Could Blockchain Be Used More Appropriately To Facilitate Cashless Society?

Thinking out loud is often done in a haste hints the nature of it.  Thus my thinking out loud in this post isn’t solid, but I like to dabble on here.  One thing people fear about a cashless society is that once the digital numbers are being erased somehow, their worth would be gone without any trace for recovering.  Thus, people are definitely still preferring cash as a mean for emergency backup.  After all, if their digital world is being shut down, they got cash to help them survive daily such as buying foods and whatnot.

Bitcoin is probably going to be an enemy of the banks since banks want to be the middlemen of the transactions.  Bitcoin takes out the middlemen role and allows people to have a direct transaction between the two parties.  In order for the bank to receive commission and gain liquid fund, the bank needs to be able to insert itself into the deal.  Simply put, Bitcoin is against a traditional bank which isn’t accepting Bitcoins!

Banks can accept Bitcoins, but people won’t use banks as of how they would use a traditional bank.  Bitcoin users may want a bank to behave as a trustful Bitcoin exchange to facilitate the Bitcoin transactions in safety manners.  This way any Bitcoin bank can still insert a banking role in a non-traditional way into the deal.  Since Bitcoin will be more transparent — plus demoting a traditional banking role somewhat, I don’t think the banks will be able to create more creative derivative means for creative investments.  I could be wrong since this is thinking out loud session.

Bitcoin is also very similar to a cashless society because it isn’t cash and it’s digital medium.  Taking away Bitcoin, underneath it all is the technology itself which is the blockchain.  The blockchain technology is more important than the clothes it is wearing such as a crypto coin (i.e., Bitcoin).  Why?  I think blockchain technology is good at keeping transactions honest.  This honesty is rather important for cashless society don’t you think?  Nonetheless, current Bitcoin way isn’t helpful for blockchain technology since the implementation is rather crude, allowing people to hack and steal each other Bitcoin without a clear way to trace back to the original owner of the lost Bitcoins.

If I’m not wrong, a will be successful cashless society could use the blockchain technology to keep cashless money honest so the original owner of the money won’t fear the tyranny of a cashless society shutdown event.  By that I mean the only way for a person in such a society to lose wealth is being incriminated with evidence and wealth get confiscated by a court of law.  In such an orderly way the blockchain technology could be used to keep track what money belongs to whom before the exchange takes place and long afterward so a cashless society shutdown event which occurs by any other mean besides the legal ones such as the one I stated just a moment earlier would be a futile effort.

I think people would be able to accept a cashless society when their wealth won’t be suddenly disappeared overnight in a mysterious event.  Of course, people are still going to fear that if they’re innocent and being convicted wrongly; their wealth got confiscated in such a rude event — they could be helpless as they would not be able to survive daily when their digital wealth got shut down in a cashless society.  I think once one accepts a cashless society, one has to accept such possibility as there won’t be any legal cash laying around to act as a legal tender for acquiring daily things.

By writing this blog post, it doesn’t mean I support a cashless society!  I just merely thinking about the possibilities and effects of it all when such a society occurs.  Although China isn’t a purely cashless society, because paper money is still going to be a legal tender within China.  Nonetheless, China is one of those countries that is leading the race in facilitating the use of money through digital devices such as the smartphone.  I think once the money becomes digital numbers, money is indeed facilitating a cashless society.  A cashless society is definitely taking some shapes or forms around the world, and so I’m writing this to amuse myself with both negative and positive possibilities of such a phenomenon.

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Weaker Dollar, Stronger Yuan May Hurt The United States And Help China In The Long Run!

I’m no expert in economic matters, but I just want to use my own personal logic to make sense of a few things that are currently happening.  People are seeing that the Dollar is weakening as we speak, and the Yuan is growing stronger as we speak.  Some people say weaker Dollar is a good thing because export will become more profitable.  Furthermore, when export becomes profitable, it also drives up the manufacturing sector at home.  That’s the theory for some people, but I feel that it’s way more complicated than this.

Since the United States isn’t a world manufacture hub — China is holding this title — the United States’ exports won’t matter as much unless the United States becomes the world manufacture hub.  Sure, with weaker Dollar, the United States’ exports will become more competitive than before.  The question is, will a little gain in competitiveness in exports spur the manufacturing sector at home?  Meanwhile, weaker Dollar will make the United States’ imports a lot more expensive.

