The Dollar and Its Brethren
Published in Financial Times - Deutschland
(Germany) on 11 September 2009
by Jens Korte (link to original)
Most Americans have no idea what their own currency is worth. That’s hardly surprising since many Americans don’t even have a passport, much less plans to travel to a foreign country.
The fact that Americans have so little knowledge about the value of their own money isn’t because they’re not interested in knowing, it’s mostly due to the great distances involved in travel abroad and the lack of vacation time in which to do it. A man I interviewed on Wall Street asked, “You’re telling me the dollar is weak?” Well, yes. The greenback, as it’s popularly called, is at its lowest value since September 2008, and the dollar’s stability is the subject of debate all over the world – just not in the United States. But it has enormous ramifications. A group of insurgents in Brooklyn are planning to start circulating their own currency there. They’re currently accepting design suggestions for their “Brooklyn Torch,” as the new currency is called. The Brooklyn Torch may only be used for purchases in shops and restaurants in Brooklyn that participate in the program. The intention is to stimulate the local economy.
Such anti-globalization plans are by no means new. In the state of Massachusetts, “Berkshares” are in circulation, named loosely after the region “the Berkshires” where they are used. In Ithaca, New York, 500 businesses participate in “Ithaca Hours” and their currency is available in “One Hour,” “One-Half Hour” and “One-Quarter Hour” denominations.
As the greenback continues to lose value, bank directors all over the world are hiring structural engineers to determine whether their vault floors are strong enough to withstand the weight of gold deposits. More and more investors are turning to gold during this currency crisis, and gold recently surpassed the $1000 per ounce mark. There are two scenarios likely in the near future: if the Federal Reserve continues to cheerfully print more and more dollars, the risk of inflation rises, the dollar is put under further downward pressure, and the value of gold continues to rise.
The other scenario is a Japanese-style deflationary environment which would encourage further borrowing, thus making gold less attractive because the likelihood of a crash would be lessened.
Since we can’t predict which scenario will come about, there’s only one solution: let’s all move to Brooklyn or the Berkshires. The Torch and the Berkshare may well survive either catastrophe.
The fact that Americans have so little knowledge about the value of their own money isn’t because they’re not interested in knowing, it’s mostly due to the great distances involved in travel abroad and the lack of vacation time in which to do it. A man I interviewed on Wall Street asked, “You’re telling me the dollar is weak?” Well, yes. The greenback, as it’s popularly called, is at its lowest value since September 2008, and the dollar’s stability is the subject of debate all over the world – just not in the United States. But it has enormous ramifications. A group of insurgents in Brooklyn are planning to start circulating their own currency there. They’re currently accepting design suggestions for their “Brooklyn Torch,” as the new currency is called. The Brooklyn Torch may only be used for purchases in shops and restaurants in Brooklyn that participate in the program. The intention is to stimulate the local economy.
Such anti-globalization plans are by no means new. In the state of Massachusetts, “Berkshares” are in circulation, named loosely after the region “the Berkshires” where they are used. In Ithaca, New York, 500 businesses participate in “Ithaca Hours” and their currency is available in “One Hour,” “One-Half Hour” and “One-Quarter Hour” denominations.
As the greenback continues to lose value, bank directors all over the world are hiring structural engineers to determine whether their vault floors are strong enough to withstand the weight of gold deposits. More and more investors are turning to gold during this currency crisis, and gold recently surpassed the $1000 per ounce mark. There are two scenarios likely in the near future: if the Federal Reserve continues to cheerfully print more and more dollars, the risk of inflation rises, the dollar is put under further downward pressure, and the value of gold continues to rise.
The other scenario is a Japanese-style deflationary environment which would encourage further borrowing, thus making gold less attractive because the likelihood of a crash would be lessened.
Since we can’t predict which scenario will come about, there’s only one solution: let’s all move to Brooklyn or the Berkshires. The Torch and the Berkshare may well survive either catastrophe.
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