I've long (and vociferously) been an advocate of the legalisation of drugs. Not just because it's your or my right to ingest as we wish to but because there's a large market out there currently untaxed: one which if taxed would mean we could reduce taxes on things like incomes.
However, I might have to change my mind on that latter:
Gangsters, drug dealers and money launderers appear to be playing their part in helping shore up the financial stability of the euro zone.
That's thanks to their demand, according to European authorities, for high-denomination euro bank notes, in particular the €200 and €500 bills. The European Central Bank issues these notes for a hefty profit that is welcome at a time when its response to the financial crisis has called its financial strength into question.
The point here is seignorage: the ECB takes a few pennies worth of paper and ink and people will pay 500 euros for it. This is, as the phrase itself says, rather profitable, as profitable as simply printing money. The amounts being made are quite large, between 50 and 80 billion a year.
Those profits themselves thus boost the capital of the ECB itself and so underwrite the loans that have been made to stricken banks. The financial system is thus being saved by cocaine dealers looking for ways to hide and transport their profits. So perhaps the taxation reasons to legalise drugs are no longer valid?
Or perhaps, more importantly, now that we've worked out how to make gazillions legally from the drug trade we should work out how to make further such gazillions? The real advantage of the 200 and 500 euro notes is that you can get a lot more value into a smaller, lighter, load than by using US dollars, the largest general issue of which is the $100 bill. $1 million in USD weighs 22 lbs while in euros about 4 lbs. Much, much easier for money smugglers that is.
So, why don't we create the 1,000 euro bill? This would make serious inroads into the US illict market and thus undermine the US Treasury's seignorage while boosting the ECB's. We get a slice of the US drug trade and just think of the CO2 savings by reducing the weight of bank notes that need to be transported back to Latin America!
Winners all round really....and aren't we supposed to be harnessing Mammon and markets in order to save Gaia anyway?
