Economics
Free exchange
Monetary policy
Spain prints money
Mar 8th 2011, 15:24 by R.A. | WASHINGTON
AXEL WEBER may not get it, but the villagers of Mugardos do:
A small town in northern Spain has decided to reintroduce the old Spanish currency - the peseta - alongside the euro to give the local economy a lift.
Shopkeepers in Mugardos want anyone with forgotten stashes of the old cash at home to come and spend it. It is nine years since the peseta was official currency in Spain. But Spain's economic crisis has forced some to be inventive. The hard times have seen thousands of businesses close and more than two million jobs go.
More than 60 shops in Mugardos, a small fishing town in Galicia on Spain's northern coast, are accepting the peseta again for all purchases, alongside the euro.
A hat tip to Kash.
About Free exchange
In this blog, our correspondents consider the fluctuations in the world economy and the policies intended to produce more booms than busts.
Advertisement
Economist blogs
- Americas view
- Asia view
- Babbage
- Bagehot's notebook
- Banyan
- Baobab
- Blighty
- Buttonwood's notebook
- Charlemagne's notebook
- Clausewitz
- Daily chart
- Democracy in America
- Eastern approaches
- Free exchange
- Global Leadership
- Gulliver
- Johnson
- Leviathan
- Lexington's notebook
- Multimedia
- Newsbook
- Prospero
- Schumpeter's notebook
- The World in 2011: Cassandra
Most commented
- Charlemagne: No time for doubters
- This week's caption competition: Caption competition 7
- Turkey and Europe: Mr Erdoğan goes to Germany
- America’s security commitment to Taiwan: From keystone to millstone?
- China's foreign policy: Setting sail for Libya
- America's budget: The elephant in the room
- Mormons in politics: When the saints come marching in
- A special report on property: Building excitement
- Trains again: All countries with passenger trains also have highways
- The Republicans: Who dares take him on?
Over the past five days
Most recommended
- Oil and the economy: The 2011 oil shock
- Turkey and Europe: Mr Erdoğan goes to Germany
- China's foreign policy: Setting sail for Libya
- Mormons in politics: When the saints come marching in
- Psychiatry: Therapist-free therapy
- China's pre-emptive crackdown: The people doth not protest
- KAL's cartoon
- Libya: The limpet's legions
- The Tata group: Out of India
- Insider trading: A tip too far?
Over the past seven days
Advertisement
Subscribe to The Economist's free e-mail newsletters and alerts.
Subscribe to The Economist's latest article postings on Twitter
See a selection of The Economist's articles, events, topical videos and debates on Facebook.
Advertisement
Readers' comments
The Economist welcomes your views. Please stay on topic and be respectful of other readers. Review our comments policy.
Sort:
So the people of Mugardos are monetarists? Who'd have thunk they read Sumner?
No. The people of Mugardos are simply following the same kind of thinking that prevailed in the middle ages: a slow down in the economy is caused by a shortage of money. Of course, that is the post hoc fallacy. A shortage of money accompanies a depression, but does not cause it any more than a rooster crowing causes the sun to rise.
If you can avoid the post hoc fallacy you will be ahead of 90% of the economists out there. It is the most common mistake in the field.
This reminds me of the 'company scrip' and similar informal currencies that were once not uncommon in the U.S. Of course the challenge with endemic currencies is their lack of tender status outside the sponsoring region.
Mugardos may also find that old stock pesetas from outside the region come flooding in creating a micro climate of hyperinflation. It will be a good study for what could happen in the U.S. should the dollar lose its reserve status...
No, the Mugardos shopkeepers are simply acting as brokers. Rather than go to the Bank of Spain with their now adult childrens' peseta filled piggy banks, empty nesters can instead head off to Mugardos (spending large amounts of Euros to get there) and get the shopkeepers to do the exchange on their behalf.