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The new twenty dollar bill turns 10 years old today. When the twenty was updated, it represented a significant shift in how US currency looks and feels. Now the one hundred dollar bill is poised to follow the twenty's lead, by adding new color and material to make it more difficult to forge. Mark Garrison discussed the importance of the twenty's pioneering look on the Marketplace Tech Report:

At The Guardian , Peter Frankopan laments the fact that politicians in Europe are happy to use the term "Byzantine" but seem to know little about Byzantium, the empire that ruled much of Southern Europe, North Africa, and the Middle East for over 1000 years after the fall of Rome. Frankopan, director of Oxcrord Centre for Byzantine Research, argues there are useful lessons for today's leaders, in both Byzantine successes and failures. There was no question that different parts of the empire could have different rules or different taxation policies: for the state to function with a single currency, there had to be fiscal, economic and political union; taxes had to be paid out from the periphery to the centre; and it was understood that resources had to be diverted from rich regions to those that were less well blessed – even if not everyone was happy about it. Freedom, grumbled one author in the 11th century, meant freedom from taxes. If Eurocrats could learn from the structure of the empire, then so too could they benefit from looking at how it dealt with a chronic recession, brought on by the same deadly combination that has crippled western economies today. In the 1070s, government revenues collapsed, while expenditure continued to rise on essential services (such as the military); these were made worse by a chronic liquidity crisis. So bad did the situation become that the doors of the treasury were flung open: there was no point locking them, wrote one contemporary, because there was nothing there to steal. Those responsible for the crisis were shown no mercy. The Herman Van Rompuy of the time, a eunuch named Nikephoritzes, was lambasted by an angry population faced with price rises and a fall in the standard of living, and was eventually tortured to death. Widespread dissatisfaction led to others being unceremoniously removed from position, often forced to become monks, presumably so they could pray for forgiveness for their sins. The crisis even gave rise to a Nigel Farage figure, whose arguments about why things had gone wrong sounded "so persuasive", according to one contemporary, that people "united in giving him precedence" and welcomed him everywhere with applause. He was a breath of fresh air at a time when the old guard were paralysed by inaction and by a dire shortage of good ideas. His message, that the current crop of leaders was useless, was hard to argue with. Read the full post here .

We have always appreciated the clarity and brevity that James Surowiecki has brought to complicated business and economics issues on The New Yorker's Financial Page. He spilled a lot more ink (or at least text) in his recent article on the history of money. In Spectrum magazine, Surowiecki charts the use of money from the 7th century B.C.E kingdom of Lydia, through Kublai Khan's introduction of paper money, up to online trade today. Here is an excerpt: By the 12th century, even as the Chinese were experimenting with paper currency, Europeans began to embrace a new view of money: Instead of being something to hoard or spend, money became something to invest, to be put to work in order to make more money. This idea came with a renewed interest in commerce. Trade fairs sprang up across Europe, frequented by a community of merchants who had begun to do business across the continent. This period also saw the emergence of a banking industry in the city‑states of Italy. These new institutions introduced a host of financial innovations that we still use today, including municipal bonds and insurance. The banks fostered the use of credit and debt, which became ever more central to the economy as kings borrowed to finance their military adventures and merchants borrowed to fund their long-range trades. The invention of the bill of exchange, which laid the groundwork for the emergence of paper money in the West, also occurred during this period. The bill of exchange was a sort of precursor to the traveler’s check: a document representing a quantity of gold that could be exchanged for the real thing in a different city. Traveling merchants liked the bills because they could be carried around with far less risk (and exertion) than the precious metal. By the 16th century in Europe, many of the ideas about money that shape our thinking today were in place. Still, money remained a physical thing—that thing being a piece of gold or silver. A gold coin wasn’t a symbol of value; it was an embodiment of it, because everyone believed that the gold had intrinsic worth. Likewise, the amount of money in the economy was still a function of how much gold and silver was available. The rulers of Spain and Portugal didn’t quite appreciate the limits of this system, however, which led them to plunder their New World colonies and accumulate vast hoards of precious metals, which in turn triggered periods of rampant inflation and enormous tumult in the European economy. Read the full article here . And after you've read the article, take a look at the timeline that Spectrum has put together. Here's a snapshot: Hat tip to Barry Ritholtz for calling our attention to this article.

