Sept. 24 (Bloomberg) -- “Granddad Benny, this investment- banking museum isn’t anywhere near as scary as the gold mine tour we went on last week during our California trip.”

Granddad looked up from the hologram showing a trading-room tableau in a virtual room the size of a football pitch. The display showed legions of angry men dressed identically in chinos and Ralph Lauren button-collared shirts, staring at racks of computer screens from their Herman Miller Aeron chairs.

“Well, Joel, for chunks of human history, mining for commodities such as gold, silver and coal played a central role in the development of particular cities and countries. Miners were regarded as stalwarts of their local communities; they faced terrible risks every day when they went underground, but their work was regarded as valuable and vital to the economic wellbeing of the world.

“Bankers and traders also endured terrible personal risks. They suffered high blood pressure caused by the stress of their jobs, they worked long days under fluorescent lights and were bullied by their managers, and many of them became sociopaths who knew the price of everything and the value of nothing. And, in the end, their industry turned out to be a lot more dangerous than mining ever was. Which is why it was eventually outlawed.”

Joel stood next to his grandfather and swiped a finger across the interactive hologram screen, which made the hands of the traders peck at keyboards and their faces contort and twist in agony or ecstasy. “The man on the mining tour told us about something called the gold rush, and said that when the gold price collapsed, the mine had to shut. Was that what happened to the banks, Granddad?”

Dead Presidents

Granddad walked over to a second hologram, which showed a rectangle of green paper rippling like a flag in a breeze, with a No. 1 in each corner and a picture of a guy wearing a wig in the middle above the words “ONE DOLLAR.”

“In a way, that’s exactly what happened,” Granddad said. “There was a decade-long boom in the kinds of commodities that the banks traded in, very similar to a gold rush. A lot of people got very rich, very quickly.

“There was one big difference, though. When a gold rush ended, the mines shut down and the miners went back to where they came from and resumed farming, or carpentry, or whatever it was they did for a living before they started digging for treasure. When the investment-banking boom collapsed, the traders didn’t have any skills that were useful to society.

Life Support

“Instead of closing down, the banks were able to scare governments into giving them billions of dollars to pay their employees. Most of them didn’t even have to take a pay cut. And instead of finding new things for their staff to do, the banks carried on taking huge risks with other people’s money.”

“The men in the hologram don’t look too dangerous, though they sure don’t look very happy,” said Joel, rubbing his finger back and forth on the screen and making one trader repeatedly throw piles of collateralized-debt obligation documents into the air, only for them to fall back into a neat pile as the clip looped back and forth. “Why was banking so dangerous?”

“Do you remember the part of the mine tour where we came up against a pile of stones that it was impossible to get around?” Granddad said.

“Yes, the guide said it was called a rockfall, and that miners used to get buried and couldn’t get out,” Joel said.

Giglobubu Time

“Well, investment banking didn’t pay enough attention to health and safety issues. Instead of the bankers getting crushed, though, it was their customers who suffered when the financial markets collapsed in the Gigantic Global Bubble Burst in the first decade of the century. When people realized that even the Giglobubu hadn’t persuaded the banks to curb their behavior, there was an uproar. Governments had to intervene and change the law to keep people safe from the traders -- and the traders safe from the angry people. This New York museum is about all that is left of the investment banks.”

Joel started playing with another holographic display, making a brick-sized gold ingot spin on its corner. “The man on the mine tour said that gold became important again when fake currencies were made illegal. What did he mean, Granddad?”

“I think he said fiat currencies, Joel, not fake. When China took control of all global financial activities, the world decided to go back to something called the gold standard, which meant paper money, like the dollar bill in that hologram, became a true store of value, rather than a confidence trick.”

Granddad glanced at his watch. “Time to go, Master Joel. My shift at the T-shirt factory starts soon.”

(Mark Gilbert is the London bureau chief and a columnist for Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Mark Gilbert in London at magilbert@bloomberg.net

Last Updated: September 23, 2009 18:01 EDT