Forgotten currency and the effect of new fake money
Sometimes I'm happy I've forgotten things – and not just because the forgetting makes room for new information in my brain. There's some knowledge I can let go of with sheer, joyous relief.
When I took my first stab at studying economics – I was an English major in a previous life, so this was a major, perilous step – I enrolled in a course on the European Economic Community, that entity once known as the Common Market and now called just the European Community.
The instructor spent a great deal of time explaining how the member countries valued their currencies against one another. I managed to retain enough to get through the exam, but today all I remember is something about a basket and a snake – which at the time evoked an image from childhood of the caterpillar ride at the local amusement park.
After too many cotton candies and snow-cones, that made me slightly queasy, too.
The basket-snake thing has since been replaced by the euro, thank goodness.
The lasting lesson I came away with, though, is that all currency is a fiction. We agree to a made-up name (pound, franc, dollar, yen), then let the currency markets rip. Values rise and fall relative to one another, inflation plays a hand, central banks meddle and we all start to act like it’s real.
Well, the fiction is growing more fictional by the day.
You’ve heard of bitcoin? Bitcoin (which apparently is singular and plural) has been in the news recently because the IRS and other government entities are trying to figure out how to tax and track this new virtual currency. Enough bitcoin have been “mined” that its holders want to put it to serious use, such as making political donations.
So I started reading up on bitcoin. Much to my surprise, a number of smart people out there are putting their math skills and computers to work generating other virtual currencies. As usual, I’m too late to the game when it comes to wealth-building (see above, English major).
But I’m not sure I want to. I understand the role virtual currencies have played in online games and “places” like Second Life. I also see how they can benefit the darker underground economy.
There always have been currencies outside the government’s purview. In the early days of our country, individual banks could issue their own paper money, and today a number of communities have created local currency to encourage hometown shopping. It’s legal as long as it can’t be mistaken for official U.S. tender.
We’re well into a virtual world with our money anyway. Thanks to direct deposit, EFTs and debit/credit cards, most of us handle very little cash anymore. That doesn’t bother me. Does it bother you?
The week ahead
Despite the long holiday weekend, we’re hard at work on the Dec. 6 issue of the Business Journal. Now that the legislature can add the “transportation” notch to its belt, we’ll be talking pension reform: What will happen over the last session days of 2013? What are the expectations for the first weeks of 2014? Why should you care?
We’ll also take you into the new Harrisburg office of the latest Philly firm to plant a flag in Harrisburg, and give you a snapshot of construction growth in the midstate.
Earlier in the day, you won’t want to miss the Being a Best Places to Work seminar. Join Saul Ewing, Global HR Research and the Central Penn Business Journal for an afternoon of HR education and information sharing.
After writing this week’s blog, I did a little more googling and found this explanation of the EEC currency basket. No wonder I didn’t retain this information. I am humbled by the intellects of the people who create and understand this level of complexity.