Sunday, July 9, 2017

Phoenix Rising?

The people came to the capitol town
One hundred thousand of them laid their hearts down
They screamed in anger and broadcast their fears
Just to have them fall on deaf ears
--Dan Fogelberg

Amusing Economist article from 1988 predicting that a common world paper money (the article labels it the 'Phoenix') would replace national currencies in 30 years. That deadline is fast approaching, of course, with no world currency in sight.

Since this article's publication, the closest the world has come to consolidating money over sovereign boundaries is the euro. Yes, the euro has reduced transaction costs of trading on the Continent. But it has exposed problems associated with trying to blanket one currency and its associated monetary policy across sovereign nations with varying needs.

Moreover, a single world paper currency exposes countries to monetary mischief of others that cannot easily be controlled via political process.

Stated differently, the greater the distance over which a single paper money is employed, the greater the risk to local sovereignty.

Doubt we'll see the Phoenix rising anytime soon.

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