Thread: No More Dollar, Pound, Yen, Euro, Push for Global Currency

No More Dollar, Pound, Yen, or Euro,The New Push for a Global Currency

Currencies / Fiat Currency
Aug 05, 2010 - 06:13 AM

By: LewRockwell

You surely didn't think that the governing elites would let this economic crisis pass without pushing some cockamamie scheme for control. Well, here is the cloud no bigger than a man's hand, a revival of a 60-year-old idea of a global paper currency to fix what ails us.

The IMF study that calls for this is by Reza Moghadam of the Strategy, Policy, and Review Department, "in collaboration with the Finance, Legal, Monetary and Capital Markets, Research and Statistics Departments, and consultation with the Area Departments." In other words, this paper shouldn't be ignored.

It's a long-term plan, but the plan has the unmistakable stamp of Keynes: "A global currency, bancor, issued by a global central bank would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy.... The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present."

The term bancor comes from Keynes directly. He proposed this idea following World War II, but it was rejected mostly for nationalistic reasons. Instead we got a monetary system based on the dollar, which was in turn tied to gold. In other words, we got a phony gold standard that was destined to collapse as gold reserve imbalances became unsustainable, as they did by the late 1960s. What replaced it is our global paper money system of floating exchange rates.

But the elites never give in, never give up. The proposal for a global currency and global central bank is again making the rounds. What problem is being addressed? What is so desperately wrong with the world that the IMF is floating the idea of a world currency? In a word, the problem is hoarding. The IMF is really annoyed that "in recent years, international reserve accumulation has accelerated rapidly, reaching 13 percent of global GDP in 2009 – a threefold increase over ten years."

You see, monetary policy isn't supposed to work this way. In their ideal world, the central bank releases reserves and these reserves are lent out, leading to a boom in consumption and investment and thereby global happiness forever (never mind the hyperinflation that goes along with it). But there is a problem. The current system is nationally based and so the economic conditions of one country turn out to have an influence on the borrowing and lending markets. Without borrowers and lenders, the money gets stuck in the system.

This is a short history of the last two years. By now, if the Fed had its way, we would be awash in money. Instead the reserves are stuck in the banking system. It's like the whole of the population of the United States has suddenly been consumed by the moral advice: neither a borrower nor a lender be.

And why? Well, there are two reasons. Borrowers are just a bit nervous right now about the long term. They are watching balance sheets day by day, consumed with a weird sense of reality that had gone out the window during the boom times. Meanwhile, the bankers are just a bit risk averse, happier to keep the reserves in the vault than toss them to the winds of fate. They have the bank examiners breathing down their necks right now, and lending doesn't pay well, not with interest rates being suppressed down to the zero level.

Under these conditions, yes, hoarding seems like a pretty good idea. What's more, we should be very grateful indeed for this retrenchment. The idea of plunging back into another bubble seems rather shortsighted.

The IMF has a problem with this practice, though it doesn't dwell on it. The problem is that this practice of maintaining high reserves is putting a damper on consumption and investment, prolonging the recession. The simple-minded solution coming from the high-minded eggheads at the IMF is to find some system, any system, that would push the money from the vaults into the hands of the spending public.

The rationale for the global currency and global central bank is that the reserves could always find a market in a globalized system, and would not therefore be so tied to the exigencies of a nationally based banking and monetary system.

An academic paper can wax eloquent for hundreds of pages about the advantages of a global system. It will lead to more stability, efficiency, and less politicization of money and credit. And truly, there is a point here: a real gold standard is always tending towards a global currency system. Different national currencies are merely different names for the same thing.

But there is a key difference. Under a gold standard, the physical metal is the limit and the market is the master. Under a global paper system, the paper provides no limit whatsoever and the politicians are the masters. So there is no sense of talking about the glories of globalization in the current context. A world paper currency and world central bank would heighten the moral hazard and lead to a global inflationary regime such as we've never seen. There would be no escape from political control at that point.

