What I mean by that is that when silver was removed from U.S. dimes and quarters in 1965, the half dollar retained some silver in it for prestige reasons.
President Charles de Gaulle of France, a famously inflation-wracked country before its 1960 currency reform, introduced a silver 10-franc coin in 1965 for the purposes of prestige (and paying pensioners with them as an example of the new financial stability in the country.)
Americans viewed the French president more as pompous than prestigious, but the 10 francs had the heft of a Morgan U.S. silver dollar, being only slightly lighter and smaller, at a time when American collectors thought of U.S. coinage as heading to junk status.
So back to my prestige question. When I saw the current James Bond movie, “Skyfall,” I found myself slightly antagonized by the scene where he opens a briefcase at a casino in Macau, China, to view his cash winnings and the case contained scads of paper money – but the notes were neither Chinese nor U.S., they were European Union 500-euro notes.
Obviously, in those fleeting seconds, the idea of prestige meant something to me as I thought to myself that these notes should be U.S. paper money.
But even in its current threatened state where world financial markets wonder about whether the euro has a future, a case full of 500-euro notes is far better than one filled with $100 bills.
At the current $1.30 exchange rate, a 500-euro bill is $650. How would you like to have a bill with that kind of purchasing power in your wallet? That’s prestige. Does it mean anything?
Officials in the United States would have us believe that only drug dealers and tax cheats would want to use paper notes with such high values. Certainly a casino scene in a James Bond movie does nothing to counter these assertions, but prestige is not an entirely foolish concept.
The dollar is still the kingpin currency of the world. The benefit of this is what is called the float. Every piece of paper money issued by the United States that is held by any of us here or abroad is basically an interest free loan to America virtually forever. Imagine being able to write checks that are never cashed. That’s the benefit to the United States of having the top currency in the world.
Scenes like that from the James Bond movie chip away at this prestige.
With all the present worries about the monetary quantitative easing conducted by the Federal Reserve and what that might mean to future inflation rates, it might seem silly to bring up the idea of prestige, but then that fleeting reaction I had in the movie reminds me that what my brain might know does not necessarily override my instincts, or perhaps I could call them my lifetime’s worth of conditioned reflexes.
Paper money might be heading to worthlessness, but even so, I want U.S. paper money to outrank world paper money on the prestige scale. I want to see James Bond paid in dollars.