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CURRENCY_EVENTS

                                          June 26, 2006

We speak often of
Jane Jacobs first work:
                               THE_GREAT_CITY

This is a line of argument
from a later work:

  "The Economy of Cities" (1969)

Here she makes the case that:

  (1) The natural unit of economic activity
      is not the nation, but the city.

  (2) Currencies act as information transmission
      mediums, sending signals about when to
      increase production or when to retrench.
                                                     CENTRAL_CONTROL
She argues that the end result of having national
currencies is that large cities tend to get even
bigger, and smaller ones tend to stay small.

The idea is that the biggest city dominates what's
going on with the currency, so it receives signals
that are more or less correct for it's own conditions.

The other cities, however, receive the wrong signals,
so their economies are always oddly faltering.  They
never get a chance to really thrive.


This line or argument
seems simple, and
persuasive -- as is so         Perhaps there's some counter-argument
often the case with Jane       that's obvious to currency experts,
Jacobs, you wonder why you     but not to the rest to us?
haven't heard it from
somewhere else.                     Apparently, according to Paul Krugman,
                                    the text book answer is labor mobility
If this is correct,                 can smooth out differences -- though
there are some                      that sounds like an awfully slow
obvious conclusions                 mechanism to rely on.
that apply to the
present state of the                   [ref]
world:

  (1) The Euro may turn out to be a very bad idea.
  Fifty years hence, Berlin will be hugely successful,           (May 28, 2007)
  but the rest of Europe will be stumbling.  It will
  be hard to believe that Germany lost the two world        Another thought:
  wars.                                                     a truly globalized
                                                            economy with one
  (2) The United States may need more than one medium       currency (the US
  of exchange... it could be that the New York              dollar?) would
  tri-state area has been dominating the exchange           have little room
  rate, making it difficult for any other region to         for more than one
  get started.                                              big success story:
                                                            New York?  Beijing?
  And perhaps in recent decades, Silicon Valley has
  been subtly interfering with other regions attempts
  at imitating it's success?

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