News that some bank depositors in Cyprus stand to lose at least a portion of their savings as part of a deal the island nation’s government made with the European Union, in exchange for financial assistance, has seen worried investors in other European countries turning to Bitcoin, a digital currency, believing it may act as a financial safe haven.
Bitcoin was created in 2009 by a pseudonymous hacker who calls him or herself Satoshi Nakamoto (and who might be several people). It’s a form of virtual cash used to buy goods and services online. Even by Web standards, it’s a strange and supergeeky phenomenon. This is what happens when software and networks meet the concept of currency, when you take peer-to-peer networks and advanced cryptography and ask, “How can I make a new economy?”
Hans-Jürgen Kuhl, a graphic designer, artist, and one time fashion designer, living in Cologne, Germany, was also an accomplished counterfeiter, who specialised in producing intricately detailed forgeries of US one hundred dollar notes.
But with his scrupulous craftsmanship, Kuhl placed himself among a rarefied class of counterfeiters who can produce truly high-quality fakes. They possess sophisticated knowledge about paper and dyes, and they have expertise in printing machinery and banknote security features such as watermarks and color-shifting ink. With a cigarette in one hand and a money- marking pen in the other, Kuhl began his quest to conquer the dollar by thumbing through thick binders of paper samples. Money-marking pens draw a black line on paper made with starch but not on stock that lacks starch, such as the ultrafine cotton-linen sheets manufactured by Crane & Co. of Dalton, Massachusetts, the sole provider of US dollar substrate. He contacted a dealer in Düsseldorf, hoping to buy some of Crane’s special blend of 75 percent cotton and 25 percent linen, but he was told that selling it was forbidden. Eventually Kuhl connected with a dealer in Prague who supplied him with starch-free paper that felt and weighed about the same as the Crane’s.
With clouds over Europe darkening, managers like Mr. Burnstein are increasingly turning their long-term focus to places with stronger currencies, like South America, Southeast Asia and Australia. When Metallica ended their “World Magnetic” tour in Australia a year ago, they played not just Sydney and Melbourne but also harder-to-get-to Perth. “We’re a U.S. export the same way Coca-Cola is,” he said. “We look for the best markets to go to.” “Right now Indonesia is on my watch list,” he smiled.
Two thousand years ago much of Europe used a single currency, that of the Roman Empire. There were a number of differences between the monetary system of Rome and that in place today though, which some economists attribute to the long run of the Roman currency, even if its value was diminished by inflation in later years.
The peculiarity of the Roman political system was indeed its taste for subsidiarity. The imperial government was usually quite happy to restrict itself to the essentials – mainly military defense and the rule of law – while devolving to local civic authorities most of the burden of managing their own issues. As such, the cities and regions, notably in the Greek or Syriac-speaking East, struck their own lower-value bronze coins as a complement to the usually higher-value imperial coins, leading to specific monetary zones.
A gold coin weighing 1012 kg (about 2226 pounds), and valued at more than A$50 million, has recently been produced by the Perth Mint in Australia, for no other reason than to make it the world’s largest coin, according to the mint’s CEO Ed Harbuz:
The largest coin in the world up to now has been 100 kilograms, made by a competitor mint, and we thought well, we’d better make it so much bigger that it’ll stay the biggest coin in the world for a long time.
At market exchange rates, a burger is 44% cheaper in China than in America. In other words, the raw Big Mac index suggests that the yuan is 44% undervalued against the dollar. But we have long warned that cheap burgers in China do not prove that the yuan is massively undervalued. Average prices should be lower in poor countries than in rich ones because labour costs are lower.
Even though the article is dated 1 April there is some method in the foolishness… taking one cent/penny off the round dollar/pound/insert-your-currency-here price of any product has been “found” to no longer entice consumers into purchasing said product. That actually makes sense.
Everyone knows – or thinks they know – that prices such as £1.99, £5.99 or £9.99 are optimal price points for retail goods. Customers read the first digit first, and the last two are ignored – or at least, they have much less cognitive impact. In general, consumers were thought to put a subjective value estimate of about ten per cent less on an item priced at £3.99, than one at £4.00.
The rationale behind .99 cent pricing – or at least so we are told – is that consumers think they are actually paying ten-percent less for something than if it were priced at the round dollar figure. In other words we “feel” as if we are paying $3.70 for a cup of coffee that is priced at say $3.99.
99 cent pricing may have worked in the days when a cent was worth something, say when five of them could pay for a bus fare, but today they are virtually worthless, except in very large quantities, and then only if you can find a merchant who will accept piles of small coins as payment.
Not only though do we not receive a ten-percent “discount”, to add insult to injury, we are saddled with useless one cent coins, or as is the case in this part of the world, five-cent coins, being the smallest unit of currency in Australia. And some people so hate five-cent coins that they literally throw them away.
Despite therefore an underlying psychology that dictates otherwise, we are probably making a greater saving by paying the round dollar price, what are you going to do with a stack of one or five cent coins anyway?
Square, a new company founded by Twitter cocreator Jack Dorsey, lets anyone accept physical credit card payments through a smartphone or computer by plugging in a free sugar-cube-sized device – no expensive card reader required. A startup called Obopay, which has received funding from Nokia, allows phone owners to transfer money to one another with nothing more than a PIN.