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The Trillion Dollar Website (a story of quantitative easing)
- uptown 16y agoPhysical currency is really nothing more than an agreement between parties that the paper is representative of some value. In actuallity, it's really just another piece of paper, but it's considerably easier to exchange than goats or cows or gallons of fuel. I'm a fan of their use of the 'Rock Band' typeface on the Trillion Dollar notes.
- shin_lao 16y agoActually currency is more a debt than an agreement. When you have a 20 € bill, the European Central bank "owns you 20 €". Since people have faith in the bank ability to pay its debt, everybody uses the note as money.
- anamax 16y ago> Actually currency is more a debt than an agreement. When you have a 20 € bill, the European Central bank "owns you 20 €". What does it mean for the central bank to owe me 20 euros? Specifically, what do I get when they pay me what I'm owed? If the answer is 20 euros....
- brianbreslin 16y agoI think they mean $20 worth of value be it gold or some other bankable theoretical material. Originally us dollars were tied to physical gold assets
- anamax 16y ago> I think they mean $20 worth of value be it gold or some other bankable theoretical material. Originally us dollars were tied to physical gold assets. While dollars were originally tied to physical assets, I'm asking about what the central bank give me today for my 20 euros or dollars.
- jsharpe 16y agoIt doesn't matter. You get nothing directly, but that's not the point (and is part of the reason they got rid of the gold standard). The point is that the store will accept it as payment for an actual thing, and its employees will accept it as payment for actual work, and the stores they go to will accept it as payment for actual things, and their employees will accept it as payment for actual work, etc. What you get is the stuff that you buy. Or more directly, what you get is buying power.
- anamax 16y ago> It doesn't matter. The person who claimed otherwise disagrees - he said that it was a payable debt. > You get nothing directly, but that's not the point Except that it is. If the answer is "nothing", than a 20 euro note is nothing more than confidence in competence of the financial system. While you may not see any alternatives to said confidence, that doesn't mean that it is justified. How much confidence do you have in them?
- sesqu 16y ago20€ worth of government work.
- eru 16y agoActually, it's more like 20 Euro worth of paying your taxes, and thus not going to jail.
- shin_lao 16y agoThe note is the debt, like a check. 20 € bill = currency (debt in paper) 20 € on your account = money
- dev_jim 16y agoCurrency is not a debt. Money in general is a store of value and a unit of account. You can buy things with money, you can't buy things with debt.
- thomasrynne 16y agoIn general, currency is not a debt, but in practise it is. See http://www.moneyasdebt.net/ http://www.moneyasdebt.net/
- rmc 16y agoCurrency is based on your belief that the mint won't print lots of money. If you do that, the money becomes worthless. Like in Zimbabwe.
- jonhendry 16y agoI think there was more going on there than just printing the money. For instance, the farms were going fallow, there were sanctions, etc, limiting supply of goods and driving up prices even without considering the money supply.
- Cushman 16y agoNot just another piece of paper, though. It's subsidized paper. If the value of a dollar becomes low enough, a physical dollar bill is actually cheaper than a piece of paper.
- eru 16y agoThey'll probably switch to higher denominations, then. Germany had Billion Mark _coins_ in the twenties.
- deleted 16y ago[deleted]
- richcollins 16y agoIt's not just another piece of paper. You have to pay your taxes in dollars and you are forced to settle debts in dollars.
- davidj 16y agoOriginally it wasn't suppose to be just a piece of paper and actually was worth something. The greenback at one time was a certificate that you could exchange for 1 oz silver. I hate linking to wikipedia but they have a decent article about the history of united states paper money: http://en.wikipedia.org/wiki/History_of_the_United_States_dollar#Silver_standard http://en.wikipedia.org/wiki/History_of_the_United_States_do...
- groby_b 16y agoI'd read it, except the cacophony of colors in the background makes it a total disaster. (Not to mentioned the rather stupid web interface.) Ah well, I'll try again post-coffee
- pzxc 16y agoI hate websites that make you click back 50 times instead of once after reading what should be a single page.
- oceanician 16y agodoes actually preserve the typical web interface, rather than dump the presentation into a flash interface. Good thing?
- adam-a 16y agoThe "cacophony of colors" are the devalued bank notes which are the entire point of the presentation. FWIW I rather liked the site, it's a much more pleasant way to view slides than some I've seen (scribd being a prime example).
- dev_jim 16y agoCouldn't you just post the link without tacking on a passive aggressive comment? Do you actually think Zimbabwe's actions are even in the same realm as the Fed's quantitative easing?
