# One currency world (Good or Bad) **URL:** \ **Category:** Great Debates\ **Created:** [April 16, 2014, 5:05pm UTC](https://boards.straightdope.com/t/one-currency-world-good-or-bad/686275 "2014-04-16T17:05:51Z")\ **Posts on this page:** 5\ **Page:** 3
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [April 18, 2014, 10:04pm UTC](https://boards.straightdope.com/t/one-currency-world-good-or-bad/686275/41 "2014-04-18T22:04:09Z")
I’m okay with letting the Americans use the Canadian dollar, once they make their banking system as stable as ours. ---
**Author:** ![YogSothoth](https://avatars.discourse-cdn.com/v4/letter/y/8edcca/32.png) [@YogSothoth](https://boards.straightdope.com/u/YogSothoth)\ **Post date:** [April 18, 2014, 10:13pm UTC](https://boards.straightdope.com/t/one-currency-world-good-or-bad/686275/42 "2014-04-18T22:13:49Z")
> [@puddleglum](#): > > Monetary policy is controlling the amount of money in an economy. Money is like any other good in that if there is alot of it then it is worth less than if there is a little bit. When an economy tanks for some reason and it is reduced by one tenth then either everyone needs to take a pay cut of one tenth or one tenth of the people need to be let go. Since it is unpopular to cut everyone’s pay unemployment results. If you increase the money supply enough you make everyone’s pay worth less and it is like everyone gets a pay cut without them noticing. Thus you can avoid the unemployment. Also if you devalue your own currency then the things you sell to other countries suddenly gets cheaper and you can sell more of them. > In the case of Greece, if the quantity of Drachmas was increased so that they were worth less relative to the other currencies of Europe then that would make it cheaper for tourists to come from other countries to Greece, helping the economy without anyone in Greece having to take a pay cut. Also unemployment would be much less than it currently is. They would still be bankrupt, but suffering would not be as great. Well in my system, governments can’t simply print money. They can actually run out of it. Increase in the amount of money due to inflation or simple population growth would be tied to an objective standard. It seems the benefits of having a One World Currency (OWC) then would be that one country having a lot of money would not make it worth less. Goods in this hypothetical economy would still be worth the same, just that people would be willing to pay more or less for the same item. How I see it working using your example is this: Say Greece’s economy tanks and people need to take a pay 1/10th pay cut or 1/10th of the people need to be laid off. They don’t want to do that. In the real world they can increase the money supply. However, in this hypothetical world, they can’t, they only have a finite amount of money to pay people. They can’t print money, and borrowing it has to come from somewhere, so they are forced to either pay less or lay people off. Why couldn’t that work? Greece today can print more Drachmas, but in the OWC world, they can’t. The extra bills have to come from somewhere, either from borrowing or increasing their exports (or decreasing their imports). Doesn’t that solve one major problem of real world countries inflating their currency? > [@puddleglum](#): > > Democracy means having a voice in the government. The bigger the government the more diluted the voice. If you are going to have each local region have its own laws, why not just call these local regions countries and let them rule themselves. But the bigger the government, the farther each voice can affect. You’re just looking at one aspect of having a world government. You don’t mention that it is also more democratic for voters in California to affect citizens in South Sudan with their vote. I think the trade off balance itself out, so I have no problems with a world government. People always worry about what others would make them do but they don’t consider that they have the same power ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 19, 2014, 12:33am UTC](https://boards.straightdope.com/t/one-currency-world-good-or-bad/686275/43 "2014-04-19T00:33:23Z")
> [@jfreakofkorn](#): > > also having it on a credit system > > in other words, no paper ( or physical ) money … tracking everything > > oh but a h\*\*\* no That’s just how most commerce works these days, including retail. ---
**Author:** ![BrightNShiny](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)\ **Post date:** [April 20, 2014, 1:45am UTC](https://boards.straightdope.com/t/one-currency-world-good-or-bad/686275/44 "2014-04-20T01:45:56Z")
> [@YogSosoth](#): > > How I see it working using your example is this: Say Greece’s economy tanks and people need to take a pay 1/10th pay cut or 1/10th of the people need to be laid off. They don’t want to do that. In the real world they can increase the money supply. However, in this hypothetical world, they can’t, they only have a finite amount of money to pay people. They can’t print money, and borrowing it has to come from somewhere, so they are forced to either pay less or lay people off. Why couldn’t that work? In the real world, there’s a phenomena called [Nominal Rigidity](http://en.wikipedia.org/wiki/Nominal_rigidity). It’s sometimes referred to as “price-stickiness” or “wage-stickiness” or “downward nominal wage rigidity.” The basic idea is that prices and wages are resistant to nominal changes downward. Nominal here means the amount expressed in units of currency. Basically, if employees are being paid $10/hr, it seems to be very difficult to move them to $9/hr. It’s just something that happens, it’s been observed over and over again, and there are a number of theories as to why it happens. Which is why if the economy actually needs people to move from $10/hr to $9/hr, the easiest way to do that is to inflate the currency and reduce the real value of wages. The same thing is also observed with prices for goods, although with goods, some companies can get around that by reducing the amount of stuff you get for the same price (say, for example, reducing the size of the candy bar but keeping the price the same). ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [April 22, 2014, 6:36pm UTC](https://boards.straightdope.com/t/one-currency-world-good-or-bad/686275/45 "2014-04-22T18:36:10Z")
Having a single currency can be emulated, in part, by a country’s tieing its currency to a big currency, e.g. U.S. dollar. In my opinion, Thailand’s pegging its baht (in effect \*) to the U.S. dollar was a key precursor to the วิกฤตต้มยำกุ้ง, the 1997 Thai currency collapse which led to the 1997 financial crisis. To sustain Thailand’s growth it was convenient for them to have high inflation and high interest rates. Pegging the inflating currency to the non-inflating dollar was anomalous. Gullible foreigners, trying to take advantage of high Thai interest rates, helped augment the Thai over-building boom in a vicious cycle. (\* - Thailand had left dollar parity in the mid 1980’s, replacing it with a secret “basket.” The basket wasn’t too secret, however. Simple linear regression of BOT forex quotes demonstrated it to be a 80-10-10 mix of dollar, yen and euro, IIRC.) [Previous page](https://boards.straightdope.com/t/one-currency-world-good-or-bad/686275.md?page=2)