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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Michael who wrote (12788)	6/9/1998 4:43:00 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 116822

Michael, I think we are talking different things, sort of. Their $13 bln that circulate outside of the US is what we have been referring to as black market dollars. The number sounds low to me but they may be right. But remember this is physical currency and the amount of physical money is much less than the total currency supply. Physical currency is a very small percentage of the most narrowly defined M. Seigniorage is a broader concept and includes more than just physical currency circulating outside the borders. The term is derived from the French seinegeur (sp?) and was a feudal term for the highest legal authority, such as the lord of a manor. Seigniorage refers to the advantage derived by being the major reserve currency. Part of that advantage is that people will hold your physical currency such as we have been discussing. But the main advantage of seigniorage is in the currency and bond markets where it is believed your currency trades at a higher value and your bonds pay a lower interest rate because of foreigners willingness to hold those assets. Seigniorage has always been an obscure theory but there has been a lot of discussion of the topic in academic circles because one of the main unstated goals of the creation of the Euro has been to challenge the seiniorage of the US dollar. Henry