July 16, 2010 (LBO)- Ex-central bankers seldom write books on their experiences. Perhaps, the fear of re living the traumatic experiences they would have undergone in handling economic crises in turbulent times may have dissuaded them from doing so. It is important to note that Copernicus made this observation when there was no formal subject called economics or monetary theory and even nearly 250 years before the emergence of The Wealth of Nations by the father of modern economics, Adam Smith. Yet, Copernicus’ observation is valid for all the times like a ˜general truth’.
What is Good Money (or its Opposite, Bad Money)?
Good money represents money that leads to economic prosperity and bad money the opposite. Since money is simply a medium of exchange and cannot bring prosperity by itself, good money is linked to an economic policy package which is conducive for creating wealth. By the same token, bad money is represented by an opposite policy package that retards wealth creation.
This was amplified by the late Dr Goh Keng Swee, the first Finance Minister of Singapore, in an article he wrote to the Golden Jubilee Commemorative Volume of the Singapore Currency Board justifying the retention of the currency board system in