Ruble Roulette

The war between Russia and the Ukraine is now well over a year old. It is difficult to know exactly how things are going for the Ukrainians and the Russian invaders on the battlefield, given the fog of war and the propaganda efforts on both sides. Information on the progress of the current Ukrainian counteroffensive, for example, must necessarily rely on reports from the Ukrainians, who aren’t exactly objective observers.

One consequence of the war doesn’t rely on potentially self-interested battlefield reports from the two sides, however. International currencies, like the Russian ruble, are traded on open markets, and the results are published–and it has become increasingly obvious that Vladimir Putin’s decision to invade Ukraine has been disastrous for Russia’s currency. The ruble has lost 34 percent of its value against the dollar in the past year. When a currency declines in value by more than a third in only a year, you could accurately call it a collapse.

The ruble’s decline is due to a number of factors, all of which are attributable to the war in the Ukraine. Russia’s invasion prompted a series of sanction decisions from western nations, which obviously has affected trade by Russian businesses. With many Russians forced into service at the Ukrainian front, and others leaving the country, there is a labor shortage that has further hobbled Russian productivity. In addition to the decline in buying power of the ruble versus the dollar, Russia also is dealing with inflation and high interest rates, which may well be increased due to the inflation and the long slide in the ruble’s value. And while some expect Russia’s economic to grow marginally this year, the growth is due primarily to Russia’s surge in military spending associated with the war.

There’s an old saying that “money talks.” In this case, the story the trading in the ruble is telling is that the decision to invade Ukraine has been a catastrophic miscalculation that has had devastating consequences for Russia, its economy, and its people.

Square Change

I had to gas up the Jeep before returning it, because the rental agreement was to return it with a full tank. I paid in U.S. dollars, which are accepted everywhere in Aruba, but got my change back in the official Aruban currency, the florin.

The Aruban 50-cent piece is a square, as shown in the photo above. I think it’s the first square coin I’ve ever handled. It’s actually a handy shape, because you can detect it immediately when you are fishing around in your pocket for the right change. It makes me wonder why more coins don’t deviate from the standard circular shape and go with squares, triangles, and other shapes you learned about in junior high geometry class.

The key thing about getting foreign coins in change is to be sure to use them up, or leave them in your hotel room when you depart. I managed to remember to do that, with the coins becoming part of our tip to the maid, and thereby managed to avoid adding to my collection of francs, kroner, marks, and other unusable currency kept in a wooden box on my dresser.

The Faces On Our Money

I’m glad that Harriet Tubman will become the new face on the front of the $20 bill.  When I read, in connection with the announcement that the twenty will be redesigned, that no woman has been featured on U.S. paper currency in more than 100 years and no black woman has appeared on American bills, ever, I thought those were ridiculous omissions that should be corrected as quickly as possible.  Tubman, who bravely led escaping slaves to freedom on the Underground Railroad and then advocated for universal suffrage and women’s rights, is a great choice.

I’m not sorry that Andrew Jackson has been booted off the front of the $20 bill and moved to the back, either.  Sure, Old Hickory may have beaten the Brits at the Battle of New Orleans and been a strong proponent of the federal government at the time the southern states first started talking about secession, but he was a slaveholder who “owned” 150 human beings at the time of his death.  You can talk all you want about Andrew Jackson being a product of his era and his place, but given his slaveholding past, putting him on the face of one of the most used American bills in this day and age is just wrong.  I’d take him off the bill entirely.  We can learn about Jackson during history class, but we don’t need to see him every time we are paying for our lunch.

For that matter, I’d like to see the decision to put Harriet Tubman on the twenty start a process of moving away from politicians being the only faces on our currency.  I’m as big a fan of George Washington and Abraham Lincoln as anyone, but I’m heartily sick and tired of politicians being the default option for coins, currency, or the names of public buildings.  There’s a lot more to America than dead Presidents.  How about thinking outside the box, for once, focusing on the richness of American culture, American invention, and American accomplishment, and coming up with some non-political figures to feature on our paper money?  I’d rather have Louis Armstrong, Thomas Edison, Marie Curie, young Elvis, Dr. Martin Luther King, Lucille Ball, Dr. Jonas Salk, Diana Ross and the Supremes, and Neil Armstrong in my billfold any day.

Bitcoins, Bubbles, And Beanie Babies

Yesterday the U.S. Department of Justice announced the arrest of two individuals affiliated with “bitcoin” exchanges. The two men are charged with using the bitcoin exchanges — which allow people to trade bitcoins for currency like U.S. dollars — to obtain bitcoins that could then be sold to users of another on-line exchange, called Silk Road, where the bitcoins could be used to buy drugs anonymously, in violation of the Bank Secrecy Act.