Paddy Hirsch tells us that Spain is causing big problems because, to put it simply, Spain is so big. At least compared to dear old Ireland. And to help us get our heads around the damage that Spain's debt crisis could cause fellow EU nations (and the global economy, for that matter), Hirsch wants us to think of Spain as a homeowner:

Writing in the May/June issue of The American Interest , Barry Eichengreen argues that while the role of the dollar on the global economic stage is likely to diminish somewhat, it will be some time before we see any significant drop in the greenback's importance. But he uses recent currency maneuverings in China and Japan to outline some of the benefits we in the US receive from the dollar being the global currency. With international business being conducted in dollars, U.S. banks aren't burdened with a lot of the exchange rate machinations that banks elsewhere deal with. And the U.S. Treasury costs of borrowing are lessened by the stability that the dollar offers. And on the political front, Eichengreen points to " America’s unique ability to provide dollars in unlimited quantities, but also to withhold them, provides U.S. foreign policymakers with another pressure point to push." But Eichengreen points out that there are some downsides to the dollar being the global currency. By U.S. Treasury estimates, China holds some $1.1 trillion in U.S. government bonds. Total official foreign holdings exceed $3.2 trillion, nearly a third of the $10 trillion of U.S. Treasury debt held by the public. It is worth noting that these official figures are almost certainly underestimates. In addition to purchases in the United States, which are tracked by the U.S. Treasury, governments and central banks can purchase U.S. Treasury bonds through intermediaries in foreign centers like London, where they are harder to detect. Foreign central banks also hold the securities of government-sponsored agencies like Freddie Mac and Fannie Mae, although they have trimmed those holdings since the subprime crisis. If by purchasing U.S. Treasury bonds foreign central banks can lower U.S. interest rates by as much as a full percentage point, then they could, by curtailing those purchases, presumably raise U.S. rates by a corresponding amount. The U.S. housing market and construction sector would feel the pain. This would be a not-so-subtle way for China to make known its displeasure with U.S. policy toward North Korea or Iran, or with a U.S. Treasury decision to label China a currency manipulator. The benefits that America derives from Chinese purchases of U.S. debt are a factor in the State Department’s reluctance to push Beijing harder on human rights issues and the Treasury Department’s reluctance to push it harder on the exchange rate issue. In principle, China could go further and sell its previous purchases. Given the magnitude of its holdings, this would cause bond prices to crater and U.S. interest rates to spike. Smaller bond market shocks than that have caused financial mayhem in the United States. Consider the 1.5 percent rise in thirty-year Treasury yields that occurred in 1994 when Japanese investors faced with a financial crisis at home sold off their U.S. holdings. The result was serious losses and fears of insolvency of major financial companies and hedge funds. If the Chinese wished to wreak havoc in U.S. financial markets, this would be the way. The deterrent to China’s doing so is that it might also be wreaking havoc in its own markets. When institutional investors in Japan sold off some of their U.S. treasuries in 1994, driving down the price, they suffered losses on their remaining holdings. This heightened concern about the solvency of not just U.S. financial firms but Japanese financial institutions as well. China would face an analogous problem. Eichengreen goes on to outline reasons such behavior would create problems for China's economy, so no need to get alarmist. The article as a whole raises a series of interesting discussion points on the impact of the dollar's global status on the U.S. economy and business. Read The Once and Future Dollar here . (Hat tip, Greg Mankiw )

Add Boston Consulting Group's Hal Sirkin to the list of industry experts who believe that reports of the death of US manufacturing have been, as Twain might put it, "an exaggeration." With the decline of the dollar and the rise of wages in China, "It's now becoming more effective to produce in the U.S. than it is to produce in a lot of different countries," says Sirkin. Sirkin recently discussed the state of manufacturing in the US with the Knowledge@Wharton editor in chief Mukul Pandya .

Europe and the euro start 2012 in the spotlight, as economists around the globe watch to see how policymakers fight what appears to be an oncoming recession. Count the Wall Street Journal 's top editors and reporters among those who see Europe struggling throughout the year. The Journal's multimedia team has put together an impressive--if at times rather gloomy--documentary titled Europe on the Brink . The doc moves from the establishment of the EU and what some WSJ editors see as basic structural flaws to the EU economy, to the beginning of the debt crisis, and through to today's challenges.

Last week the Federal Reserve and the European Central Bank announced a plan in which they, along with other key central banks, will coordinate efforts to fight the global credit crunch . In short, the Fed will make it easier for the ECB to get dollars. Why do they want dollars, when they have their own currency? Paddy Hirsch takes to the Marketplace Whiteboard to explain: Why does the EU want U.S. dollars? from Marketplace on Vimeo .