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The eternal coin or eternal value

This week's debate at the Long Finance roundtable, the influential think tank of academics associated with the finance industry presented the "Search for the Eternal Coin" to an engaged audience of eclectic professionals. The presentations were first from an historical aspect starting 4000 years ago and then up to date with the immediate financial crisis uppermost in the minds of those concerned.

The debate stirred many questions in my own mind, concerning the true value of currency and how the global economic crisis and the impact on population and politics are paving the path to the future.

In Europe we have seen the introduction of the Euro, which has now been put under severe stress due to the economic crisis and its value is falling in the markets. The realisation of the Euro was surely to cater for such global catastrophes and enable the Euro zone countries to be protected from such problems, as we see today. But the problem with Greece indicates that the European ideal is not what was presented. When push comes to shove the Germans would prefer to push a Greece solution to the IMF. This appears a failure of the Euro vision!

Despite the apparent cracks if not the beginnings of the breakdown of the Euro zone, the real question is how do the worlds governments and markets produce economies that are resilient and able to protect the value of countries assets for their population?

Protective measures to prevent social and economic downturns seem to indicate regulations and state controls but this is something to be avoided if freedom and democracy are to be maintained. Equally, burdening the population with high taxes does not appeal as a method of securing long term value and prosperity.  The UK Government is very likely to increase taxes even more after the election despite what the Tories see as a dereliction of their values. Even mass cost cutting will only go so far in protecting the currency value unless it is allied to fiscal methods of raising government funds.  

Thought might be given to eliminating all global currencies pushing the world back to economic basics where the underlying assets of the country dictate value, power and social standing. In this imaginary scenario who would be the world powers?

In terms of tangible assets it would be the USA and Russia for natural values and India and China for its people. Not much change from the G7 then!

In my imaginary world the UK would not figure in terms of assets or population. So it's remarkable that the UK is stable enough to still eat at the top table. This has to be recognition of its historical success and the ability of Governments over the last two hundred years to invest and perform extremely profitably. It's a sobering thought that based on assets alone the UK is punching way above its weight in the world's economies.

So how do we find the eternal coin or maintain eternal value of any currency? The answer I am afraid is locked in the debating halls and an academic problem insolvable in today's world. The reality is that for most of the world's countries the 21st Century has seen them enter the wealthiest period they have ever seen. There is of course still a huge amount of poverty and degradation around the world but there is the beginnings of new world economic order and a rebalancing of the world's finances. The end results will enable greater wealth distribution and overall an increase in global wealth for the majority. But we have to ensure those that are left out are looked after and the distribution of wealth continues. Maybe the search for the eternal coin is what we have all been involved with and a Utopian objective that will never be realised but must be tried.          


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