I think the United States currently imports a lot more than exports.  The United States’ import is at $2.25 trillion and the export is at $1.45 trillion for the year of 2016, according to Wikipedia.  If the United States’ exports continue to slack even with the weak Dollar and the imports continue to grow, the United States could face an even stronger trade deficit.  For an example, manufacturer companies in the United States may have to import more expensive materials from the outside to manufacture products at home for selling across the world and at home.  This may not make the products at home cheaper for homegrown consumers.  Furthermore, this will increase the trade deficit in manufacturing sector if not enough products within the United States get to export to balance out the import costs.

Weak Dollar will increase less buying power for the Americans who go abroad for vacation, business, and so forth.  Weak Dollar can make purchases of products from foreign companies through online websites or offline imports more expensive for the American consumers.  For an example, I could be buying a music plugin from an online website which belongs to a French company, and with a weak Dollar, I could be paying more for this software.

I guess good things and bad things do exist even when the Dollar is weak or strong.  Nonetheless, the most interesting question is can the United States fare better when the Dollar is weaker or stronger.  In my opinion, weaker Dollar can help spur export a bit, but if the United States’ exports don’t carry the whole United States’ overall, long-term economy, then the weaker Dollar will be a very bad thing!

What about China?  If the United States enters a trade war against China, China can increase import tariff costs for the products from the United States.  This could hurt the United States’ export market because weaker Dollar would be neutralized by this move from China.  Furthermore, China can also buy up weak Dollar on the cheap to make Yuan stronger if this would serve China’s agenda.  Of course, stronger Yuan for China could make China’s exports look expensive.  Still, from what I’ve heard, China is trying to spur demands at home to create a bigger home consumer market so China won’t be relying on too much from the export market.  If this is the case, then cheap Dollar would be beneficial for China in a big way!

Stronger Yuan would allow Chinese who are going abroad to get more bang for the buck.  Meanwhile, Chinese imports would become cheaper, and so China won’t have to spend so much money to import stuff.  As China’s export market isn’t doing so bad and the imports get cheaper, stronger Yuan allows China to continue to reform her consumption market.  Foreign companies would love to enter China’s bigger homegrown consumption market because China has 1.4 billion headcounts and growing.  As China becomes an ever more important factor for foreign companies due to the size of Chinese population and market, China can begin to dictate tastes, styles, fashions, and so forth worldwide.  Chinese culture will become ever more influential if Chinese market becomes the most important market in the world.

With a weaker Dollar and stronger Yuan, entering a trade war against China might be very bad for the United States!  China can sanction the United States’ companies, entities, and so much more to crash the United States economy.  Of course, a trade war would be bad for China too, because the United States’ imports from China do matter to China a lot.  Nonetheless, as China doesn’t rely on the export market so much, a trade war between the United States and China won’t deter Chinese economic reform plan.  After all, China wants to grow the homegrown consumption market!  While growing a homegrown consumption market to rely less on the export market, China relies on the cheaper import market to balance out the reduction of Chinese exports.  Weaker Dollar and stronger Yuan will allow China to transit from the export market to a service market, also to move to a higher value-added export market — all in all – making this transition in a smoother fashion.

In conclusion, I think China can make the best out of either weaker or stronger Dollar, and the United States — as long as the country stays less competitive — won’t be able to have the upper hand if a trade war occurs between China and the United States.  Meanwhile, China can use stronger Yuan to buy cheap debts from United States’ weak Dollar to prop up China Yuan’s strength.  This, in turn, will actually help China transits from a manufacturing to a service economy.  As the low value-added market goes away in China, China has to accelerate the reform of the manufacturing sector at home so Chinese future export market will be more about high value-added products.  Anyhow, if the United States isn’t going to be able to use the opportunity of a weaker Dollar to reform her economy somehow to make the United States’ economy more competitive against rivals such as China, in the long run other rivals will use the weaker Dollar as the opportunity to make their own economies a lot stronger.

Why I Think Bitcoin Is Not Ready For Prime Time

So Bitcoin becomes the rage again for unknown reasons.  Today Bitcoin price is going through the roof.  As of this writing a single Bitcoin is equating to $2251 (US Dollar).  I can see the allures of Bitcoin, but I can also see so many drawbacks.  Let’s talk about the drawbacks shall we?