Bitcoins are a kind of token to which some people have assigned value. Each bitcoin is represented by a supposedly unique online registration number, created when a computer solves a difficult mathematical problem with a 64-digit solution. There are supposed to be a finite number of such 64-digit solutions and therefore a finite number of bitcoins, which is why bitcoin investors believe they will only appreciate in value. Users receive bitcoins at unregistered, anonymous addresses, which means the bitcoins themselves can be used to conduct anonymous transactions, as a kind of on-line currency. And, as the announcement yesterday reflects, bitcoins can be traded for real money.

I don’t pretend to fully understand bitcoins and how they are supposed to work — but I wonder how many people who have them and use them really do, either. It’s hard to understand how real value could be created simply because a random computer solves a complex math problem, and I expect that many bitcoin investors don’t have the mathematical and computer capabilities to really understand whether bitcoins are truly unique and just how limited their supply really is. And the anonymity of bitcoins means there is plenty of opportunity for mischief in how they may be used.

People who trade in bitcoins and are banking on their appreciation in value are taking a lot on faith. Of course, at a certain level you can argue that every form of currency involves a similar act of faith, but at least there are public, functioning markets for U.S. dollars, Treasury bills, stocks, and bonds and they are backed by functioning, publicly known entities. Bitcoins remind me of subprime mortgage bundles, or for that matter Beanie Babies. For a time, each of them was a hot commodity. Everyone seemed to be buying them and the word on the street was that their value was only going up. Then one day the frenzy ended, people stopped buying, and the investors were left with pieces of paper or a pile of children’s toys — and a big hole in their balance sheets and bank accounts.

Maybe bitcoins will be different . . . or maybe they won’t.

Canada Loses Its Cents

On Friday, Canada minted its last penny.

The rationale for this move is that it costs more to mint the penny ($.016 each) than the penny is worth.  In addition, Canada’s Finance Minister concluded that people weren’t using the penny for business.  Instead, they were just putting them in jars at home.  So, no more Canadian pennies will be minted.  Those that have been minted thus far will remain in circulation — at least until they get tossed into the penny jar on someone’s bedroom dresser or kitchen counter.

It will be interesting to see exactly how this works.  According to the linked article, retailers will charge credit cards to the penny, but the price for people paying cash will be rounded to the nearest five-cent interval.  Odd to think that people paying with declared legal tender might end up paying a few cents more for that privilege than people swiping a plastic card, isn’t it?  I imagine that retailers will just establish uniform prices in five-cent intervals to avoid the issue.  Canadians won’t see any more of those beckoning $9.99 prices that retailers are so fond of; instead, Canadians will be seeing a lot of $9.95.

People have urged the U.S. to do what Canada has done, which is probably the first step toward an entirely electronic economy.  All money is an abstraction, of course, but at least there was a satisfying physical dimension to dollars in your wallet and coins in your pocket, and its cumbersomeness provided some security.  Now, the accounts holding your life savings can be emptied in the blink of an eye by a savvy hacker a world away with a few well-chosen keystrokes.

This is called progress.  Of course, if that unfortunate incident happens, we can all fall back on the pennies we’ve carefully hoarded.

Retirement Riches Untold

I didn’t win the Mega Millions lottery payout, which means that a key assumption in my retirement planning will need to be changed.  Why not simply presume that, at some point, you are going to get a huge windfall?  It makes retirement planning a heck of a lot easier.  (And it’s about as realistic as assuming that Social Security will be able to make monthly payments at current levels indefinitely to millions of long-lived Baby Boomer soon-to-be retirees.  But I digress.)

With the removal of the Mega Millions payout assumption, I need to look elsewhere for the wealth that will fund the fabulous, active retirement that is every American’s true birthright.  Recently, in doing some spring cleaning, I think I found my answer — in our travels, we’ve accumulated an impressive collection of foreign money.  Why, I have one piece of paper currency alone, with a picture of Ho Chi Minh on the front, with a face value of 20,000 dong.  20,000 dong!  If the exchange rate is even remotely favorable, that one bill alone should fund a year’s worth of Early Bird Specials at whatever restaurant caters to senior citizens at our ultimate retirement destination.

