It was a damn innovative idea.
For centuries, countries had tied the value of their currency to cold hard assets. If you had $1 US in your pocket in 1800, you could trade it for gold or silver at the local bank, walk around with said mineral deposits for a few years, and trade them back for exactly that same $1 later. Same was true with nearly every other country out there. Of course, this system was not without it's problems, but by and large a dollar meant something because you had a pile of shiny stuff it could convert to.
Still, governments and other fiscal types didn't really like a system where some idiot with a slue in the Sierras or some Injun in the Klondike could throw a fairly hefty, gold cast monkey wrench into their carefully balanced system, so they created a new one, not based on actual lumps of glittering metal, but instead based on the promise to pay you next Tuesday. Thus, sometime after WW2, was born an economy of Credit.
This, needless to say, was incredibly attractive to all sorts of countries (particularly ones without burgeoning piles of heavy metals), but the problem with it is "How do i determine the relative value of your promise to pay me with his promise?" That question was pretty easily solved by nearly everyone comparing their economy with the strongest, most powerful economy out there, the guys that came up with the whole idea of Credit Based Economies, the US. Surely, once they do that, then all will be well with the world.
And we can see how well that's going.
i'm reminded of this particular lesson in economics when i think about various Web 2.0 companies (ah, so THAT's where the hell this is going). Perhaps it's just me, but i can't help see many of the same sorts of economic milestones being reached in the virtual world as is occurring in the financial one. Figure, early on a site had to make money the old fashioned way, by appearing on Paper Chase and selling you a Volvo by earning it. A lot of small sites had subscription models or donation campaigns or some other means to get money. Eventually, things shifted to a more ethereal economy where advertisers were lured to pay for things from the promise that people might actually buy their stuff. The decided winner of that battle is Google.
Where things become strange is that a lot of sites are basing their economy off of Google. They're doing exactly what those small nations did when things moved to a credit based economy. While there's money to be made in this sort of arrangement, it's not really their money so much as they get a fraction of it. In addition, when Google gets hit, everyone associated with them is likewise hit. (Note: i do mean "when" not "if". The US was a reasonable fortress of fiscal responsibility until someone with a penchant for jellybeans determined that "deficits don't matter" and started the trend to completely tank our economy and everyone else's.) Ultimately, the problem is that if you don't own your own economy, you really don't have any say in how well you're going to do in the future.
The folks in Europe kinda recognized that and decided the best way to solve the problem was to join up and do something about it. i'm not saying that it's a perfect model either. When the Euro came out, few folks took them seriously. Even within Europe, the regulatory bodies are a unending and frustrating joke (where you can't sell Welsh Dragon Sausages because they don't actually contain Dragon). Still, they are providing a fair bit more stability and growth than the US economy currently is, and it's no wonder that a lot of countries are moving to the Euro standard instead of the Dollar.
i'm actually amazed that groups of large audience web sites haven't done the same thing as the EU. i know that there's been at least one movement like it, but much like anytime you invite a few corporations over to play Monopoly, they all fight to be the banker. It really needs to be a completely federated system. Thing is Google quite literally CANNOT do this. They can't even be party to something like this. No regulatory agency on the planet would allow it, yet should some federated system actually take shape and grow, Google wouldn't stand a chance.
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