Wednesday, October 16, 2013

Funny Money

I just returned from Mexico recently. While I was there it was an interesting exercise to calculate in your head how much something would cost in reference to dollars. The Mexican peso, at the time, was worth about 11 cents. I had lots of pesos with me because I exchanged one thousand dollars before I left.

After a few days of going through the trouble of keying in the price of something into the currency converter on my smartphone I quickly realized that if something cost 50 pesos it was about $5. A 100 peso item was close to $10. They just added a zero to everything. That's inflation. That is what we will do with the dollar too. They'll just add a zero to the money.

When I got back I still had quite a lot of Mexican currency with me. I was looking at and thinking how weird it looked. Why could I buy anything I wanted with this funny paper just a few miles south but it was worthless here? Why aren't these bits of paper accepted here? It's really no different at all from the bits of paper we do accept. It's a strange concept when it's staring you in the face.  It's all just pieces of paper.

And yet based solely on a mentality really, people are able to exchange pieces of paper for vast expanses of land and the resources that land holds. How long will it last that you can walk into an office with a suitcase full of pesos and get laughed out of the building, but if that suitcase contained dollars the mood would quickly become somber and serious?

I am old enough to remember when it was quite common to get a silver dollar as change. That will not happen to anyone again and hasn't for years. I am looking at a quarter on my desk right now that is made of silver from 1950. I recently found it in my change. How did I quickly separate it from the other change in my pocket? Why is it on my desk and not with the rest of the change that sits in a bowl in the kitchen?

One day when I got on the subway I received quite a few Sacajawea dollars in change from the machine. This was the first time I had ever had any of these in my possession. I looked at them very carefully the next day. They seemed like tokens from an arcade. I was almost positive that the cashier would laugh at me when I put them on the counter in exchange for a soft drink. I asked the cashier if they were acceptable, she didn't know. She had to ask her supervisor. I felt as if I had committed theft as I walked out. What I had given them was worthless and I had a beverage.

What is it that causes that mental facade to fall, to break down, to make people lose confidence in the paper they've been taking for their entire lives? It never had any real value at all. It was always only paper. The sooner you can change those slips of paper you hold into tangible goods while people will still accept them the better.

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