I know that this is just a monetary game, but I would at least like to know the rules of the game, so that even if I don't play I can watch and see whats going on.
An interesting yet at times perplexing article by Steil brings up several important points (see links below). One is the goal and advantages towards unitary currencies and the abandoment of national currencies (by establishing 3 types of worldwide currencies and if you follow the logic to one worldwide currency). Here are some points on this topic:
"The right course is not to return to a mythical past of monetary sovereignty, with governments controlling local interest and exchange rates in blissful ignorance of the rest of the world. Governments must let go of the fatal notion that nationhood requires them to make and control the money used in their territory. National currencies and global markets simply do not mix; together they make a deadly brew of currency crises and geopolitical tension and create ready pretexts for damaging protectionism. In order to globalize safely, countries should abandon monetary nationalism and abolish unwanted currencies, the source of much of today's instability."
"But the dollar's privileged status as today's global money is not heaven-bestowed. The dollar is ultimately just another money supported only by faith that others will willingly accept it in the future in return for the same sort of valuable things it bought in the past. This puts a great burden on the institutions of the U.S. government to validate that faith. And those institutions, unfortunately, are failing to shoulder that burden. Reckless U.S. fiscal policy is undermining the dollar's position even as the currency's role as a global money is expanding."
The part that I found personally confusing, pardon my ignorance deals with gold as an appropriate substitute. The author states:
"So what about gold? A revived gold standard is out of the question. In the nineteenth century, governments spent less than ten percent of national income in a given year. Today, they routinely spend half or more, and so they would never subordinate spending to the stringent requirements of sustaining a commodity-based monetary system. But private gold banks already exist, allowing account holders to make international payments in the form of shares in actual gold bars. Although clearly a niche business at present, gold banking has grown dramatically in recent years, in tandem with the dollar's decline. A new gold-based international monetary system surely sounds far-fetched. But so, in 1900, did a monetary system without gold. Modern technology makes a revival of gold money, through private gold banks, possible even without government support."
"As for the United States, it needs to perpetuate the sound money policies of former Federal Reserve Chairs Paul Volcker and Alan Greenspan and return to long-term fiscal discipline. This is the only sure way to keep the United States' foreign tailors, with their massive and growing holdings of dollar debt, feeling wealthy and secure. It is the market that made the dollar into global money -- and what the market giveth, the market can taketh away. If the tailors balk and the dollar fails, the market may privatize money on its own."
These last two sentences are particularly intriguing. What exactly is being said between the lines? On the one hand, he argues that you can't have a gold standard but it can be used by privately owned banks to conduct transactions. Does that mean that if the fiscal policy of the US does not shape up, that the repercussion is that the market will take over by moving away from the dollar and instead using privately owned banks making transactions based on a gold equivalent?
So what are the rules of the game being proposed?
Best, ER
Here is the link to the original article in Foreign Affairs:
http://www.foreignaffairs.org/20070501f ... rency.html
Here is the link to the article in Kryptogon on the same issue:
http://cryptogon.com/?p=706
PeakOil is You
Council of Foreign Relations: End of Natl Currency
First unread post • 4 posts
• Page 1 of 1
Council of Foreign Relations: End of Natl Currency
by Elan_Rasa » Wed 09 May 2007, 21:11:59
-
Elan_Rasa - Peat
- Posts: 53
- Joined: Wed 28 Jun 2006, 03:00:00
Re: Council of Foreign Relations: End of Natl Currency
by Tanada » Wed 09 May 2007, 21:47:37
Really it is simple in a way, money is anything people accept in trade for something of value to them. UIf you are bartering things can get complicated because sometimes you value something you are trading far more than those you are trading with, money is just a go between that makes it easy for people to judge how you value your labor and stuff compared to a third standard. It works best if the third standard has an agreed upon worth, otherwise you end up negotiating what your money is worth before you can negotiate your barter. Governments from time immemorial have defined the money supply, and from time to time people loose faith in the government approved standard. This is bad. 
It leads to wars or at least major economic upheavels. In the modern world your local currency might crash, but if you are wise and a little bit lucky you can switch to another currency before you loose too much value. That is how the big international banks really make most of their money, currency value speculation. Not an art for the poor or feint of heart.
It's all a game and only the elites get to place.
It leads to wars or at least major economic upheavels. In the modern world your local currency might crash, but if you are wise and a little bit lucky you can switch to another currency before you loose too much value. That is how the big international banks really make most of their money, currency value speculation. Not an art for the poor or feint of heart.
It's all a game and only the elites get to place.
$this->bbcode_second_pass_quote('Alfred Tennyson', 'W')e are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
- Tanada
- Site Admin
- Posts: 17094
- Joined: Thu 28 Apr 2005, 03:00:00
- Location: South West shore Lake Erie, OH, USA
Re: Council of Foreign Relations: End of Natl Currency
by Zentric » Thu 10 May 2007, 04:50:57
Here's what I think it means - which I've just paraphrased and updated from an older thread:
$this->bbcode_second_pass_quote('', 'I')nstead of all the world's currencies being valued against USD, they would instead be denominated against gold, which, unlike the USD, is finite and less subject to manipulation.
If America is to continue towards insolvency, the value of USD in relation to gold will plummet. Similarly, if, say, Canada wishes to reinvest a greater portion of its oil and mineral revenues into smart, energy-saving infrastructure, its Loonie, in relation to gold, will do better or possibly even soar.
