a day. If the Federal Reserve wanted to influence the dollar rate, its trading desk could call Citibank or Morgans and place an order for $10 million, which was large enough to move the market. Today with the foreign exchange market at about a trillion dollars a day, central bank intervention can only result in expensive failure, as there is not enough money in any central bank to influence the exchange rate on anything but a momentary basis.

It is worthwhile to remember that in that so-called stable Bretton Woods environment there were hundreds of currency devaluations, great and small which affected almost every currency in the world. Major currencies were not exempt; indeed, they led the way. For example, the devaluation of the British pound on September 19-20 in 1949 triggered devaluations by 15 nations ranging from Austria to India and South Africa. Thus what is often remembered as stable exchange rates in the days of Bretton Woods were stable only in relation to floating rates and then only in some parts of the world.

Today we have a wholly new situation. The marriage of computers with telecommunications has created a truly global market in everything from money to stocks to commodities. These huge networks-public and private-have even created a new kind of an economy, a network economy in which the law of increasing returns operates the more people connected to the network or the clearinghouse, or your fax machine, the more valuable it becomes. Since markets are basically driven by information about money or stocks or commodities, the instant and almost universal...availability of this information makes the modern Reuters or Bloomberg screen light up in a way that is different in kind from more primitive times.

The development of the global market I have sketched was occurring contemporaneously with a sea change in the world's monetary system. For the first time in history, no major currency is tied directly to a commodity like gold or silver. In 1911, long before the advent of information technology, Irving Fisher opined that "irredeemable paper money has almost invariably proved a curse to the country employing it." He certainly had history on his side. The advent of the Gold Standard and the Gold Exchange Standard furnished for a time a discipline on the creation of money, but now with the uncoupling of money from any commodity, those old arrangements have been replaced.... But the market is so huge that intervention by central banks has become an expensive exercise in futility. Indeed, the market has over-powered one of the most important aspects of national sovereignty.

Peter Drucker put it this way: "Control over money was at the very center of what came to be called 'sovereignty.' But money has slipped the leash.

It cannot be controlled any longer by national states, not even by their acting together.