Old observation in a new bottle #1561324
“Like the human being, grass has a life also. You have to replace grass,” said President Trump in his closing speech ahead of the US midterm elections. We’re not a horticulture blog, so we wondered — is the same true of currencies?
OBVIOUSLY. The wisdom of orange-man is grand and much celebrated.
This paper, from my prev two-time university professor -- bonus zap quest to find out which, and what unis -- for the BIS traces that history more comprehensively:
Toby again:
Almost any time a currency is born or dies, it’s a big deal. The authors find that births are most commonly the result of political events, like independence or conflict (36 per cent). But currencies usually die for economic reasons, like inflation (20 per cent) and unit changes (35 per cent).
"These numbers are skewed a little by the fact that, like the number of countries, there has been a generally upward slope in the number of currencies in circulation over time."
EXAMPLE:
the database tells us that the country we know today as Serbia has had only three currencies since 1868, and, as far as we can fact-check, this looks right. But a family who’d spent the last 160-odd years in Belgrade would’ve counted at least twelve currencies as their own over the period. The disconnect comes from fact that the name of their country has changed a number of times too, so currency changes enjoyed/suffered as citizens/subjects of various versions of Yugoslavia aren’t easily captured.
Rather than relitigate each of today’s countries’ currency histories, we’ve rather lazily matched the country labels in the database, and adjusted only for euro adoption. As such, we’re whitewashing a lot of defunct entities and currency areas (that are carefully detailed in the database) from our picture.
If you remember a few years ago (an age in bitcoin times), someone resurrected this defunct 2009 idea from some stupid blogger that the average currency lives for 27 years... It's shit like this that makes such calculations "work." (Of course the Deutsche Mark didn't "die"when it got subsumed into the euro.) I guess that was a couple of years ago, so the currencies have aged a bit since then...?
The authors calculate the life expectancy for the average currency. And it turns out to be a mere 33 years, if history is a guide. However, the continent (and the circumstances) in which a currency is born looks like it has some bearing on life expectancy. Currencies born out of war or civil conflict have tended to die within not very many years.
"Despite America’s relative youth as a nation, it’s the US dollar that comes out as the world’s longest continuously used unit of account still in circulation."
What about the British pound, seemingly a mysterious omission in the chart above? According to the database, Sterling committed hara-kiri after a good 1,171-year run back in 1971. That’s because each redenomination or decimalisation resets the currency clock. As such, the current British currency is a mere sprightly 55-year old.
Ugh.
There are a million questions one could ask about all this:
- which currency is next to die?
- What might replace it?
- Has the US dollar cracked the code of immortality? #1561324
archive: https://archive.md/HE29V