First, one of the biggest drawbacks of Bitcoin for me is not be able to sell Bitcoin anonymously through an exchange.  Instead, the exchange requires you to send your info includes your social security number before you get verified and be able to do any trading of Bitcoin.  This means if an exchange gets hack, all of  your info is going to be shared or be sold to any unknown parties.  Of course you can argue that lot of your information is already in places that are being stored online and can still be hacked easily.  I argue that at least the government agencies and banking institutions are perhaps more willing to protect your information than some Bitcoin exchanges.  Thus, hacking into these institutions may not be easily done, and once it is being done the government would definitely go after such hackers in a big way.  So, at least you know you got huge resources to look after your information in a more serious manner.

Second, another biggest drawback is that many Bitcoin exchanges cannot be trusted, because not only they’d gotten hacked way too many times before but some of them also run away with your bitcoins.  This means if an exchange decides to stop doing business and just run away with your bitcoins, you’re basically losing all of your bitcoins on a specific Bitcoin exchange.  This is why I don’t think it’s wise to store any of your bitcoins on a Bitcoin exchange besides just enough bitcoins for selling purpose.  Once buying a bitcoin on an exchange it’s wise to transfer the bitcoin out of the exchange immediately and into your more secure Bitcoin wallet that stores on your local machine/computer.

Third, another biggest drawback is that you can lose all of your bitcoins easily if a computer that you’re using to store all of your bitcoins got corrupted hard drives.  This means if you cannot rescue a specific corrupted hard drive that stores all of your bitcoins, you basically lose all of your bitcoins forever.  Thus, I think some people may adopt storing their bitcoins on multiple machines in multiple wallets, so they don’t have to worry about having all of their eggs in one basket.  Some people also do backups for their Bitcoin wallets’ data to ensure that Bitcoin wallets’ data won’t get corrupted easily.  It is also wise to encrypt the partition or partitions that you store your Bitcoin wallets’ data, and only this way you can protect your bitcoins from being stolen easily.  Basically, encrypting a partition on top of already encrypted Bitcoin wallet’s data is like having one more security layer.

Fourth, another biggest drawback is that Bitcoin is still not being accepted widely.  Sure, there are many places that may accept Bitcoin, but there are also so many many places that do not accept Bitcoin.

Fifth, another biggest drawback is that Bitcoin can be confusing for people who have no experiences with computer.  Some people in older generations will not be able to understand how to use Bitcoin, and so it’s going to be exotic and hard to use for them.  To use Bitcoin, one must know how to securely protect your bitcoins in a Bitcoin wallet and on a secure machine, but these measures are probably just gibberish for people who do not have the ability to use computers correctly.  Especially, if they do not know how to use computer in a secure manner, they are going to get hack easily and lose all of their bitcoins.

Sixth, another biggest drawback is that many governments are not recognizing Bitcoin as currency, and so Bitcoin is in a grey area in which so many different laws are being applied to Bitcoin.  This means you have to use Bitcoin differently in each country, and so laws that regulate Bitcoin in one country doesn’t behave similarly to laws in another country.  Of course you can argue that cash are not the same in all countries, but cash are legal tender — thus there are specified laws that may apply on the usage of cash even though such cash are not printed in the specific country or countries.  Some governments are outright hostile toward Bitcoin, thus they’re banning Bitcoin outright.

Seventh, another biggest drawback is that some governments are making you as a target of investigation for using Bitcoin, because they think Bitcoin is a way to facilitate dirty money.

These are the drawbacks and other drawbacks that I may not have stated that prevent me from seeing Bitcoin as a sure way that can replace the traditional money.  Furthermore, I like to have the option of Bitcoin and digital currencies and traditional currencies in digital forms, but I also like even more to see that traditional currencies in the form of cash that do not go away.  Why?  Anything that is tangible is definitely harder to be erased and made disappear.  This means your wealth can be protected better even it means securing them under your mattresses.  If your wealth can just go poof in an instant, it means your wealth is not being secured in a correct form or forms.  Because Bitcoin has so many weaknesses, I think it’s not wise to convert a huge portion of your wealth into bitcoins at all.

