On Tue, Jan 24, 2012 at 7:15 AM, Vinayak Hegde <[email protected]> wrote: > Nothing tells about how high inflation is (the govt manipulated index > notwithstanding) than how cheap is the metal that goes into making the > coins.
It is also an indicator of how serious the government considers itself. Traditionally buildings and coins have been ways of displaying state power. For example, the Malaysian 50 Sen coin is of a size and weight that would make you think it was worth much more than it is. The idea of a fiat money is in itself a display of state power - Somalis couldn't realistically expect to use their Somali shilling for anything of importance - hence the US dollar is the defacto currency in that region. The idea of each of us being wealth accumulating robots has gained the high ground only in the last century or so, but at the end of the day economic power too is merely a display of superiority in strength, like the cat puffing up the hair on its back and rising on its toes. When monetary economies meddle too much and weaken the signal with inflation, and fake currency and overnight changes in wealth through the vagaries of the market cycle it is time to move on. The exchange rate is far better on signals that we can create on our own that aren't diluted by external factors. The Dalai Lama for example has a signal that has nothing to do with economic power, and yet he is in many ways a very rich man. Sorry for subjecting a random haze of thoughts, I will try to clean this up when I have the time to explain it better.
