The “Stupidity of the Week”-award for the week that I was gone is hereby awarded to the 376 Members of the European Parlament (MEP:s) who thinks that inflation should be fought by replacing the one and two euro coins with bills.
Having one bills of roughly the value of one euro have as we all know worked perfectly in the United States. None of you Americans have seen any cost of living increases lately,right? I’m just waiting for the MEP:s to come up with more equally brilliant ideas for fighting inflation, like “Whip Inflation Now”-buttons.
And the MEP:s are of course not the least deterred by the fact that the most significant price inflation have occurred in real estates, which are usually not exchanged through one or two euro coins.
Just in case this doesn’t work, how about restricting money supply growth which have steadily accelarated for the last few months from a already high (much higher than the 4.5% value the ECB is supposed to aim at)level to a full 8.5% in September 2005. I suspect that many of the 376 MEP:s that signed this belong to the vocal group of pundits which have called for the ECB to become even more inflationary.
{ 5 comments }
Stefan,
Other than the reasoning, having one and two euro bills is consistent with the US experience. How many of us have had a one dollar coin in their pocket in the last six months, unless it served as a subway token or something? I didn’t even remember what the latest dollar coin was.
Regards, Don
Don, I refered to the US as being a place that *does* use the equivalent (sligthly less but still roughly equivalent) of one euro bills (And then sarcastically wrote that it has worked well to contain price inflation). You must have misunderstood the sentence.
Stefan,
No, I was merely commenting that the US hasn’t embraced large denomination (token !!) coins either. The fact that the Europeans have not even without a paper alternative, should be positive evidence to resist the next time the government wants to force a dollar coin into circulation by pulling the dollar bills.
Regards, Don
Don,
Actually, I have at least one Sacagawea dollor coin on me at all times. They’re the perfect size for me to walk across my knuckles (excellent dexterity excercise for those fond of sleight-of-hand).
Xellos
Inflation means money is worth less, So ? Let’s print more money ?! Indeed here’s the real eternal reason behind that European decision: fight inflation with inflation. This time it’s virtual.
Indeed, since bills were traditionally used for large figures, and coins for small ones. European inflation is the worse inflation you could ever imagine: it now devaluates the mere feeling of value inherent to the bill, to that of a coin…!
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