Has the Dollar Jumped the Shark?

US100000dollarsbillreverse.jpgTwo news stories from yesterday about the intersection between entertainment and finance were sobering.

Gisele Bündchen, the world’s best paid supermodel, reportedly demanded that Proctor and Gamble pay her in Euros in return for her promoting Pantene shampoo.

Jay-Z, rapper and entrepeneur, has been spotted waving Euros, instead of $100 bills, in his Blue Magic video.

Gisele’s decision looks like a cool and smart economic hedge against the possibility of a continued decline in the dollar. But Jay-Z is a tastemaker, and his video may signal dark days ahead for our economic hegemony. After all, our economy rests, in part, on continued faith that the dollar will be the accepted medium of global exchange. Revealed preferences of global citizens don’t lie.

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3 Responses

  1. Street Cred Ed says:

    US doesn’t print $500 bills. Can’t do drug deals in small bills. EU is printing big denominations to appeal to international drug traders. Can do major deals with big denominations.

  2. merevaudevillian says:

    Street Cred is right. The E500 notes are (now) equivalent to about $750, which is much more convenient for drug deals, rather than using 7 or 8 times as much US cash.

    Additionally, Euros are known for their excellent use in snorting cocaine.

    That said, the other substantive points stand true.

  3. Nate Oman says:

    I am not so sure. It is a mistake to think that a strong dollar is ipso facto evidence of a strong economy or that a falling dollar is necessarily a harbringer of a falling economy, e.g. a weaker dollar will help U.S. exporters while blunting the U.S. appetite for imports which will strengthen our balance of payments, etc. etc.

    When Churchill served as chancellor of the exchequer between the wars, he insisted on putting the pound back onto the gold standard because he associated a strong pound backed by gold with the economic dominance of the empire. The decision was an economic mess; the complexity of currency markets, interest rates, and the demand for credit making short work of Churchill’s monetary sentimentality.