Economics Lesson — Rate of Exchange

One year I was taking my semi-annual trip to Jamaica. Mid Seventies.
On the plane to Montego, the stewardess gave us all a notification.
The Jamaican government had recently recalled the currency.
Jamaican money looks like monopoly money anyway.
The Jamaican dollar is based on the American dollar.

The problem was that there were a bunch of Rasta dope dealers back in the hills
that had been making large bucks selling the ganja. They had suitcases full of cash.
The Jamaican government didn’t want them to spend that cash on guns.
So, what did they do? They cancelled the currency. Every citizen had two weeks
to walk into a bank and exchange their old bank notes for the new ones which
looked just the same as the old ones, but with a different treasurer’s signature. Naturally it would
arouse suspicion if you walked into a bank with a suitcase full of twenties and hundreds.

So, the stewardess told us that if we had old currency, it wouldn’t be worth anything.

This is an object lesson in the stability of currency. Your money is only worth what it pays for.
And the issuing government can can cancel it on whim.

Jamaica is a small island, a hundred and fifty miles long and sixty miles wide. It’s a microcosmic universe.
They have one cigarette factory. It manufactures all the brands. While I was on this same trip to Jamaica, the cigarette factory went on strike. This meant that there were no cigarettes in the COUNTRY.

Lightning Rod is fairly savvy, so he managed to have a supply of cigarettes. He would buy them from the incoming tourists before they realized that there was a ciggy crisis. I had a couple of cartons of Exports from the Canadians that were arriving unaware. Knowledge is power.

After about two weeks, things got tense. The cigarettes started disappearing from the store shelves. Even the duty free shop at the airport was running out. If you lit up in a restaurant, there would be an uncomfortable darting of eyes. People would come over and ask you for one. If you said, “sorry, ” they would beg you for a drag from the one you were smoking. Can you imagine a whole country of addicts jonesing at the same time? Crazy. And Jamaica is just a little country. What if the US was jonesing for oil?

I began to reflect upon the meaning of currency. In Jamaica that year, nobody knew exactly which paper money to accept. US dollars usually worked. With Jamaican dollars it was a little more dicey. But cigarettes were the gold standard. According to the Fabulous Furry Freak Brothers, “Pot will get you through times of little money better than money will get you through times of little pot.” You can’t smoke money or eat it.

Money is like religion. It only works if you believe in it. This is because money is based on confidence, not value. Anybody can photocopy a hundred dollar bill. The dollar can fall against the euro or the yen can yen for more pesos and in the end it’s all paper. The Fed can jack up or lower the interest rate, and the money becomes worth more or less, but a cigarette is a cigarette. Food is food and oil is oil. Price tags change.

When I was growing up in West Texas, the benchmark standard for oil was West Texas intermediate crude. It cost $3.35 per barrel. Today that same barrel of oil costs 40 to 50 dollars. It’s the same oil, only the dollars have changed.

In 1968 I made my living selling pot for $10 an ounce, and I thought that I was making out like a bandit. That’s not my business anymore, but if I want to catch a buzz today, I have to pay 250 to 400 dollars an ounce for it. Same pot, different money. I know I’m not telling you anything new, a box of cornflakes costs five bucks these days.

The Poet’s Eye looks hard for a bargain. I’ll trade you a carton of cigarettes for five gallons of gas. End of economics lesson.

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