Cashless Society Encourages Monopoly Money

I’m not an economist, because I’m a nobody.  Thus, my experience in trained economics is a zero.  As a human being, I do have opinions.  By staying informed with everyday experiences, I do form opinions on facts that, I think, are real.  From these opinions and ideas, I can draw some non-expert conclusions.  In fact, right now I like to talk about one or two conclusions I have on cashless society.

I think cashless society is wonderful for governments, bankers, and whatever associations that have control over a society, because electronic traces are available 24/7.  What is scarier is that anybody in the position of power or any hacker who has enough knowledge can just shut you out of a cashless society by changing your electronic numbers.  This is very real, because without any cash on hand, your only option is to rely on the credit system and other electronic monetary forms.  When such a system cuts you out, you are basically helpless and powerless and cashless.  In such a situation, surviving becomes impossible!

Cashless society can also be wonderful for you, but as long the illusion of real efforts and real transactions are actually taking place.  I think bankers can just enter any number of money into a bank account for just about anybody, and the money will form instantly by the electronic means.  You could say money seem to be appearing out of thin air!  Growing on tree, or however you want to phrase this illusion.  I think cashless society will enhance this ability by an infinite time more.  What do I meant by an infinite time more?  Cashless society won’t use cash, because cash cannot be legal.  Thus, cashless society is all about the electronic, monetary numbers, and anybody who has the authorization to form these numbers can just make them out of nothing.  Or they can just delete these numbers whenever!

What makes cashless society humming brilliantly is the illusion of convincing people that real efforts and transactions are actually taking place.  Let’s say, if a doctor who got paid very well by treating his patients in exemplary manner would probably quit his job if the bank could instantly form any amount of money, into the infinity, without any effort.  Why even bother to go to work when you can just go to the bank for an easy loan, and the bank won’t care if you can pay the money back or not since the bank can form infinite amount of credits.  In the cashless society, if the bank isn’t going to lend you any credit, you have to acquire these credits by working for a job or doing whatever to acquire more credits.  But will you be working with a happy smile on your face knowing the bank can form any amount of credits out of thin air?  Demand and supply formula won’t be a good gauge anymore in cashless society, because unlimited amount of credits can flood the system forever.

Even better, why don’t you just form a bank where you, yourself, can electronically form infinite amount of credits?  Wouldn’t this make you an infinite-air?  Why would you bother with taking out someone else’s trashes and problems for a wage/fee when you can just hallucinating yourself with infinite credits of your own bank?  If everyone is into this, then the system got a problem.  The problem is not lacking of credits or money, but the problem is about — nothing will ever get done.  Because nobody will give any real effort in any exchange since credit is created out of thin air without any real effort.  This means the producers see no reason to produce products, because the infinite bank is giving out easy credits freely.  Basically, why produce when you can obtain free credits, right?  Without producers in the equation, the consumers won’t have anything real to consume.  The whole economic system would become meaningless, and so the system collapses.

I guess, the only real demand for cashless society is the demand for more credits, and the easy credits are plentiful available so the demand for more credits could be fulfilled.  Of course, the government and the powerful bankers can just create laws that make the illusion works for awhile.  An example would be you have to pay back the loan you want to borrow, or else you may suffer a consequence of being shutout of the cashless society system.   Knowing being shut out, it means you are not going to be able to buy the most necessities such as foods, and so you know you’re doom for good.

Nonetheless, in a cashless society — a shutout mandate or whatever rules a cashless society wants to impose on the people — the atmosphere can become very toxic for the powerful people.  How come?  If a society can only get poorer while the banks have unlimited amount of credits, the poor people will see this as the greatest injustice of all time.  This means if there is large amount of poor people who are thinking this way will have a king’s head rolls.  Thus, a cashless society needs to uphold not only the illusion of real efforts and transactions, but it also needs to uphold the income equality for the whole society.  As long the majority (e.g., 65%, or 75%, or 80% of the general population) is wealthier than a small percentage of the whole population, then nobody would be able to form a big enough movement to have a king’s head rolls.

