by Bob Cervelli
vol-a-tile (vol'e-til) adj. 1. Evaporating readily in normal conditions. 2. Capable of being vaporized. 3. Changeable, as: a. Inconsistent; fickle. b. Tending to violence; explosive. c. Lighthearted; flighty. d. Ephemeral; fleeting.
Volatile. Sounds like today's money. Evaporating, inconsistent and flighty.
There's no longer any fixed reference point for the value of the world's money. The currencies of the G-7 nations are fiat money - money which is not backed by gold, silver or other valuable hard commodities. The US was the last to remove their currency from the gold standard back in the early 70's. Today, we can only keep track of a currency's value by comparing its exchange rate with other currencies. But those currencies are being compared against others still. Its like measuring one moving target against another moving target.
The bottom line for any currency these days is confidence. Since a fiat currency is only paper and ink, without confidence it is worth nothing. When we get paid in Canadian dollars, we feel confident that we can spend them for the things we want and need. We feel confident that that paper and ink is worth something. Everyone else in Canada feels the same way. Collectively, it is Canadian society that empowers the Canadian dollar with its value.
But, there's also a bigger picture. The modern global economy is a world of hope and fear. It is a world of fleeting, knee-jerk confidence that runs at the first smell of trouble. Investment managers and speculators have more control over the value of money than any community or government. The world's currencies are controlled by the impulsive reaction of a few sets of fingers on a few computer keyboards, instantly transferring US $1.3 trillion per day around the globe. Now that's volatility! This nervous, impulsive quaking has made our G-7 leaders nervous as well. It is a situation which is outside of the control of any group of nations. It is nothing less than the global economy itself, a global problem. The bottom line of confidence is evaporating for everyone.
Over the past two years, at least 3 dozen local currencies have sprouted up in North America. These are also fiat money - backed only by the confidence of the community that uses them. But they are backed by people who know each other and work with each other every day. As it says on our own local currency, the Maritime Hour, "They are backed by our most valued capital: our labor, skills, time and resources." History has shown that when a society lacks confidence, it finds it again by rediscovering its unique strengths, by valuing the skills in its communities and pulling together economically. The same is true of forms of money.
There's a story from the great depression reported once on the CBC radio show 'Ideas.' It is about a Bank in Pennsylvania that issued its own scrip during the height of the depression. When people came to the Bank to cash their paychecks, the teller would ask them if they wanted US dollars or the local scrip. Many people would reply, "Give me the local scrip, I know the Bank owner; but I don't know those politicians in Washington."
Back then, as now, its the same story. The bottom line is confidence. Maritime Hours are backed by our community's confidence. A community currency free from the global economy of hope and fear.