On Monday of this week Reuters published the following story:
http://rawstory.com/08/news/2009/09/07/united-nations-calls-for-new-world-currency/
"The United Nations Conference on Trade and Development said in a report published Monday that the U.S. dollar should be replaced as the world’s standard reserve currency, giving rise to a new global currency managed by an as-yet undetermined financial regulatory organization.
This is just the first paragraph of what goes on to be a push by the U.N. and several key players in the IMF for a new world monetary fund. “[The] dominance of the dollar as the main means of international payments [has] played an important role in the build-up of the global imbalances in the run-up to the financial crisis,” the report says. “Another disadvantage of the current international reserve system is that it imposes a greater adjustment burden on deficit countries (except if it is a country issuing a reserve currency) than on surplus countries"
The UN adds: “Such a multilateral system would tackle the problem of destabilizing capital flows at its source. It would remove a major incentive for speculation and ensure that monetary factors do not stand in the way of achieving a level playing field for international trade. It would also get rid of debt traps and counterproductive conditionality. The last point is perhaps the most important one: countries facing strong depreciation pressure would automatically receive the required assistance once a sustainable level of the exchange rate had been reached in the form of swap agreements or direct intervention by the counter party.”
This basically states that the IMF and UN would now set the exchange rates for all world wide currencies and that they would control the debt burden and have the ability to void one countries debt to another if they feel that the currencies of the two countries were not equitable in their market evaluations!
The dollar's current weakening has already created an inflationary hit on our day to day costs of living by increasing the commodities we purchase in the form of finished goods. Every time the dollar takes a hit oil, gas, nat. gas, corn, soy beans , every commodity that becomes a product that we consume and or use gets more expensive.
The OPEC nations are just meeting as of this publishing and they are content with oil at $70 a barrel as long as the dollar does not keep lowering. They plan on keeping production at current levels temporarily or even cutting back to keep the current reserves from growing, preventing a glut. That is if they can get Russia to play nice and not back door them like it has been doing and selling more oil than OPEC wants them to. (Russia is not an OPEC member)
The value of our dollar has been one of the corner stones of America's super power status it is not just our military might that makes us the one of the elite few nations that can affect world change.
The dollar has up until recent times been the envy of the free market systems globally because of its acceptance as both a world currency and the value that it once represented by the number of them in circulation. It is simple if you print too many of them they are worth less and could become worthless. With the Fed. printing money and creating the largest debt burden in the history of mankind the dollar has an uphill fight to keep its value on the world markets.
If you become a debtor nation as we have to China and several other countries and can no longer control the spending that our government is hell bent on, with no signs that it is working at any level on stimulating the economy, you become less valuable and so does your currency!
Our dollar is becoming the peso of the 70's and 80's where you could not give them away, the yen of the 50's and 60' where it took a wheel barrow to exchange dollars for yen, the rupel of the pre and post Soviet meltdown. Our dollar is a direct reflection of our country and all that it once represented, strong and resilient with value based on long term growth and prosperity not short term policies that are not working but having the opposite effect.
With unemployment on its way to 15% by Spring of 2010 where does this regime think it is going to get the taxes necessary to pay back our debt and grow our economy, by infrastructure improvements that is only temporary at best and several years down the road.
Washington needs to wake up and smell what they are spreading and be forced to face the realities that they are creating like their constituents, US!
See folks that is the real reality of any countries economic strength, the ability to raise taxes on its populace to pay its debt!
If we cannot put people to work and keep them employed and paying taxes our countries long term fiscal viability is an illusion, just like the stimulus programs Washington has forced on us.
And that means even more pressure on the employed and the dollars they earn and do not kid yourself, they will have to raise taxes on anyone employed and earning a paycheck to pay this debt off or no one will accept our by then worthless dollars for anything but toilet paper!
Keith C. Westtbrook Ph.D.
