February 9, 2001

19 Million Dollars

This week's lottery is up to 19 million bucks and, as happens every large lottery, I think about what it would be like to win a mountain of cash that big.

Sometimes I think of those old Richie Rich comics I used to have when I was 8 or 9. He had swimming pools of money, fountains of coins, and dogs with gold and diamond collars. It made money seems like something tangible, like wood, water or concrete. There wasn't a lot of discussion of economy or world monetary funds.

It's interesting to think about what money actually is: A guarantee. That $10 in your pocket (new or old, older, even older, older still or ancient) is really just a guarantee that the Government of Canada will guarantee the bearer the amount printed on the face of the bill.

In what? More bills?

Well, originally, Canada (like England) was on the 'silver standard', which means that the bills were exchangeable for the equivalent amount in Silver. Hence the English currency was called 'Pounds Sterling'. The currency even had a strip of silver in it for the longest time.

The American system (called the Gold Standard) was similar in that it promised that your dollars were equal to the equivalent amount in gold. WHen the economy started to overtake the US gold reserves, they had to come up with another way to ensure that the money they were printing would be

Like the US and England, Canada went of the precious metal standard some years ago, creating an interesting situation.


An interesting article: These two economists are famous for their views.