If you’ve read thus far, I think you would probably have a notion that cashless society is the same thing as a credit society we’re living in today.  I would agree, but cashless society is more draconian since it outlaws the tangible cash.  With cash in the equation, people can still feel that transactions are real, because something gets sold something gets paid with hard, cold cash (i.e., it’s real).  Even with cash in the system, it’s all about maintaining the illusion that credits are properly distributed.  Taking the cash out of the current credit system to make a complete cashless society, the illusion of proper distribution and exchange will be harder to uphold when the going gets really tough.  Few good examples would be unemployment goes skyrocket, income inequality goes skyrocket, debts go skyrocket and so forth.

Of course, you can argue, when the going gets really tough, with cash in the economic system or not, the whole bubble is going to pop and a king’s head rolls anyway.  Nonetheless, with cash in the system, at least new problems of cashless society won’t be introduced to the general population.  Once cashless society is in place, some traditional problems plus new problems are going to continuously rain down on the whole society, especially when people can be cut off from the system altogether since only credit-like means are acceptable and real.

Cashless society would definitely help the controllers to see the nuts and bolts of the whole system more clearly, because electronic transactions are going to leave electronic traces behind.  Nonetheless, in bad time, this would aggravate people rather easily, because they feel their privacy are being invaded all the time.  When it comes to money, privacy matters!

I think people won’t mind sharing who they’re having sex with, but when it comes down to money people are not that willing to share.  Thus, money is rather private!  So, cashless society is going to have a problem of allowing people to have some privacy with their money.  For an example, if everything is so connected in the cashless society, everyone would know how much credits you have available.  This would mean your local pizza parlor would refuse you a slice of pizza for they know your whole worth is zero or negative credit.  In a cash society, you can just hand over the cash, the local pizza parlor would careless if you have any credit, and off you go with a delicious slice of pizza.  In a cashless society, your shame would be revealed instantly.  Even worse, you will not be able to fill up your stomach when nobody is going to accept cash.  After all, it’s a cashless society!

In summary, I think cashless society can make bad economics worse, because new problems would be introduced to the general population.  These problems may become apparent rather quickly when the economy goes bad.  An example would be people may become less cooperative in making a living, because there are less incentives to encourage people to earn money the hardy way.  People may try to scheme the infinite credit/cashless society to make money the easy way, and economic bubbles would form into gigantic ones till they burst and collapse the economic system altogether.  Instead of really solving the problems of society such as poverty and whatnot, cashless society can only enhance the paranoia of lacking privacy.  Money is a very private matter to many people, and so these people are not going to be very happy about having to live in a cashless society when every known businesses and services out there know how much you are worth 24/7.  At least with cash, people can hide their shame of having less worth.  Basically, any society with a lot of insecurity can collapse, and so the same goes with cashless society.

 

What Will Happen If The World Uses One World Currency?

What will happen if the whole world is going to use the same currency?  Imagine if the whole world only has one currency, the economy would behave rather differently than how it is now.  Currency war would be history.  Trade war through currency manipulation might not be easily executed as now.  Is it really that positive to have one world currency?  If you’re reading on, you might see that I’m not so sure about this idea.  Nonetheless, the idea is interesting and provocative.

Saying is easy, but having one currency for the whole world would be difficult.  Our world is made of countries with histories and sovereignties.  Thus, each country has its own financial and currency systems.  Except the Eurozone member states, most countries are able in printing their own currency for whatever purposes.  Since each country is being ruled by a specific umbrella system that supports the financial and currency systems, and so it’s rather difficult to have any country in such situation to give up their right to print their own currency.

Nonetheless, let’s say the whole world gets together and decides to have one currency for all countries in the world, the question is how one world currency system would behave?  Perhaps, it’s like a democracy, because each country should have the right amount of currency printing privilege in percentage quota.  The world could use the population size of a country to determine how much percentage quota for the right to printing the one world currency a country should have.

The idea of one world currency is just too radical, because nothing like this has ever happened in the human recorded history.  Since this is too radical and has never happened before, I don’t think anyone is clever enough to see the consequences if one world currency is actually taking place.

My suggestion — if this scenario takes place, the country’s population size should determine the percentage quota of right to printing the one world currency — is having many flaws.  On the top of my head, a flaw of this suggestion is noticeable in regarding to how a country should prioritize their policies, because the larger the population size the bigger the percentage quota would be for printing the one world currency.  In a competitive world with one currency, poverty might be increasing instead of decreasing.  If a country decides to make policies that encourage population growth but without policies to help keep the population stays competitive in the world market, it’s a disaster in the making since bigger population means more mouths to feed.  In one world currency system, wrong prioritization of policies can encourage a disaster on a very large scale.

