Re: OT: the euro & 01.01.02 (was NATLANG/FONT:)

Quoting Anton Sherwood <bronto@...>:

> "Thomas R. Wier" wrote:
> > Actually, the official currency of Ecuador *is* the US dollar.
> > Last year, they changed over from a 1-to-1 rate peg to full
> > dollarization.  (Argentina's been thinking about doing the same
> > thing for a couple years.)  . . .
>
> If they do that, I wonder why they don't go the whole hog to a bullion
> standard.
Well, in much of the world, the dollar *is* in effect a bullion
standard -- it's something that's considered to have a very
stable inherent worth.  That's why countries that have had
bad histories of hyperinflation, like Brazil and Argentina
did in the 80s, they actually store one dollar for every
peso they have in circulation.  This has two results:
(1) they do get a modicum of price stability, even if that
means they lose practical control over their macroeconomic
policy, and (2) they can ditch the policy at any time,
because they have not *fully* dollarized by accepting the
dollar outright, like Ecuador, Panama, and Liberia. Sometimes,
though, having a freely floating currency actually helps
your economy.  Canada's dollar, for example, has taken a nose
dive over the last ten years, which means that it's expensive
for them to buy things from the US.  The flip side, though, is
that Canadian products are cheaper on the US market, which
makes them more competitive, and therefore gives more Canadians
jobs.  So there are pros and cons to dollarization, and a
country has to ask itself what its current and future priorities
are going to be if they want to dollarize.

=====================================================================
Thomas Wier <trwier@...> <http://home.uchicago.edu/~trwier>

             "...koruphàs hetéras hetére:isi prosápto:n /
Dept. of Linguistics  mú:tho:n mè: teléein atrapòn mían..."
University of Chicago "To join together diverse peaks of thought /
1010 E. 59th Street   and not complete one road that has no turn"
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