That’s not all, either.  I’ve got a 1 yuan bill with Mao’s picture on it, as well as Chinese coins.  Another bill reads 5 Wu Jiao and has a nice picture of two women wearing some traditional tribal costumes on it.  It’s probably Chinese currency, too.  China’s economy is doing great, so that hoard will be like an investment that will keep on growing.  I’ve got Euros, and Canadian change, and coins with holes through the middle and Asian writing on them.  Surely, all of those will be worth something, and will help to avoid times of want in my golden years.

As I go through the money, I found one game token that has “no cash value” stamped on it.  Oddly, it looks just like the other coins — made of metal, about the same weight and heft, minted with a picture on one side and numbers on the other.  I suppose you could conceivably confuse American currency with such worthless bits of metal or paper.  Fortunately, our money has the full faith and credit of the U.S. government behind it.  Thank goodness!

Dissing The Benjamins

On our quick trip to Chicago to drop some things off to Richard this weekend, we stopped to gas up at a station somewhere in rural northern Indiana.  As I was paying at the pump, this sign stopped me in my tracks.  What’s wrong with $100 bills, and why would my paying with one affect my safety?

As it happened, I didn’t have any $100 bills.  In fact, I can’t even remember the last time I had a $100 bill in my wallet.  Usually I don’t carry any currency larger than a $20 bill.  Still, if I had a $100 bill, why shouldn’t I be able to pay with it?  How is it unsafe?  What, would the cashier rob me if I flashed a c-note?  Are the other customers at this rustic gas station such a bunch of felons that the sight of a $100 bill is going to provoke them into a frenzy of theft, whereas a wallet with a few twenties wouldn’t?  Is there some problem with the dye used in the portrait of old Ben Franklin?

Most fundamentally, I thought part of conducting a business in America means you have to accept American currency.  I could see declining a $1000 bill and saying you don’t have enough money to make change.  But a $100?  No way!

Funny Money

Today I had to park in a parking garage, and when I paid the parking fee I got two dollar coins for change.  When I looked at the coins, I did a double-take and wondered if I had been scammed, because these dollar coins did not look like bona fide American currency.

Seriously, has anybody else seen these?  My coin featured a perplexed-looking Andrew Johnson — arguably the worst President in American history — on one side and the Statue of Liberty on the other.  It is a garish copper color, it feels like it is made of reclaimed metal, and the art on the coin is pretty cheesy.  Is this real American currency?  It looks like one of those cheap metal tokens you’d get if you got change for a dollar at a video arcade.

I’m assuming it is an actual American coin, in which case I fear for the future of the Republic.  Shouldn’t our currency be a bit more carefully considered and aspirational?   Why in the world would we put one of our worst Presidents on any form of legal tender?  For that matter, why do we have to put Presidents on everything?  Can’t we get back to the point where our coins are more symbolic, like the classic walking Liberty half dollar, or more focused on American history and culture, like the Buffalo nickel?  And if we can’t manage that, can’t we at least create a coin that looks like it is worth its face value?

The Queen, The Hog, And The Coin

When Kish and I were in Bermuda we bought a soda, paid cash, and received some Bermuda coinage as change.  I took a look at the coins and was surprised to find that the bright copper Bermuda penny has the familiar likeness of Queen Elizabeth sporting a crown on one side and a hog on the other.

What’s up with that?  Why would a tony island like Bermuda, with its lovely “pink sand” beaches, iconic Bermuda shorts and knee socks, ubiquitous scooters, and proud British colonial heritage, feature a pig so prominently on its legal tender?

It turns out that hogs have a long and distinguished connection with Bermuda.  A sea voyager who was an early visitor to the Bermuda Triangle was shipwrecked with some live hogs in the hold.  The hogs made it to shore and, in a few years, their grunting, squealing descendants had spread throughout the island.  The hogs were so prolific that some who visited Bermuda came to know it as “Hogge Island.”  (Changing that name undoubtedly helped spur Bermuda’s tourism industry, by the way.)  Naturally, then, the first coins minted on Bermuda featured a hog on one side.  The current penny is a tribute to that initial coinage.

The eagle is our natural bird, of course, and it looks noble on our currency.  Canada’s coins properly feature the likes of the beaver and the maple leaf.  Given its important role in Bermuda’s history, the humble hog therefore is properly honored with a prominent place on the Bermuda one-cent piece.  You have to give the Queen credit for being willing to share a coin with a curly-tailed swine of the four-legged variety.  The people of Bermuda also seem proud of their hog penny.  Indeed, one of the most popular pubs in Hamilton is the Hog Penny Pub.