Saturday, October 22, 2005

There are lots of very old bills in circulation here. They must be at least ten years old, judging by the age of the coins in my pockets (coins always last much longer than bills) and the state of the bills themselves, crumpled, thin and soft as tissue paper, torn and broken and often mended with scotch tape, a bit like Mexican bills were about 20 years ago.

This must mean something in terms of economics, you know, the rate at which a bill is replaced must reflect something about the economic state of the country, but I don't know what, never having taken an economics class in school due to my aversity for the subject. Perhaps someone here can tell me in the comments (Carlos, give it a shot for me?), for I am quite sure that in the US a dollar bill circulates for a couple of years tops before it is replaced by a bank somewhere (and this is true now in Mexico too, not counting the new 20 peso note that is made of plastic, precisely to make it last longer, but without tears and the "tissue-papering").

Just like in Mexico 20 years ago, too (before the NAFTA and consequent influx of cheap repleaceable stuff from the US,

*a la*"Walmart"), everything seems to have several lifespans here, things are very much recycled, but not in the "granola" sense: old medicine bottles, used shoelaces, cassete tape cases (that is, cassete tapes without the actual tape inside), vaccum tubes, metal pipe fragments, and all manner of odds and ends is sold and re-sold at old city souqs, typically near or at the outside of the walls, away from tourist eyes, and the clientelle for these goods is vast.

I asked a 26-year old from Rabat, how long did he think it would take for "things" (and I was deliberately vague when asking in terms of designating what exactly "things" were) in Morocco to get better. "I don't know," he said. "It may not be during my time, or my children's time, or my grandchildren's time, but in the meantime I will do whatever I can, because it is up to me, to make a better life for my children and those that come after me, even if I don't live to see the benefits."

Comments:

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Sure,

what you describe is the "quantity theory of money", which follows the well-known equation

MV = PQ, M is the total money in circulation over a period T, V is the velocity of money, how often each unit of money is spent during the period T, P is the average price level over P, Q is the quantity.

Interesting rates can be derived by quick differentiation (use Euler's rule for percentage change: multiplication => addition and division => subtraction)

%Delta(M) + %Delta(V) = %Delta(P) + %Delta(Q)

Seemingly, you have an equation for economic movement, as, for example, the inflation term (%Delta(P)) shows. Have fun playing with this.

--C.

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what you describe is the "quantity theory of money", which follows the well-known equation

MV = PQ, M is the total money in circulation over a period T, V is the velocity of money, how often each unit of money is spent during the period T, P is the average price level over P, Q is the quantity.

Interesting rates can be derived by quick differentiation (use Euler's rule for percentage change: multiplication => addition and division => subtraction)

%Delta(M) + %Delta(V) = %Delta(P) + %Delta(Q)

Seemingly, you have an equation for economic movement, as, for example, the inflation term (%Delta(P)) shows. Have fun playing with this.

--C.

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