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Dollarize Me

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Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Fri Nov 25, 2011 6:42 pm    Post subject: Dollarize Me Reply with quote

Not sure if this belongs in one of the word play forums but it's so sweet I have to lay it on you somewhere.

I have lately been following the EU financial crises and after reading numerous articles come to the conclusion that the euro is radically overvalued maybe by a about a buck, thus a fair exchange would be about 38 cents.

I then thought, why don't they just do away with it entirely and use US money as their fiat currency. I wondered if that were "legal" or not...and found, not only is it possible, but there's a word for it...Dollarization!

Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.

The biggest economies to have officially dollarized as of June 2002 are Panama (since 1904), Ecuador (since 2000), and El Salvador (since 2001). As of August 2005, the United States dollar, the Euro, the New Zealand dollar, the Swiss franc, the Indian rupee, and the Australian dollar were the only currencies used by other countries for official dollarization. In addition, the Armenian dram, Turkish lira, the Israeli shekel, and the Russian ruble are used by internationally unrecognized but de facto independent states.

Scary think of it, and then you find it already has a name.

I love that term, it's so right to the point. Dollarize.

So, I guess I'm saying once they move to a fair price, Europe should dollarize.

Now you may ask...does it all have to do with righting the wrongs of inequity, and my answer is yes, so maybe it does have to do with this forum.

While the Occupancy focuses on the 1% who own the lion's share of wealth, I tend to be more of a Technocrat who wonders...are there simply runaway processes in the economy system that allow for this. So, rather than being "greedy people" (and I'm sure many of them are) they simply acted in a rational way and the system used a kind of positive feedback to amplify that greed into logarithmic proportions.

Certainly, the more I consider the situation the less I believe in any type of conspiracy or even power of rational minds to create the imbalance. A typical human I do not think can manage it. And there are hundreds of billionaires.

Hence, I think there are just imbalances that were introduced in the 1980s that have lead to the current state. A lot of it had to do with computers. I mean, having devices that can add up to trillions and beyond is a necessary step towards being able to store a billion dollars for an individual. And then of course as we view the transition to the E-Economy as in the introduction of any new system, there will be bugs and back doors. as well as increased powers (what they call "leverage").

So, in the past I have called for a kind of reverse arbitrage on the part of regulators to find these before they can be exploited and dampen down the amplifying processes to prevent runaway accumulation of dollars.

This rationalization has been taking place, in my estimation, since the crash of 2007, and it partly explains the behavior of Government trying keep TBTF institutions afloat on dollars that don't really yet exist.

Still, each month I become more convinced of us being able to backtrack our way out if we finally get around to letting crying babies cry themselves to sleep instead of staying up all night trying to pacify them.
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