The Reichsmark was never an international currency.So studying inflation in the Weimar Republic is not enough.This post traces the history of the Drachma,Denarius,Bezant and Dinar–the international currencies of antiquity.I think knowing this history will help us see the parallels and understand our world better.If macro-economics is not really your thing,atleast knowing about the coins should give a rough idea of which ones would be more collectable for their bullion content!
The Drachma
The Greeks minted stunningly beautiful coins.Non-Greeks thousands of miles away treasured these coins and so they became the first “international currency”.Archeologists have found Greek coins as far away as China, India and Northern Europe. In fact, even though Rome soon rose to eclipse Greece, most Asians kept using Greek money for centuries.
The main currency of Greece was the Athenian Drachma (pic on the left). It was a silver coin, and its weight and quality stayed amazingly consistent through the centuries. From Solon, around 600 BC, to Alexander the Great, around 300 years later, it stayed exactly 67 grains of fine silver. This was the money Alexander brought to India, and from there it traded yet further East becoming the monetary standard of all Asia. And even as Greece declined and was finally absorbed into Rome, its value did not fall much. By the end of the Drachma’s life, it had only declined to 65 grains of fine silver. This is an extraordinary achievement. No other civilization has ever had an international currency that stayed the same value —or pretty much so, since a fall from 67 to 65 grains of silver is a loss of less than 3%. And this was not only during the period of its greatest influence, but even as it declined in power over a period of six centuries.Whatever the secret of the Greeks was, no international currency since then has ever been able to keep its value, even as the government issuing it started on its seemingly inevitable decline.Certainly the conquering Romans were astounded at how the Greeks had mastered money. They paid Greece the ultimate monetary compliment by fashioning their own money, the Roman Denarius, as an exact copy of the Drachma right down to the size and weight. Read more of this post
Filed under Alternative Assets, Precious Metals, Theory, Tidbits, Tool Kit
Tagged with 6 carats, Africa, Alexander the Great, Alexius Comneus, America's Great Depression, Anastasius, Ancient Greeks, Andalusia, antiquity, Antoninianus, Arabian peninsula, Arabs, Aristotle, asia, Athenian Drachma, Aureus, Baghdad, bankers, base metals, Basilica di San Vitale, Battle of Milvian Bridge, black markets, book, Book of the Prefect, British Museum, Bullion, business, Byzantine Empire, Byzantium, Cairo, Caracalla, cash, Christ, Christian Church, Christianity, Christians, church of Sant Apollinare Nuovo, clip coins, confiscate property, Constantine, Constantinople, convivienca, copper coins, Cordoba, Council of Nicea, currencies, Damascus, Dark Ages, debase currency, debt, Delhi, devaluation, Dirhem, Edict of Milan, Egyptian, Egyptians, Elgin Groseclose, Emperor Diocletian, Emperor Heraclius, Emperor Nero, France, Genoa, Ghana, God of Abraham, Gold, gold coins, Goths, Granada, Greece, Greek Coins, Hagia Sophia, hard currency, history, hoard, Holy Land, Huns, Imperial Romans, India, Inflation, interest, international currency, Islam, Islamic coins, Istanbul, Italian City States, Jerusalem, Jews, Julius Caesar, Law of Maximum, Mecca, Mohammad, monetary history, monetary system, Money and Man, money changers, mosaics, Muslims, Orthodox Church, Ottoman Turks, pagan gods, Persia, Persian Empire, Pope Leo IV, postaday2011, poverty, Praetorian Guard, prices, prices soaring, RandomBlog2011, Ravenna, reduce taxes, Reichsmark, Roman Coins, Roman Denarius, Roman Empire, Roman persecution, Rpme, Septimus Serverus, Sicily, silver coins, slave, Sol, Solidius, Solon, Spain, St.Peter's, Syria, The Bezant, The Denarius, The Dinar, The Drachma, Thomas Carlyle, Tiber, Toledo, trader, treasury, trinity, Tripoli, Turkey, Umayyad Caliph Abdel Malik, Vandals, Vatican Palace, Venetian Crusaders, Venice, Visigoths, wage and price control, Weimar Republic
1. Banks normally come up with special term deposits with high interest rates.Now is a great time to book some fixed deposits.
2.Newly issued bonds tend to have higher coupon rates or deeper discounts.Now might be a good time to add some to your portfolio.
3.Older long term bonds you might have been coveting for a while might be available cheaper or at deeper discounts now.Maybe you should buy some now.
4.Stock markets might not be so buoyant now so investing short-term funds in bank term deposits which are offering equity like returns is a good idea.
5.Good stocks that you plan on holding for the long-term might be available cheaper.Why not buy them now?
6.Tax-saving FDs are likely to be very good options now.Do the math to check your pre-tax returns to see just how good they are. Read more of this post
Filed under Paper Assets, Theory
Tagged with banks, bonds, Bulk Investments, bullion market, coupon rates, deep discount bonds, FDs, Fixed Deposits, Fixed Maturity Plans, FMPs, foreign currency denominated assets, foreign exchange, inverted yield curve, last quarter, long term bonds, MFs, Mutual Funds, NAVs, negative yield curve, Net Asset Values, postaday2011, pre-tax returns, RandomBlog2011, RD, RD Account, Recurring Deposit, retirement accounts, savings plan, SIPs, special term deposit rates high interest rates, special term depositshigh interest rates, stock markets, stocks, Systematic Investment Plans, tax-efficient, tax-saving FDs, tax-saving fixed deposits, trading opportunities, Uncertainity
Normally,for fixed income instruments , the interest rates corresponding to longer terms are higher than those for shorter terms.However,locking in money for longer periods is not always an option.One way of ensuring a greater degree of liquidity while taking advantage of the higher rates offered for the longer tenures is laddering.
If you want to create a 5 year ladder you could buy a 1year, 2year, 3year,4year and 5year instrument .Then after the first year,renew the matured 1 year instrument for a term of 5 years.Then the following year do the same with the matured 2year instrument.Continue the process.
Laddering ensures that at least some of the higher interest rates are locked in and that the average rate is higher than the rates at the lowest point in the interest rate cycle.
If you are drawing an income from your fixed income instruments say to pay or part pay you a pension,your EMIs,a tution fee or get some passive income,laddering smoothes out the variations.
Laddering is possible with bonds,NCDs,FDs,CDs etc.
Filed under Paper Assets, Theory
Tagged with bonds, CD, Certificate of Deposit, EMI, FD, Fixed Deposit, Fixed Income Instruments, higher interest rate, Income, Interest Rate, interest rate cycle, laddering, liquidity, low interest rate, NCD, Non convertible debentures, passive income, pension, postaday2011, RandomBlog2011, tution fee