Every proposal of a drastic solution such as this always comes with a warning of some equally drastic consequence of failing to adopt the proposal. In this case, the IMF actually raises questions about the survivability of the dollar itself. "There has been a long-running debate speculating on whether the dollar could collapse," says the paper. It raises the worry that if a run on the dollar materializes, central banks could attempt to race each other to dump it permanently.

But, the paper points out, many people wonder whether "good alternatives to the dollar exist." And for this reason, it might be a good idea to cobble together such an alternative sooner rather than later.

There is probably more truth in that statement than most people want to grant. But the right alternative is not yet another and more global experiment in paper money inflation. God forbid. If we want an alternative to the dollar, there is one that could appear before our eyes if only we would let it happen. Private currencies traders the world over could, on their own, give rise to a new currency rooted in gold and traded by means of digital media. On many occasions over the last 20 years, such a system nearly came to be. But guess what? The government cracked down and stopped it. The governing elites have decided that there will be no currency reform unless it comes from the marble palaces of the monetary elites.

http://www.marketoracle.co.uk/Article21659.html

But there is a key difference. Under a gold standard, the physical metal is the limit and the market is the master. Under a global paper system, the paper provides no limit whatsoever and the politicians are the masters. So there is no sense of talking about the glories of globalization in the current context. A world paper currency and world central bank would heighten the moral hazard and lead to a global inflationary regime such as we've never seen. There would be no escape from political control at that point.

The problem with just a gold standard, this as opposed to bi-metalism, is the market forces brings out the big guns, and they corner the market through sheer strength in volume, deep pockets, combined with political corruption and he with the gold makes the rules. It is the political corruption that enables the manipulations of the market.

The idea of a international currency has been around for much longer than 60 years. How far is the dollar from being a international currency right now?.................down the primrose path?

Originally Posted by roundabout

But there is a key difference. Under a gold standard, the physical metal is the limit and the market is the master. Under a global paper system, the paper provides no limit whatsoever and the politicians are the masters. So there is no sense of talking about the glories of globalization in the current context. A world paper currency and world central bank would heighten the moral hazard and lead to a global inflationary regime such as we've never seen. There would be no escape from political control at that point.

The problem with just a gold standard, this as opposed to bi-metalism, is the market forces brings out the big guns, and they corner the market through sheer strength in volume, deep pockets, combined with political corruption and he with the gold makes the rules. It is the political corruption that enables the manipulations of the market.

The idea of a international currency has been around for much longer than 60 years. How far is the dollar from being a international currency right now?.................down the primrose path?

Good points...roundabout. The dollar was the world currency or at least the world standard...but our government destroyed that. Ever wonder why they would do that?

The dollar was the world currency or at least the world standard...but our government destroyed that.

That is a bet that I would not make. Not quite yet. Keeping in mind that a fiat currency requires faith and/or force to sustain it. How would a world orgainzation such as the IMF or any other pull together both faith, (as many countries would not go along, due to sovereignty issues) or force. U.N. Forces?

When money is treated like a commodity, which it is, the dollar can be viewed as the standard and other commodities and currencies are traded off of that standard. If there was a world currency, a currency replacing all other currencies, there would be nothing to trade against the standard. This does not seem possible as it would suggest parity amongst the economies of the world. There is nothing realistic for business to strive for. JMO Still wandering around kicking the cat.

Originally Posted by roundabout

The dollar was the world currency or at least the world standard...but our government destroyed that.

That is a bet that I would not make. Not quite yet. Keeping in mind that a fiat currency requires faith and/or force to sustain it. How would a world organization such as the IMF or any other pull together both faith, (as many countries would not go along, due to sovereignty issues) or force. U.N. Forces?

When money is treated like a commodity, which it is, the dollar can be viewed as the standard and other commodities and currencies are traded off of that standard. If there was a world currency, a currency replacing all other currencies, there would be nothing to trade against the standard. This does not seem possible as it would suggest parity amongst the economies of the world. There is nothing realistic for business to strive for. JMO Still wandering around kicking the cat.

