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A little history, a little dream, and a big warning.

Published:

The History
People who study history know that paper “money” is a way for governments to steal through inflation what they cannot coerce through taxation, fees, fines, etc. Having said that, we also know that while 2-ply toilet paper is better than 1-ply, you eventually wind up doing the same thing with either...     

For a good portion of the 20th century, the American dollar was a store of value relative to most “local” currencies. The $100 bill, the largest readily available denomination note of a major economy, was quite popular outside the U.S. among honest people trying to protect themselves against the incompetence of their own government, as well as gangsters (elected or not). There was much fuss made over Saddam of Iraq being found with so many thousands of dollars in American $100 bills, and also the tractor-trailers found with same. There was not so much fuss made over the pallets of American $100s sent over by Congress, without your consent or knowledge.

   

The problem a “regular” person runs into is that you need, at some point, to convert your hidden American dollar into whatever local dreck is required to buy a loaf of bread. You need someone who has enough local cash to make the swap. Of course, they are going to want to profit from this “service” so there will be a spread involved. This is much like trading in a twenty dollar bill and getting back 19 singles.

   

Before you argue that such a thing only happens in “third-world” nations, and only during crises ~ as a real-world example; there is at least one company that has machines in grocery stores in the U.S. that take your coins, counts them, then issues you a receipt for 95% of that amount. You then use that receipt as a credit towards your groceries at check-out. That’s a double rip-off, because the coins actually have a melt value greater than their face value, anymore. That’s a whole other write-up. I leave it to you to decide if you are living in a third-world nation, or during a monetary crisis. I think I see what looks like a duck & I hear some quacking too.

       

The Dream
A few days ago, I dreamed I was in what looked like a convenience store. I was standing near the counter unfolding some American dollars (mostly singles), counting through them looking for some amount. (I should point out here that even during the dream I was not aware of what I was originally in the store to buy, or its price. It is not a forgotten detail. It was never “added”) As I was unfolding them, I came across a $100. A few more $1s and then a $500 (William McKinley), a few more singles and then a $1000 (Grover Cleveland). I felt like someone who finds a forgotten twenty in a pocket of their jacket, that is to say amused, but not concerned. The two larger bills were in normal circulation. Whatever I was going to buy didn’t cost that much, those bills had just slipped in with the singles. Then I awoke, and thought of a couple of pieces I haven’t seen anyone go out of their way to put together, anywhere. So, here it is.

     

The Warning
As I mentioned before, the American $100 bill was the big boy on the block in terms of paper currency. But there was that nasty “spread” involved and someone, somewhere, had to get it back to America, or believe they could. The Euro negates that need. It is used across many nations. The spread is gone. Those American dollars are no longer needed so much. They are coming “home”. At 1Euro ~ $1.50, the 100Euro note will “hold” $150. You say that’s simple math. Now here’s the “other” piece. The largest Euro note is not the E100. There is also a(n) E200 note. That is not the largest, either. Right now, today, trading in 26 or so nations, there is a currency note of E500 units. At $1.50 per unit, that will be $750. The King American $100 bill has been deposed seven times over. The U.S.$500 and U.S.$1000 have not been used since the 60s. Allegedly halted to combat organized crime (by Nixon, no less). Right. The Europeans seem to have to such concern.

I cannot say if the dream I had represented the future or the past. Those who find my previous entries entertaining or informative will decide on their own what, if anything, it all means. I will just add that I was one of the few (all the way back in 2006) griping about the U.S. dollar reaching parity with the Canadian dollar. I’m just saying….  

Entry #40

Comments

1.
justxploringComment by justxploring - November 9, 2007, 3:23 pm
I remember when I visited Mexico in the 80s and everyone wanted an American dollar because, if they could afford to, they'd hold onto it for a week or 2 and it would be worth more than when I paid for the service. The exchange rate was around 850 to 1. So in Cancun, for example, a ride from one hotel to another would be either 500 or 600 pesos and I'd just hand the guy a buck & he was very happy. It's obvious that our money is becoming less and less valuable, not only when we travel, but when we buy everyday groceries like milk and eggs. How can that be a "good" thing as many are telling us?

2.
Rick GComment by Rick G - November 9, 2007, 3:26 pm
Time*treat,

Yes indeed, you have been right on target with your observations on this subject.

Thanks for your posts...very educational for us neophytes.
3.
justxploringComment by justxploring - November 9, 2007, 6:12 pm
Yes, I agree with Rick.
Lately I haven't been making much sense when I write. Maybe it was always that way and I never noticed! Anyway, what I meant in my last post was that, although I was only paying a dollar, I was giving a very big tip (about 50%) I used to get angry at tourists who argued with the cabbies when they'd ask for 600 pesos and the customer would say "the hotel said only 500!" They were arguing with a poor local over 12 cents and then didn't bother tipping. Try doing that in New York!

Sorry, time*treat for my digression. My point was that the exchange rate in Mexico is now about 10 to 1 instead of 850.   Huge difference!! Better for whom? I agree with you about Canada too. When I worked in retail, I always had many Canadian customers who spend part of the year here in FL, and they were always the hardest to sell because their money didn't go as far as ours. Around 2001 or 2002 I was showing a desk on sale for $799 and a customer from Toronto said "Okay, how about taking off another $300 so it will be the same for me! :-)   

4.
time*treatComment by time*treat - November 9, 2007, 10:39 pm
Heh, it's like learning how hamburger is "raised". You sometimes regret finding out, and you can't erase the memory, yet, you still feel compelled to "traumatize" others with what you know.
Proving a) ignorance IS bliss & b) misery DOES love company :-) Tag! You're "it". :-)
For a while, they were using dollars as far south as Ecuador & Peru. Can you believe it?
Any nightmares, therapy, or cardio-care needed after reading my blog ... are purely coincidental.

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