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The E-Sylum:  Volume 9, Number 16, April 16, 2006, Article 34

COOK ISLAND: WHAT GOES AROUND COMES AROUND

Regarding the attempt to cash in the Cook Islands $50 "coins",
Martin Purdy writes: "Isn't it interesting that selling these
things originally - for presumably much more than $50 - is
apparently considered OK, but trying to redeem them for only
their face value is considered "ripping us off"?  Wonderful
example of a double standard!"

[My thoughts exactly, though it's unclear what portion of
the original profits went to the Cook Islands, and what portion
went to the Franklin Mint. Who was scamming who? -Editor]

Martin add: "It sounds odd when they claim that "millions"
are involved, if the coin denominations are only in the order
of $50.  What were the mintages of these pieces again?  You'd
need 20,000 $50 coins to claim back a single million."

[Well, the piece WAS dated April 1st, but it had the ring of
truth to me. I also wasn't sure whether the Cook Island dollar
is linked to the U.S. dollar or a separate currency at some
exchange rate.  Ralf Böpple informs us that Cook Islands dollars
are linked to the New Zealand Dollar. -Editor]

Ralf Böpple of Stuttgart writes: "No, I am not one of the
Germans who presented Cook Islands money for redemption, but
the story does not really sound that new to me. A similar thing
happened on another Pacific archipelago a few years ago - I
think it was Micronesia.

The official currency of Cook Islands is the New Zealand Dollar.
A 50-dollar-coin of Cook Islands could thus be cashed in for 50
NZ-dollars, which is 30 US-dollars. The “coins” have approximately
the size of a silver crown. Hundreds, if not thousands of these
sets were marketed in Germany, and who knows how many sets never
got sold and just sat in the vaults of some wholesale company.
A quick look into eBay reveals that, quite unsurprisingly, these
disks can today be bought at close to their bullion value, which
is much less than 30 US-dollars.

It seems to me that this is not really a scam to “rip of a
developing country”, as the Cook Islands officials claim, but
simply a case of a government being too greedy and keen on the
proceeds of these pseudo-coins to do their homework in economics.
Or maybe they were just too self-conscious to think that somebody
would actually show up at their forlorn shores with the money
that has their name on it!"

Mike Marotta writes: "Cook Island's monetary crisis is its own
doing.   They thought that they could scam tourists with their
non-circulating non-legal non-tender.  The government of Cook
Islands found themselves obligated to a group of Germans who
apparently knew their folktales: you have to pay the piper.
Rather than allowing the Cook Islands legislative junto to get
away with denigrating merchants who deal in money, we should be
boycotting the Cook Islands as a thug state where tourists are
victimized by the authorities for the profit of the ruling clique.

Closer to home, the Liberty Dollar silver warehouse notes are
an interesting example of the kinds of alternatives that people
create to facilitate trade and commerce.  All through history,
merchants of all commodities whether "farmers" or "craftsmen"
or "clerks" have solved problems in currency.  To denigrate the
Liberty Dollar is to make fun of coins for not being cows or
to laugh at "pounds-shillings-pence" because they were only
"money of account" and not "real" money.

You have to ask who is laughing at whom.  In ancient times,
merchants supplanted farmers when democracies replaced monarchies
and philosophies replaced superstitions.  In the middle ages, a
vibrant patchwork society with thousands of polities striking
hundreds of currencies was united by traders who threw wide the
cathedral doors to allow new arithmetics and (not surprisingly)
new philosophies.  In our time, we know that fiat currencies
are doomed.  This is not some unfortunate accident of history,
but an economic law as immutable as gravity.  People who choose
silver over fiat and whose silver is tallied with attractive
promissory notes are applying the truths of numismatics to the
solution of practical problems."

  Wayne Homren, Editor

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