I think there are positives and negatives in regarding to have one world currency.  The positives are cohesive world monetary system, less aggressive trade and currency manipulations, and so forth.  The negatives are poverty might be increasing in uncompetitive countries/regions, losing sovereignty, democratization of currency printing is still going to be dictated under one central umbrella govern body which oversights the regulatory bodies of how one world currency should work, and so forth.

Since I’m just a puny human, I don’t really know all of the negative consequences might bear fruit if one world currency system is actually taking place.  One thing I do know is that most things are possible, and so you would never know that one day the whole world might band together to come up with one world currency.  Who could have thought Eurozone would be possible, right?  Nonetheless, the jury is still out in regarding to how effective and prosperous the Euro has been for the Eurozone member states.  After all, Eurozone as a whole is facing greater uncertainty in regarding to the increase of financial instability within several Eurozone member states.  Greece comes to mind in this regard.

I don’t particularly side with the idea of one world currency, because seeing how Eurozone member states are facing the problem of not having to be able to print their own currency to support their uncompetitive trade markets.  Still, seeing how one country can manipulate her own currency to boost trade competitiveness at the cost of other countries’ trade welfares, perhaps one world currency might be able to stem this problem.  To sum things up, I’m not sure having one world currency can solve the world’s financial uncertainties, because Eurozone member states have shown that even they are not immune to the financial uncertainties even though they are using one currency (i.e., the Euro) to trade with each other.

Sharing A Currency Means Giving Up One’s Own Sovereignty

I’m no expert in economics, but this doesn’t stop me from having my own thoughts on all things economics.  Thus, if my thoughts on economics are skew somehow, you have to forgive me for having a weak forte in economics.  Hmm…, weak forte is an oxymoron?  Anyhow, in this blog post, I like to persuade you why holding on to sovereignty is bad for a country which shares a currency with other countries.  Beyond the scope of currency matters, the good and the bad consequences for a country to give up one’s sovereignty is entirely another topic in which I don’t want to delve into in this blog post.

There are 19 European countries that are using Euro currency.  These countries are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.  Certainly, you can think these 19 countries that are using Euro as a region in the West, westward of Russia and China.  To simplify things in this blog post, I like to say the West whenever I refer to these 19 European countries.  Contemporary economic troubles that are stirring unrests and provoking new economic fault lines in the West can be argued that one currency Euro is the source of troubles of the economic crisis in Greece and several other Euro’s member countries.

In my opinion, the U.S. Dollar or the China Yuan or Japan Yen and so on has always been more flexible than Euro, because Euro is not a currency for a coherent country but for 19 countries with incoherent economic policies.  Instead of seeing economic progress for all countries within one currency system, we are seeing some Euro countries do really well and others are either bankrupted or on the verge of defaulting.  Incoherent interests among these currency sharing countries have divided these countries from forming up a coherent economic plan.  Without a coherent economic plan, these currency sharing countries are failing to execute economic policies that would work for most if not all member states (i.e., countries that are using the same currency).

For an example, Greece of today may be a very good country for tourism and several other service industries, but this country does not have a strong foundation of manufacturing high value products.  Taking this narrow point of view on Greece’s economic structure, we can see that Greece has to import a lot stuffs for internal consumption.  What would happen when service sector and several other sectors fail to produce net profit for Greece?  Greece has to spend less on internal consumption of course.  Unfortunately, Greece’s economic crisis evolves with how Greece is spending more than Greece can make, thus the whole country is now bankrupted.  In this situation, we can see that Euro currency isn’t able to dictate the economic policy to Greece in a way that Greece won’t have to go bankrupted.  In this situation, Greece cannot print more Euro since it has no power to do so.  If Greece can print more Euro, it may be able to attain more Euro to pay off the debts at the cost of devaluing the Euro.  Without being able to print a country’s own money to get out of debts (i.e., work for short term at the expense of the purchasing power of the next generations), Greece may have to find other means of bringing home the bacons.