- haploid 16y agoI do. QE1, QE Lite, and QE2 might not be there, yet. But QE3, QE4, and QE5 are all but inevitable. It's just a matter of time.
- dev_jim 16y agoWould you stop with the fear mongering. It's financial illiterate comments like this that confuse the issue for everyone. btw, Core inflation rose 0.8% YoY. Zimbabwe here we come!!!
- aj700 16y agoQuantitative easing is a little "printing" to restore growth. Running the presses as fast as possible is funding a kleptocracy through seignorage. One makes me bemoan the necessity of the state, one makes me see that it is necessary. I can be a communist or a objectivist, but my continent's population (Europe) have made it clear that they'll still vote for a flavour of social democracy every time.
- pzxc 16y agoYou are using the "official" inflation numbers. Do you really think they report it accurately, when so much depends on it -- not just confidence in the economy, but COLA adjustment for our massive social programs, etc. That is like asking an encyclopedia salesman if you should buy an encyclopedia. The official inflation numbers have all kinds of wonky adjustments in them. For one thing, food and energy are not included (because they are too "volatile" we are told), yet food and energy are the #1 expense for most American households. Also if something rises in price too fast, they use "substitution" (saying that people will buy something else instead of that) and therefore that products inflation is not included in the "official" number. It's no different than the games they play with the unemployment numbers -- not including people who have been out of work longer than unemployment covers them, people who have accepted part-time work when they really wanted full-time work, so-called "discouraged" workers who have stopped looking, etc. I don't know what products you buy, but I can tell you that where I am the price of milk, bread, and almost everything else I buy has gone up a helluva lot more than 0.8% per year in the last few years. The few products that haven't risen in price considerably, have gone to smaller product sizes/containers. Some products have done both. Now, I'm doing just fine so inflation isn't much a burden to me -- yet. But for millions of Americans who are either low-income or worse on a fixed-income, it is a very big deal. Quoting the fed's own numbers about inflation to say everything is alright is like trusting the fox to guard the henhouse -- that is the true definition of a financially illiterate comment. Don't take their word for something as critical as this, research it yourself and use facts to support your position. And admit to yourself that they have an inherent bias, a conflict of interest, to make things seem rosier than they are, because it allows them to sell public debt, treasury bonds and short-term T-bills, to fund our massive deficits. If they actually reported the truth of everything suckers around the world wouldn't be as likely to let us keep spending trillions more a year than we earn like a teenager who doesn't understand how credit cards work. Call it fear-mongering if you like, I'd rather face the realities of our situation than stick my head in the sand. You have to admit you have a problem before you can address it.
- oceanician 16y agoI'd genuinely like to exchange some money for some trillion dollar notes....It'd be great playing Monopoly with them eh :)
- prawn 16y agoMulti-trillion dollar notes are all over eBay and seem pretty cheap.
- chevas 16y agoI find it particularly amusing that the trillion dollar note has an avant garde / rock band typeface / font on it.
- tapiwa 16y agoAs a Zimbabwean myself, I would have to say that most of the posters here totally missed the point of the site. The site was not a critique of quantitative easing. It is a commentary on the Zim government's attack on a newspaper that dared to criticize their fiscal policy (in this case a whole lot of printing money, or ... ahem quantitative easing). The paper then fought back, using this effectively worthless money (available in huge quantities, and cheaper than paper), to front their guerrilla campaign. Looking at the box of Zim dollars under my desk, you can see how the currency got steadily worse (physically), as the currency got steadily worse (economically). The last straw was the EU sanctions that then prevented the German company from exporting banknote 'paper' to Zimbabwe ... the notes after that were sad. Really sad. Interestingly, at the height of the Zim crisis, a friend of mine in Germany sent me a couple of notes from the hyper inflation days in Germany (apparently, even now, there are still so many of those notes around that they are not worth much). The 1919 '50 mark' note feels like real money (quite oily too), while the 1923 '500 million mark' note, is just a plain paper bill, printed on one side, with just a bit of colour. When the govt starts printing money on paper, instead of cotton, then you know you are in big trouble. I suppose the point I was trying to make, was that while you can debate the similarities between the Zim situation and the Fed's quantitative easing, the site is really about the fight between one paper and the Mugabe government. Incidentally, the Zim Dollar died a couple of years ago. The only currency you will find in widespread use, is the South African Rand, and the US Dollar.