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  Currencies In Crisis
A Beanie Baby GuideTo a Grown-Up Problem

By Fred Barbash
Washington Post Staff Writer
Sunday, February 7, 1999; Page H01

Currency Report
Currencies in crisis
Euro The Beanie Baby guide to currency
A world of currency woes
Traveling abroad: Using foreign money
The value of a strong dollar
Exchange Rates
Major Currencies
Africa | Asia | Europe
Middle East | North America
South America | South Pacific
Euro Report
Europe and the Euro
Euro-Conversion Timetable
Quiz: Test your Euro smarts
The Euro and travel.
News, Data & Reports
International Markets
Brazil Economy
Asian Economy
U.S. Markets
Recent Post news on foreign markets and currency
The currency crises of the past two years have also created a crisis for America's parents: What to tell the children when they come home from school, as they inevitably will, and say, "Dad, Mom, why did they devalue the Brazilian real?"

"I don't understand that stuff, honey," is not an acceptable answer. Herewith, therefore, a parent's guide to currency turmoil.

The most important thing to know is that currency is like any other item that's bought and sold--it generally obeys the law of supply and demand. The greater the supply of a currency, the less it's worth; the less the supply, and the greater the demand, the more that currency will cost.

Be not intimidated by such arcana as "currency boards" and "crawling pegs." It's all just like Beanie Babies.

The main reason Beanie Babies have value, apart from cuddliness, is that the manufacturer made it known there would be a limited number. Beanie Baby speculators therefore could confidently expect increasing demand and therefore greater value.

The Beanie Babies are likely to hold their value until and unless the people who buy them decide they like Furbies more, perhaps because of an irresponsible rumor that some Beanie Baby baron is about to dump his supply on the market all at once. The Beanies already out there would become less valuable. This would start a flight to Furbies and the financial pages would report that Beanie Babies declined relative to Furbies.

Now, it's a shame that children have to be exposed to this stuff at all. It's ugly out there. And remember they may be shy about bringing it up. Thus, parents should prepare them for the possibility of Beanie Baby panics ahead.

A Beanie Baby panic would occur if Beanie Baby owners started selling en masse. (This is what has been happening with the Brazilian real.) This decline could be reversed if some large institution, such as The Furb, intervened to buy up Beanie Babies, reducing the number in circulation and bolstering their value.

This would be decided by Alan Beanspan.

© Copyright 1999 The Washington Post Company

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