Negative interest rates and what it means

Quote: Pacomartin

Norway has decided to dump their portraits completely and go with abstractions (as of next year). The reverse sides are the strongest attempt by any country to allow the visually impaired to distinguish denominations

I remember when the Euro was under design they said that they were not only not using portraits but the pictures they did use were not of real things but generic things that looked European. So not a famous bridge, but one that looked similar. Idea was to stamp out any nationalism or symbolism.

Quote: AZDuffman

Idea was to stamp out any nationalism or symbolism.

Well, that is because the currency was meta national. I am not sure why Norway did it, but maybe the conflict over picking five people was too contentious.


Only the two Presidents associated with the civil war were not involved in the Revolutionary War or born after the country was formed.

Death Portrait Denomination: Percent of banknotes
Apr 17, 1790 Franklin $100: 28.3%
Dec 14, 1799 Washington $1: 29.9%
Jul 12, 1804 Hamilton $10: 5.0%
Jul 4, 1826 Jefferson $2: 3.0%
Jun 8, 1845 Jackson $20: 22.4%
Apr 15, 1865 Lincoln $5: 7.2%
Jul 23, 1885 Grant $50: 4.2%

By 1880 the population of the USA just surpassed 50 million. The fact that nobody from the modern nation is honored is more of an issue to me than the fact that no women are on the banknotes.

Quote: Pacomartin

Well, that is because the currency was meta national. I am not sure why Norway did it, but maybe the conflict over picking five people was too contentious.

True on the Euro, but I see a strange pattern with Norway doing much the same thing. It's weird. For 2,000+ years currency has had leaders pics on them. Now they are making it nuttin special.

Quote:

Only the two Presidents associated with the civil war were not involved in the Revolutionary War or born after the country was formed.

By 1880 the population of the USA just surpassed 50 million. The fact that nobody from the modern nation is honored is more of an issue to me than the fact that no women are on the banknotes.

Well really you should not put a "modern" face on a coin or bill, that is what banana republics and dictatorships do. Better to wait until someone has been dead 50 or more years so history can really judge them. Right now we are really looking at the early 1900s for candidates.

But when it crashes it will not matter, you may be using the Tubman $20 to light cigars.

Quote: AZDuffman

But when it crashes it will not matter, you may be using the Tubman $20 to light cigars.

See when people talk about the instability of the US dollar, they seem to forget that the entire world system of fiat money has questionable stability. As well all know the US $100 is widely used as a store of value outside of the USA.

But some countries like El Salvador and Ecuador have completely given up on printing their own currency. Panama, of course, has always used the US dollar. When Ecuador abandoned their currency, their biggest banknote was worth US$2.

With that in mind, perhaps we should redesign the $5 and the $10 to make them more acceptable as a world currency. If the US dollar is adopted by more desperate countries, it might make it more palatable.

Circulation figures in billions at end of 2015

$1: 11.40 billion
$2: 1.15 billion
$5: 2.74 billion
$10: 1.90 billion
$20: 8.57 billion
$50: 1.60 billion
$100: 10.82 billion
total: 38.173 billion

When the reported number of $1 banknotes is 11.4 billion, that represents the number of banknotes that have been printed by the Bureau of Engraving and Printing (BEP) minus the ones that were destroyed by the BEP. For all denominations, it is understood that many notes have been lost accidentally or are secured in private collections. But since 1928 we can safely assume that for the $1 banknote the number lost is in the billions.

Taking George Washington off the $1 won't be necessary as even mid level countries would use a coin.
Though Ecuador mints their own coins for any denomination less than a dollar, which are not valid in the United States, but the Susan B Anthony, the Sacagewa and the US president dollar coins are very popular there. They will accept a George Washington, but since they wear out and must be destroyed they are not popular with the Ecuadorean government. Since they are unilaterally using another country's currency, when they destroy a worn out bill they cannot print another one to replace it.

You will note how ridiculous the widespread belief is that the $2 bill is rare and that it should be hoarded. It is not rare and will never be worth more than $2.
$2: 1.15 billion
$10: 1.90 billion
$50: 1.60 billion

Quote: Pacomartin

See when people talk about the instability of the US dollar, they seem to forget that the entire world system of fiat money has questionable stability. As well all know the US $100 is widely used as a store of value outside of the USA.

But some countries like El Salvador and Ecuador have completely given up on printing their own currency. Panama, of course, has always used the US dollar. When Ecuador abandoned their currency, their biggest banknote was worth US$2.

With that in mind, perhaps we should redesign the $5 and the $10 to make them more acceptable as a world currency. If the US dollar is adopted by more desperate countries, it might make it more palatable.

For that case I would say make an "international" version and a domestic one. Maybe several international, say put "PANAMA" over part of it. This way bills could be voided if a coup or other hostile action.

Here are all of the portraits that have been on bills.

https://en.m.wikipedia.org/wiki/List_of_people_on_United_States_banknotes

It looks like DeWitt Clinton is trying to make someone's head explode using only the power of his mind.

Quote: AZDuffman

For that case I would say make an "international" version and a domestic one. Maybe several international, say put "PANAMA" over part of it. This way bills could be voided if a coup or other hostile action.

