New Yorkers are starting to accept Euros and some people are starting to hoard them. http://news.yahoo.com/s/nm/20080206/us_nm/newyork_euros_dc;_ylt=AuNqC6IfGcWRNwOGfVcLpjKs0NUE
How about its a smart business move, huge influx of European tourist caring euros shopping in new york stores, its be happing along the boards of US/Canada and Us/Mexico for Ages.
No. You're missing the point. In order to understand what consumers do and why, you have to understand the underlying principles that make some decisions "smart" and others "dumb". People may not know or understand Gresham's Law, but that doesn't mean that the principle behind the law isn't true, and doesn't manifest itself in market behavior.
It would be one thing if New Yorkers who live and work in the city with no ties to Europe were using euros to buy goods there its another thing when people come from Europe and shop here and spend Euros with the hassle of converting them at the airport.
You have totally misapplied the Law, and I think you probably know that. Most obviously, the two currencies have to be forced to be accepted at the same value. That essential condition is not met here, as the Euro and Dollar regularly fluctuate and are not fixed at the same value. Nobody is forced to accept 100 Euros as the same as 100 dollars. "Gresham's law says that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves." Further, according to this law, the people will keep the good ones and spend the bad ones. So, it is antithetical to conclude the Euro (the one being spent) is the good currency. Overall, just a careless or misleading interpretation of Gresham's Law.
I have traveled a fair bit of the world. In some countries (that have their own currencies *not* pegged to the dollar), the FRNs can be used as currency just about anywhere in the local economy. In others, there are strict controls/laws against it. In the countries with loose policies, I have read editorials in the local papers ranting about the use of FRNs as a secondary currency. I wonder how long it will be before I see similar rants here in the USA about foriegn currencies.
No. You're missing the point altogether. The Euros are perceived by the American shopkeepers as having greater "intrinsic" value, which is why they are being taken, and in some cases hoarded. They are being removed from circulation when they hit America, making FRNs from Europeans with Euros, the less wanted alternative. Understand the good money, bad money paradigm. Gresham's law is older than global fiat currencies with floating exchange rates. But it still applies. Right. The shopkeepers are hoarding the Euros, rather than spending, exchanging or depositing them. The law in action. Good currency has "value" and is exchanged with less ease if there is a "bad" alternative. Please leave the economic discussions to the people who can think in a non-linear fashion.
FRNs have always been the black market currency of choice in countries that are experiencing, or have experienced hyper inflation. That's what makes Bogart's post so interesting. The emergence of a black market requires an alternative currency, in WWII, it was cigarettes. With the Canadian dollar and Euro gaining significant strength against the FRN, one or both could become the secondary currency of America for cash transactions.
I understood your point. It just had no merit and it did not fit the facts of the article prompting your comments. These quotes are what the shopkeepers really said, not the bs you try to push as their motivation. "We had decided that money is money and we'll take it and just do the exchange whenever we can with our bank," Robert Chu, owner of East Village Wines, told Reuters television. "I'm happy if I take in 200 euros, because what I do is keep them," he said. "So when I go back to Paris, I don't have to go through the nightmare of going to an exchange place." I really expected better of you - but not anymore: You said: Euros are perceived by the American shopkeepers as having greater "intrinsic" value They really said: money is money and we'll take it and just do the exchange You said: shopkeepers are hoarding the Euros rather than ... exchanging They really said: we'll take it and just do the exchange The last guy is saving them only to spend when he goes to Paris, his reason - to avoid the hassle of the exchange. Nobody in that article is trying to get Euros because they think it is a better currency than the dollar. It was either as a convenience to their customer or to themselves. ___ I should add that bogart's comment about hoarding was also unsupported by the article.
Jay Z Flashing Euros instead of Benjamins in "Blue Magic" video http://www.msnbc.msn.com/id/21792414/
The article simply says that since the weak dollar has made US tourism more attractive to Europeans, some stores in NY started accepting Euros for the sake of convenience. Robert Chu exchanges the Euros at the bank, while Billy Leroy keeps his Euros so that he won't have to "go through the nightmare of going to an exchange place" when he goes back to Europe. The article doesn't even imply that the shop owners are doing this because they lost faith in the USD. The lack of reading comprehension skills demonstrated by some of the people here is amazing.
You have to read between the lines. How many euros do not get exchanged at the bank and find their way into the underground economy. The 500 euro note is being favored by drug dealers and there are plenty of reasons to hoard euros as interest rates decline.
Once most businesses in NY are accepting Euros "from tourists", the shopkeepers won't have to go to France to use them. It doesn't take a rocket scientist to put 2 plus 2 together to see how this applies to guerilla's argument.
God, all you "paulunteers" have this extremely cynical view of america, and you constantly are trying to make us all extremely worried about living here. If that is how you try to push your campaign, that is very sad. Tell me, in Europe, when the dollar was pouncing on any other currency, did the shopkeepers hoard dollar bills and then stop using their own currency? No. Sure they definently accepted multiple currencies, that is a good business move, but did they "hoard and stash away" dollar bills? I doubt so. The dollar is declining and no, that does not mean america is collapsing. This is similar to how everyone is hyping up this "future recession". Honestly there has not been two negative quarters, so there is no grounds for a recession yet. Right now all that is happening is people talking themselves into a recession.
If people really wanted to hoard Euros, wouldn't they just invest in them with a simple forex trade? The implication here seems to be that New York business owners prefer the Euros but they are somehow too stupid to know how to acquire them other than from European tourists who spend money at their business. I would think anyone who can manage the logistics and red tape involved with owning a business in New York would be smart enough to know how to acquire foreign currency.
There is a difference between a pure investment and a currency that can be used in the local economy.