Thursday, May 22, 2014

Will plastic notes be better for the economy?

Starting in 2016, £5, and later £10 notes, will be printed on polymer instead of paper. The reasons for this transmutation, according to authorities, are numerous: more security against counterfeit, extended durability, reduced environmental impact and lower costs of production.

Let's examine this further: 

It can be agreed that if making plastic money could stop counterfeiting, then paper as money would have been abolished a long time ago. But just as in Canada now, fancy plastic fakes have been spotted. 

So let's assume that at best, polymer notes will only make it more difficult to print fake money, making it only possible for the richest and most powerful counterfeiters to carry on with their business. Talk about equality of opportunities! 

We cannot really argue against polymer durability. The worst that can happen is that, if you iron your plastic notes, they will melt and ruin your clothes. 

In an article from the BBC which was published last year, what we can assume to be a representative of the Bank of England (there's no mention of who the person talking is), explains how the new notes will be cheaper to produce over a period of 10 years. But no mention is made on whether this takes into consideration the fact that we use less physical money with every day that passes. 

But what if the opposite is true and we need the same or a greater amount of physical money in the coming years? Then that would make the argument that plastic notes would have a lesser impact on the environment questionable.
According to the Same BBC article, less notes would need to be printed because of their durability, that would be good for our planet, they say.
But what if the constant loss of purchasing power of the Sterling pound continues thanks to the brilliant ideas of our “economic planners” who can order further QE and devaluation with a finger snap? This would probably mean that billions of notes would have to be printed and that will be all new plastic. 

But all things considered, at least polymer notes will be shinier and waterproof! 

Does this make any real difference to the economy? I believe it does not.
There is no real difference between having paper or plastic notes since the main problems persists: it is a form of currency that can be easily reproduced.
It is not only the counterfeiters that make paper money not viable. The real problem lays in the fact that, be it paper, plastic or any form of currency which can be reproduced when someone in an office unilaterally decides, then bad things will happen. More so if this type of currency is forced upon the market thanks to the strength of laws (coercion). 

If a solution to counterfeit is to be found it will probably come in the form of freedom of concurrence by other currencies issued by whoever can prove their money is good. If these ideas would not be sinful thoughts or a taboo as our central banks pretend , then different currencies could be created by different entities and aimed at specific financial activities. Then it would be up to users to believe in the solvency of their currency of choice.
Gold (or money backed by gold) could be again used as real money and that would not be that bad! It is a well know fact that the philosopher's stone has not yet been found, making it impossible to make fake gold.
For people looking for a lighter form of money or to make long distance transactions, other currencies could be created by special banks. Even technology could be used in a credible way instead of being used to lure people into ponzi schemes like the Bitcoin "currency".

No comments:

Post a Comment