Easter man was here
Sunday, January 30, 2011
Thursday, January 27, 2011
Tuesday, January 25, 2011
Timor is one of a surprising number of countries that use the US dollar as their currency. I've always found this idea fascinating, and puzzled over the idea quite a bit.
Where do they get their US dollars from? (They obviously don't print it, but they don't get bills by simply pulling paper money out of the US economy either: that would affect the US monetary system, actually causing disinflation)
How does the US feel about this?
Is it safe for (someone like you or me) to use a currency not guaranteed by the government of the country we are in?
I did some homework on this, and it turns out that it's much less wild and crazy than I thought.
First of all, the US actually encourages other countries to use its dollar. It helps supply their paper currency. This actually helps stabilise volatile emerging economies by fixing their interest rates and inflation to the (presumably) more stable and conservative US economy and monetary policy.*
*(although it's also criticised for contributing to the attitudes and sentiments that brought about the last economic crisis)
Having other people use their dollars is actually in the US's interest: it makes countries like Ecuador and Panama much more reliable trading partners.
You don't have to read on:
If you haven't already figured out, I'm a pretty nerdy guy. Secretly, I read four or five different economics blogs. On one of them, I found an interesting bit of theory and speculation:
Gregory Mankiw, a high-profile and extremely influential US economics advisor (whose book on macroeconomics I used in college) famously wants to abolish the penny.
What does this spell for a country like El Salvador, which uses US currency, and which also has such a low price index that many common transactions happen in cents, and where people often need to break dollar bills to get change?
Could a country like that cope with adhering to US policy or would transaction volumes become impractical? What if they kept the penny legal tender and all the pennies from the US flowed there? How much would that be? (Billions?) (Is the size of their economy such that) it would cause catastrophic hyperinflation?
I find currencies with "outrageous" units endearing, like Indonesian Rupiah, where it's about 10000 to the dollar, and 1 rupiah is meaningless. Ghana used to have a similar currency but they have since issued new currency with 1/10000 of the value.
I know, isn't it a shame?
Some charm remains: people in Ghana still talk in old currency even though they use new paper: they say "thousand" to mean ten cents" and "ten thousand" or sometimes "ten" to mean a dollar.
Leaving Timor was surreal. Because of how things panned out, I flew from Oecusse to Dili, had a day's errands and layover there, flew to Bali, had a spare day and a work call, and then flew back to Singapore.
It felt like a dream, especially since I was drifting in and out of sleep on all the flights and my mind couldn't really anchor itself on any one thing while I was still awake. The scenery was changing too quickly.
I looked out the window of the airplane as we approached Singapore, thinking we were over Malaysia but recognising nothing. I frantically checked my cardinal directions as the plane flew big circles and just as I thought that we were definitely in an imaginary place, we flew in over the Singapore harbour.
I looked down to see a fleet of huge oil tankers and massive cargo ships, more than I had ever seen in my life.
That old Talking Heads song jumped into my head: "This is not my beautiful house! This is not my beautiful wife! How did I get here!?"
I've hung out a lot with an old friend (one of my oldest) these last few days in Singapore.
We don't see each other very often, but it's always felt easy to be comfortable around each other again.
I used to talk with him about music, girls, food, The Future, you know, when life was perhaps simple. Now we talk about how Singapore is broken and why we're never coming home.
It feels like the final nail in a coffin for my youthful innocence.