If an American wants to buy a pack of gum, it'll be in US dollars. If a Canadian wants to do the same, it'll be in Canadian dollars. And if a Canadian firm wants to import a gum shipment from the US, the firm, with a bank's assistance, would convert its Loonies into gold and then the gold into US dollars to make their purchase. Everybody wins except for the US, who loses its privilege as the keeper of the world's reserve currency, and possibly deservedly so since it has greatly abused its caretaker role.
$this->bbcode_second_pass_quote('', 'I')nstead of all the world's currencies being valued against USD, they would instead be denominated against gold, which, unlike the USD, is finite and less subject to manipulation.
If America is to continue towards insolvency, the value of USD in relation to gold will plummet. Similarly, if, say, Canada wishes to reinvest a greater portion of its oil and mineral revenues into smart, energy-saving infrastructure, its Loonie, in relation to gold, will do better or possibly even soar.
If an American wants to buy a pack of gum, it'll be in US dollars. If a Canadian wants to do the same, it'll be in Canadian dollars. And if a Canadian firm wants to import a gum shipment from the US, the firm, with a bank's assistance, would convert its Loonies into gold and then the gold into US dollars to make their purchase. Everybody wins except for the US, who loses its privilege as the keeper of the world's reserve currency, and possibly deservedly so since it has greatly abused its caretaker role.
In other words, fiat money stays around for all countries' domestic purposes. But for international purposes, a gold-based settlement system takes the dollar's place, allowing for greater international monetary stability, while also forcing fiscal responsibility on those in the US government who recklessly have either created or spent those dollars in the past.
-
Zentric - Tar Sands
- Posts: 709
- Joined: Mon 14 Mar 2005, 04:00:00
Re: Council of Foreign Relations: End of Natl Currency
by Mircea » Sat 19 May 2007, 23:01:29
$this->bbcode_second_pass_quote('Elan_Rasa', ' ')National currencies and global markets simply do not mix; together they make a deadly brew of currency crises and geopolitical tension and create ready pretexts for damaging protectionism. In order to globalize safely, countries should abandon monetary nationalism and abolish unwanted currencies, the source of much of today's instability."
All true. I don't have a problem with a global currency, my problem is with who or what would control it.
$this->bbcode_second_pass_quote('Elan_Rasa', 'T')he part that I found personally confusing, pardon my ignorance deals with gold as an appropriate substitute. The author states:
"So what about gold? A revived gold standard is out of the question.
To understand that, just read the previous part:
"The dollar is ultimately just another money supported only by faith that others will willingly accept it in the future in return for the same sort of valuable things it bought in the past."
I would guess that you've been reading a lot of erroneous information on other web-sites about the US Federal Reserve Bank. The correct pronunciation of "Federal Reserve Bank" is "Central Bank."
That's what it is, a central bank, and it does the same thing every single central bank in every single country on the planet does, including those countries that have more than one central bank.
There are one or two important differences, the first being the US central bank is set up to prevent it from being politicized. When Jimmy Carter and George Herbert Bush were on their hands and knees begging and pleading for the US central bank to save their presidencies, the US central bank thankfully and fortunately refused to allow itself to become a political tool in the hands of idiot politicians.
The second difference is that it isn't controlled by religious groups or labor unions or the military, like some central banks are.
Whether you use a dollar, a dollar-backed by gold or silver, or a dollar backed by urine or dog-poop, or you actually use gold or silver coins, vials of urine or baggies of dog-poop, or even compact discs or computer chips, the bottom line is that the value is still faith based, and there's no escaping it.
And the value of anything is highly subjective, not objective. Here's a Queen Anne chair that Elvis Presley sat in while eating dinner at a hotel one night. What is its value to me? It has absolutely no value whatsoever, except maybe as firewood. But, to someone else, it might be worth $10,000 and to someone else it might be worth $1 Million.
$this->bbcode_second_pass_quote('Elan_Rasa', 'I')n the nineteenth century, governments spent less than ten percent of national income in a given year. Today, they routinely spend half or more, and so they would never subordinate spending to the stringent requirements of sustaining a commodity-based monetary system.
This is very misleading to some extent. People today expect and demand more services from their governments, like food stamps, subsidized housing, college tuition, free medical care, retirement and pension plans, unemployment payments, disability payments, urban enterprise zones, urban rehab zones, money for the "homeless," abortions, child care etc etc and many other services, all of which were either non-existent or not funded by governments in the 19th Century.
A gold standard, or any other standard, would severly limit what a government could spend, and many people are pushing a return to the gold standard, because they believe it will severely restrain the power of the US. If the US was tied to a standard, it would not be in Afghanistan, or Iraq, or supporting puppet governments in Central Asia, or Central America or anywhere else.
That isn't necessarily a bad thing, but also understand there would have been no "Great Society" either and most of the US government's social programs would not exist.
$this->bbcode_second_pass_quote('Elan_Rasa', '[')b]It is the market that made the dollar into global money -- and what the market giveth, the market can taketh away. If the tailors balk and the dollar fails, the market may privatize money on its own."
These last two sentences are particularly intriguing. What exactly is being said between the lines?
Well, you'd have to accept the pretext that "the market made the dollar into a global economy" as true. I don't except it as true since it is the dollar that made the market into a global economy.
$this->bbcode_second_pass_quote('Elan_Rasa', 'O')n the one hand, he argues that you can't have a gold standard but it can be used by privately owned banks to conduct transactions.
That isn't contradictory, since the function and purpose of each is vastly different.
$this->bbcode_second_pass_quote('Elan_Rasa', 'D')oes that mean that if the fiscal policy of the US does not shape up, that the repercussion is that the market will take over by moving away from the dollar and instead using privately owned banks making transactions based on a gold equivalent?