New Mandela Banknotes

[w1z4rd]

Almost every country, including the United States, is on a system of fiat money, which the glossary defines as "money that is intrinsically useless; is used only as a medium of exchange". We saw in the article "Why Does Money Have Value" that the value of money is set by the supply and demand for money and the supply and demand for other goods and services in the economy. The prices for those goods and services, including gold and silver, are allowed to fluctuate based on market forces

The stability the gold standard cause in the foreign exchange market is often cited as one of the benefits of the system.
The stability caused by the gold standard is also the biggest drawback in having one. Exchange rates are not allowed to respond to changing circumstances in countries. A gold standard severely limits the stabilization policies the Federal Reserve can use. Because of these factors, countries with gold standards tend to have severe economic shocks. Economist Michael D. Bordo explains:

"Because economies under the gold standard were so vulnerable to real and monetary shocks, prices were highly unstable in the short run. A measure of short-term price instability is the coefficient of variation, which is the ratio of the standard deviation of annual percentage changes in the price level to the average annual percentage change. The higher the coefficient of variation, the greater the short-term instability. For the United States between 1879 and 1913, the coefficient was 17.0, which is quite high. Between 1946 and 1990 it was only 0.8.

Moreover, because the gold standard gives government very little discretion to use monetary policy, economies on the gold standard are less able to avoid or offset either monetary or real shocks. Real output, therefore, is more variable under the gold standard. The coefficient of variation for real output was 3.5 between 1879 and 1913, and only 1.5 between 1946 and 1990. Not coincidentally, since the government could not have discretion over monetary policy, unemployment was higher during the gold standard. It averaged 6.8 percent in the United States between 1879 and 1913 versus 5.6 percent between 1946 and 1990."

So it would appear that the major benefit to the gold standard is that it can prevent long-term inflation in a country. However, as Brad DeLong points out, "if you do not trust a central bank to keep inflation low, why should you trust it to remain on the gold standard for generations?" It does not look like the gold standard will make a return to the United States anytime in the foreseeable future.

http://economics.about.com/cs/money/a/gold_standard_2.htm

Interesting read.

 

[DreamKing]

I don't want to see south africa version of Osama bin Laden printed on the banknotes. it only encourages me to use more electronic payments.

how can I put a terrorist inside my pocket?

wait ... think positive... may be one day I found it had no toilet paper.....I can use ........... instead.!!!!!!!!!!

 

[boramk]

Thanks, learnt something new. I'm with you on the world being a better place with commodity based currency.

Don't fall for it. There is a reason why we changed to fiat currency, the previous system was also unstable, except the complete opposite.

Fiat currency = inflation and possible debt
Gold standard = unstable employment and external trade issues

Look at the Euro and Greece. Think of Greece as being on the Gold (Euro) standard, its very similar.

 

[alloytoo]

Don't fall for it. There is a reason why we changed to fiat currency, the previous system was also unstable, except the complete opposite.

Fiat currency = inflation and possible debt
Gold standard = unstable employment and external trade issues

Look at the Euro and Greece. Think of Greece as being on the Gold (Euro) standard, its very similar.

A fiat currency is a reflection of the goods and services being traded in your economy and as such it grows with the economy.

A commodity based currency is merely a measure of the amount of dirty yellow metal held in a vault somewhere. If the money supply doesn't grow then the result is currency shortages, hoarding and depressed economic activity.

 

[boramk]

A fiat currency is a reflection of the goods and services being traded in your economy and as such it grows with the economy.

A commodity based currency is merely a measure of the amount of dirty yellow metal held in a vault somewhere. If the money supply doesn't grow then the result is currency shortages, hoarding and depressed economic activity.

Oh don't tell that to proponents of commodity based based (Gold Standard) people, its the perfect system that was removed for no reason because it worked so well.

 

[Grant]

It's been said a country's currency should be representative of the country.

I don't feel the new notes have been politicized, if they were, we would have seen a carnival atmosphere depicted on one side & a large feeding trough on the other.

 

[Shake&Bake]

Why does he have to be on all the notes though? They could've gone with Madiba, FW De Klerk, Steve Biko and a few other proponents that led to the freedom struggle seeing its 'conclusion', if they (govt) are of the opinion that these notes are to be representative of South Africa.

I would've liked to be like the Americans when bribing the Maitre'D of a restaraunt: ''Will Mr. Steve Biko help me get a table?''

Madib's already got statues all over the world, streets named after him and other random stuff. I don't think it'd be something he really cares for, these notes. Neither do I, therefore, indifferent.

 

[alloytoo]

Oh don't tell that to proponents of commodity based based (Gold Standard) people, its the perfect system that was removed for no reason because it worked so well.

Sadly they somehow believe that a large vault full of metal in a dust bowl is a stronger economy than a fertile valley.

 

[Merlin]

Are you @#$%ing kidding me?!

I never thought it was actually possible to cheapen the value of a note.

Just what I always wanted, a wallet full of sensationalised terrorists.

Tacit politicking.

 

[saksakgp]

Money has value because we say it does and gold has value because we say it does but both are essentially useless and they only become useful once we agree that they have value. So both standards are somewhat the same

 

[KleinBoontjie]

1, 2 or 3 for me, it's not going to belong now, in the not to distant future we will only swipe a card to pay for stuff, no more notes or coins in our pockets. Just think, no more cash means , no more ATM bombings.....

 

[DigitalSoldier]

Agreed though notes have to periodically be changed in order to thwart counterfeits and tax dodgers.

Please explain how changing the currency will help thwart tax dodgers ??

 

[DigitalSoldier]

Well Said.

For me, Mandela is not a ANC person, he is a South African, first and foremost, who helped our country heal and grow up.

Agreed!!

He is also still a proud ANC member. It was so good to see him at a recent ANC rally with Zuma. And to know that tata Mandela is supporting Zuma all the way

 

[Albereth]

So, who got the contract to make the new plates?

 

[Apache]

Looks like most of the people here on mybb do not approve...

 

[Fudzy]

Please explain how changing the currency will help thwart tax dodgers ??

If they take the old notes out of circulation like they did with the old R200 notes then it forces people who have been generating large amounts of undeclared money to swap the notes out, thus putting them on SARS's radar.

 

[w1z4rd]

Looks like most of the people here on mybb do not approve...

Out of almost 100 000 users... half a dozen complained about it... yeah... I suppose in Apacheland that equals "most people here on mybb" Love the strange world you live in.

 

[The_Ogre]

I couldn't be bothered, hell I don't even know what animals are on which notes because I don't care

 

[Fudzy]

Out of almost 100 000 users... half a dozen complained about it... yeah... I suppose in Apacheland that equals "most people here on mybb" Love the strange world you live in.

This thread really highlights how backwards some folk are.

 

[Elimentals]

This thread really highlights how backwards some folk are.

Can you name any country that is not a Monarchy or dictatorship that depict a single live person across all their notes?

Again I have no problem with Mandela's face on the notes, but only if it was done on or after his passing. Not the way its done now as this is a political move and opens up the system for abuse.

The moment another party gets voted in or hell even someone with a chip in his shoulder it will be the 1st thing they will change. Mark my words.