That's what they did in Hawaii during WWII, as there was some fear that the Japanese might conquer the islands


Ecuador adopted the dollar out of desperation, as their economy was in ruins. El Salvador had a stable currency, but so many of their citizens had immigrated to the USA during the war years, that their primary source of income was money sent home by men who lived in the USA. So it was actually costing them more money by having their own currency than by simply adopting the US dollar.

But if you had overprint currency as you suggest, no country would use them. Instead they would follow the lead of countries like Bahamas, Aruba, Belize and the nations that use the East Caribbean Dollar that are unilaterally pegged to the US dollar. Bahamas prints currency, which is 100% backed by US treasury notes, and is exchangeable at 1:1 with US currency. But they are free to print denominations that don't exist in the USA (like the $3 bill). The $3 bill was actually very clever, because they know American tourists will take them home as collectibles. So the Bahamian government gets $3 for the cost of printing a banknote. So in a very very tiny way, they are doing to the US what the US does to the rest of the world.




Over 100 million people in Africa (mostly former French colonies) use a currency pegged to the Euro. But unlike the Bahamas which can print banknotes of value US$1, $2, $3, $5, $10, $20, $50, and $100 the banknotes in Africa are of very small value. If the currency were devalued by only 1.63268% then conversion factor would be simpler.

XOF/XAF Coins - Euro Equivalent (not all coins are commonly used|particularly small values)
1 0.0015 €
5 0.0075 €
10 0.0150 €
25 0.0375 €
50 0.0750 €
100 0.1500 €
200 0.3000 €
250 0.3750 €
500 0.7500 €

XOF/XAF Banknotes-Euro Equivalent
500 0.7500 €
1000 1.50 €
2000 3.00 €
5000 7.50 €
10000 15.00 €

Quote: Pacomartin

That's what they did in Hawaii during WWII, as there was some fear that the Japanese might conquer the islands

That is where I got the idea. IIRC Guam had their own as well, maybe another island or two.

Quote:

But if you had overprint currency as you suggest, no country would use them. Instead they would follow the lead of countries like Bahamas, Aruba, Belize and the nations that use the East Caribbean Dollar that are unilaterally pegged to the US dollar. Bahamas prints currency, which is 100% backed by US treasury notes, and is exchangeable at 1:1 with US currency. But they are free to print denominations that don't exist in the USA (like the $3 bill). The $3 bill was actually very clever, because they know American tourists will take them home as collectibles. So the Bahamian government gets $3 for the cost of printing a banknote. So in a very very tiny way, they are doing to the US what the US does to the rest of the world.

They might or they might not, nations already pay the USA to make coins rather than mint them themselves. They still need to anti-counterfit. The USA could cut them in on the profit. I am just pointing out that it gets to be a worry when you have entire nations using your bills that may one day come home and cause inflation.

BTW: Wish I knew they had a $3 when I was there. I would have gotten one. They gave Americans USD in change all the time, I had to ask for a Bahamian $1 to bring back.

Quote: AZDuffman

I am just pointing out that it gets to be a worry when you have entire nations using your bills that may one day come home and cause inflation.

Well a country has to be pretty desperate to give up seignorage. All the money in Ecuador is just a little bump in the USA.

Now, Connie MACK, III, (1940 - ) Florida Senate Years of Service: 1989-2001 Party: Republican had a more radical proposal. He created a bill that would provide Cash to any country in North or south america that wanted to dollarize. Furthermore, he would pay the country to make up for seignorage if they (1) instituted reforms to prevent money laundering, and (2) promised never to print their own currency, and (3) paid the cost of printing and shipping the banknotes.

His ideas are expressed in the paper below
http://salsa.babson.edu/Pages/Articles/ClassSp00/Dollarizat--Official%20US%20Senate

In his wildest fantasies, I think that he thought all of the Americas would dollarize if his bill was passed. But more than likely it might have caught on in the Carribean, Central America and Colombia, Peru, and Bolivia. Argentina seriously considered dollarization at one point.

I doubt if Brazil, Mexico. or Venezuela would dollarize, even if the US government paid for lost seignorage.

Of course, the main problem would be political. Dollarization would become the scape goat for every problem that exists.

Quote: Pacomartin

In his wildest fantasies, I think that he thought all of the Americas would dollarize if his bill was passed. But more than likely it might have caught on in the Carribean, Central America and Colombia, Peru, and Bolivia. Argentina seriously considered dollarization at one point.

You are probably correct, though not so sure for Columbia, Peru, and Bolivia. Argentina did back 1:1 for a few years but it ultimately collapsed, causing much mayhem in the country. In the end the big problem would be that when, not if, these countries defaulted on debt would they be like another state, in line for a bailout. Would their banking systems affect ours since it was all in dollars? While monetary policy is tricky enough that perhaps 10 countries in the world can really manage it well, is it better to quarantine the problem children?

Quote:

Of course, the main problem would be political. Dollarization would become the scape goat for every problem that exists.

Yes, one more in a list of things they blame the USA for. Some of these places are just never going to get it together. Brazil is an example. I did a paper on Brazil in college. I was amazed that since forever they will have a period of boom where they come close to improving followed by a crash back to poverty. The drive of the economy changed every time, but every time it fell in after a decade of being oh so close. Five years ago we heard about the BRICS. I was not so sure. Lately most of them look sickly in their own ways.