I think I understand but I am unsure of what you mean by "a bet I would not make..?" To me the dollar was the standard but not anymore. Even the Canadian dollar has been worth more.

I do not understand how the government and 50% in the USA supporting socalisem...how they think there can be an "economy" where there is basicly no industry or capatiisem or compatition. When everyone becomes cradel to grave on the dowll what will happen? One guy out there working in the private sector makes no sense.

As you say...one currency would blend well into this world stagnation or static form of socialistic living but for me I support consumerism and competition. It was suppose to be what held down runaway inflation and one world dormancy.

But I also think that the diversity of people is natural and should be a respected thing also. Now, with all the racism issues the "divers pride" has turned to civil war. I think people being multicultural is a good thing...but in America we are an AMERICAN CULTURE and though diversity can be celebrated it should not war against our way of life.

"To each its own kind..." I like travel and the diversity of culture.

This statement can easy be taken the wrong way...but I hope that the world continues to fight this NWO government of socialistic democrapic rule. We need to stop the wars. I think their point has been made!

I don't understand the 'one round table" controlling the world philosophy.

But the world is a relatively new concept. A few thousand years and a few hundred years of the world being travel accessible is simply not enough time for social empirical testing. We are still in a very violent and volatile hostile world...which is normal for humanity.

I am unsure of what you mean by "a bet I would not make..?" To me the dollar was the standard but not anymore. Even the Canadian dollar has been worth more.

Even the standard must fluctuate. A standard is a go to point for comparison. Money as a commodity would dictate that the standard is also a commodity as there is no such thing as a stagnant standard. As a economy builds upon itself, or sputters along, the standard must follow.

Please keep in mind these are just my opinions as I stated, I am still kicking the cat.

I have a habit of throwing cow pies at the side of the barn and then trying to read them like tea leaves in a cup.

Originally Posted by roundabout

I am unsure of what you mean by "a bet I would not make..?" To me the dollar was the standard but not anymore. Even the Canadian dollar has been worth more.

Even the standard must fluctuate. A standard is a go to point for comparison. Money as a commodity would dictate that the standard is also a commodity as there is no such thing as a stagnant standard. As a economy builds upon itself, or sputters along, the standard must follow.

Please keep in mind these are just my opinions as I stated, I am still kicking the cat.

I have a habit of throwing cow pies at the side of the barn and then trying to read them like tea leaves in a cup.

there is no such thing as a stagnant standard

YET!

Better save them cow pie...they may become the standard for the dollar!

I think we are on the same page. I enjoy your posts.

Not an exact quote, but, 'to coin money, and determine the value thereof' was the instructions to Congress in the Constitution.

The 'value thereof' recognizes that gold and silver, both commodities can fluctuate on the market, less then, than now. Due mainly to industrial uses of the two, and art, jewelry, manipulation etc. Gold coins regulated by Congress could be of a certain size or weight, AND, of a certain number of grains per ounce. The number of grains could be legislated. Gold could be diluted with copper and silver, and silver could be cut with copper. Add into that mix the ratio between the two of which was 16 to 1, 16 ounces of silver in circulation to 1 ounce of gold, then even this ratio could be regulated and changed in order to chase a standard. Still some room for manipulation, IF, you have deep pockets and crooked politicians.

So a standard is some what of a misnomer. A paper standard would have to behave in the same manner as economies ebb and flow and are easier to manipulate.

So is the dollar a standard or a reserve? Seems as though it acts like both. If there was to be a international reserve currency made up of a basket of different currencies, then it would seem that those currencies participating would be subjected to a variety of foreign influences. Much like our dollar now. Question that comes to mind, WHO would be the principles over looking the kitty?

When it comes to money, it seems that honesty is the best policy, yet we are told, while looking for honesty, the day will come when men throw their gold and silver into the streets.

This was a little thing I wrote:

http://whathappenedtothestimulusmoney.blogspot.com/