How did the global monetary system become such a mess?
Posted: 22 Sep 2022, 14:48
I have had to ask a simple question over the last many days and I still do not have an answer. I know that it sounds naïve in the eyes of trained economists. I wish I knew better about it.
Suppose a number of farmers in different parts of the world produce 100 kilograms of tomatoes that are comparable in quality. Naturally, you would expect each of them to be able to sell their produce for comparable prices, which means their earnings would be comparable. In reality, it doesn't seem to be the case.
Over a long time now, I have had to ask, and there must be plenty out there who have been asking the same question, how the purchasing power of the American Dollar in comparison to the Ethiopian Birr is so different. I am guessing this applies to all currencies on a global scale.
So, how is it that producing 100 kilograms of tomatoes of comparable quality anywhere in the world failed to become a common denominator, to take this as a single example, for the global monetary system and that it became such a mess?
Suppose a number of farmers in different parts of the world produce 100 kilograms of tomatoes that are comparable in quality. Naturally, you would expect each of them to be able to sell their produce for comparable prices, which means their earnings would be comparable. In reality, it doesn't seem to be the case.
Over a long time now, I have had to ask, and there must be plenty out there who have been asking the same question, how the purchasing power of the American Dollar in comparison to the Ethiopian Birr is so different. I am guessing this applies to all currencies on a global scale.
So, how is it that producing 100 kilograms of tomatoes of comparable quality anywhere in the world failed to become a common denominator, to take this as a single example, for the global monetary system and that it became such a mess?