The example of Greece shows that country without one’s own currency can prevent a country from having a second chance of righting the sinking ship.  Without being able to repair a sinking ship, how one can expect Greece to be able to get out of the economic crisis?  Foreign countries can continue to lend money to Greece — increasing Greece debts without knowing for sure that Greece would be able to pay back — to help Greece sustains the sinking ship from sinking.  Nonetheless, without repairing the hole from the sinking ship, no amount of extra lending would be able to suddenly make the hole whole.  It’s like you keep on scooping the water out of the sinking ship while the hole keeps on letting in more water into the sinking ship.

Without having one’s own currency, a country may experience the devaluation of a currency without having any choice in the first place.  For an example, Germany’s economy got most things right, thus Germany doesn’t need to weaken the Euro for generating an attractive export industry, but Greece and other European countries need to have Euro to be weakened for various economic benefits.  If European countries are banding together to devalue the Euro for economic benefits, this means Germany will have to be a reluctant party to the devaluation of the Euro.  If the Euro is being devalued, Germans will see their wealth being stealthily taxed away by other Europeans, because currency inflation weakens the overall health of the wealth holding of every German.  Basically, Germans don’t have a choice if Germany wants to see Euro’s member countries devalue Euro for economic benefits.

In the long run, the disparity of the rich and poor members within a single currency system will become ever more so apparent.  The disparity of such a scale within single currency system will be the force that can eventually break the system apart.  Once the system breaks down, the rich members will go on, hopefully, with a better currency system.  The aftermath of a broken single currency system will make things a lot harder for the poor members.  The poor members will have to fight an uphill battle, because they lack the economic prowess.

A single currency system can work only if all member countries become one country!  As each member country gives up the sovereignty, each member country has to act as a state and not as a country.  This means the states need to listen to a centralized power.  This centralized power will execute general, coherent economic policies.  Sure, each state can have its own economic policies, but these economic policies would be localized and limited in scope and scale.  Since each member country gives up sovereignty to become a state, it’s pointless to spend the money that they don’t have to upkeep big military as if a country would do.  Thus the implication of truly giving up one country’s sovereignty for sharing a currency can go beyond the scope of economic matters.

Basically, a true country needs to be efficient in resource allocation.  Nonetheless, a true country also needs to be able to generate needed resources in the moment of need, thus the power of printing money comes in handy.  Perhaps, the power of mobilizing many states’ resources in a coherent manner in the time of need can also be very effective in stabilizing the crisis moment.  As long a true country has a clear, efficient picture of the resource allocation, it can figure out which resource needs to be generated in extra for strategic purpose.  The redundancy of a strategic resource can later bail out a country from a resource lack crisis.

If 19 European countries in Euro currency zone can become one true country, then the Euro may become more flexible.  Nonetheless, one’s own currency doesn’t necessarily translate into healthy economy for a country.  We had seen countries devalued one’s own currency to the point of the currency became worthless.

Quote from Wikipedia:

By late 1923, the Weimar Republic of Germany was issuing two-trillion mark banknotes and postage stamps with a face value of fifty billion mark. The highest value banknote issued by the Weimar government’s Reichsbank had a face value of 100 trillion mark (100,000,000,000,000; 100 million million).[15][16] At the height of the inflation, one US dollar was worth 4 trillion German marks. One of the firms printing these notes submitted an invoice for the work to the Reichsbank for 32,776,899,763,734,490,417.05 (3.28 × 1019, or 33 quintillion) marks.[17]  (Source: https://en.wikipedia.org/wiki/Hyperinflation)

To conclude this blog post, in my opinion, one’s own currency allows the possibility of currency manipulation.  Usually, a country manipulates its own currency to gain trade, tourism, and other advantages.  Nonetheless, if not careful, currency manipulation can drive one’s own currency into a currency hyperinflation, leading to a worthless currency in which nobody wants to have anything to do with such a currency.  Worthless currency won’t be able to support trade and so on.  Sharing a currency is not the same as having one’s own currency, and the disadvantages of sharing a currency are many.  The lack of the ability to freely manipulate one’s own currency, currency sharing country will have to rely on self-discipline in nation spending.  If a currency sharing country cannot produce anything of values to bring in a net profit, a currency sharing country must cut spending even more since money printing isn’t possible, leading to apparent austerity and poverty.