Is It Time For A WORLD dollar and Central Bank (credit, lending)

[KevK]

This is question I have been pondering- since we now live in a "global economy" and, as has been made quite clear in the last month, this economy is so interlinked that what happens in one nation has huge effects world wide, should we be looking at moving to a world currency and a world central bank?? Such an institution would be far more able to put out economic "fires" like the one we are in now before they spread around the globe and they could act much faster than the central banks and the G-7 have been able to act for this. What do you think? Do you see it in the future?

[graceC]

I don't think so. The disparity of wealth, economic/monetary situation, inflation, cost of living, etc.. is still so stark in this world, that even the idea sounds impossible. Look at Euros. Many citizens of European countries who took up Euros ended up making less yet paying much more for their daily stuff.

[paperhouse]

You can't put out a global fire unless you understand what a central bank does. They artificially raise and lower interest rates to spur growth or control it.

[Mircea]

You can have a unified world currency, or "One World Currency" if you prefer without a world central bank.

[bale002]

Originally Posted by KevK

the G-7 have been able to act for this. What do you think? Do you see it in the future?

Yes, unless we have a series of wars with no clear winner and/or a return to protectionism.

The first step is a movement towards re-arranging the global monetary and banking system, in its various parts to be sure. See this article.

In short, among other things, many EU governments are buying into the UK plan to guarantee interbank lending and the EU will ask the US to help arrange a meeting soon to join in and take other measures to reform the entire system. I figured as much, I do not rule out another Bretton Woods-type meeting within the next couple of weeks, maybe even within a week.

Now, who knows, we are probably quite a ways from one currency and, as Mircea alludes to, we can still have a hodgepodge of institutions, but - again, unless we have a series of wars with no clear winner and/or an outbreak of protectionism - one of the results of this whole episode will be a "deepening" of globalization, not necessarily an "acceleration", but a "deepening", for better and for worse.

We'll see.

[sterlinggirl]

Is It Time For A WORLD dollar and Central Bank?

If its a fiat currency, that's about the scariest thing I've heard all week.

If it is based on something physical (gold, etc), there is the potential for countries or multinationals to corner the market.

If its based on energy, it would be harder to completely corner the market. Whether you can drill for oil, mine coal, grow food, grow wood, dam a river, turn sunlight into energy, or just perform physical labor, you've got something that is worth a certain amount of money based on the BTUs, Calories, Watts, etc. that it contains.

Basing a currency on energy would also take away OPEC and the multinational's ability to jack up prices by limiting supply.....which is why it'll probably never happen.

[chris_ut]

Yea, then we can have a one world government. Good plan. I nominate myself for Dictator for Life.

[StealthRabbit]

Originally Posted by bale002

...
The first step is a movement towards re-arranging the global monetary and banking system, in its various parts to be sure. See this article.

In short, among other things, many EU governments are buying into the UK plan to guarantee interbank lending and the EU will ask the US to help arrange a meeting soon to join in and take other measures to reform the entire system. I figured as much, I do not rule out another Bretton Woods-type meeting within the next couple of weeks, maybe even within a week.

... - one of the results of this whole episode will be a "deepening" of globalization, not necessarily an "acceleration", but a "deepening", for better and for worse.

We'll see.

Nice time of the year to go to Bretton Woods, but they are probably 'booked-up', But I'm sure AIG entertainment organizers could pull some strings for the G-7 to get a few rooms. (AIG could take part of the cut for their 'fee')

Yes, 'a deepening' of globalization is a good way to put it. I hate to think we (USA) propagated this mess, as there will be some serious 'feather clipping' of US for payback. The guilty parties of this mess were not thinking 'globally' (unless it was to figure out where they could safely escape and have access to their cash).

but speaking of global... didn't "W" appoint Angelo Mozilo (countrywide CEO sleaze) as ambassador to The Netherlands ? This is really 'criminal', Good grief who's at the helm of this ship?

[MissDaisy]

In as much as I find it disturbing...the trend is nothing short of biblical...

I hope you are familiar with Revelations??

it is frightening...

I hope I am incorrect..really..

Don't bother flaming me on this one....you can't hurt my feelings....

I am not a flaming anything...not liberal, not right or left wing...no agenda..just trying to live my life as best as I can..

but "this" stuff...makes me worry about the future of not only ourselves , but our (grown) children, and future grandkids....

[floridasandy]

Originally Posted by KevK

This is question I have been pondering- since we now live in a "global economy" and, as has been made quite clear in the last month, this economy is so interlinked that what happens in one nation has huge effects world wide, should we be looking at moving to a world currency and a world central bank?? Such an institution would be far more able to put out economic "fires" like the one we are in now before they spread around the globe and they could act much faster than the central banks and the G-7 have been able to act for this. What do you think? Do you see it in the future?

absolutely not! we are currently a fiat currency. what we need to do for economic prosperity is to strengthen the dollar. Exploding fiscal deficits, the housing correction, protectionist threats and $200 billion in tax hikes scheduled for 2011 are fueling loss of confidence in the U.S. dollar. If foreign holders of dollars or dollar-denominated assets sell them, all the good effects of being the de facto international reserve currency start operating in reverse. Until fiscal and monetary policies change, all this implies future inflation and higher interest rates.

The bottom line is this: the Fed should bury its errant Phillips Curve framework, and cease attempts to fine-tune perfect balance between inflation and recession. It should halt further rate cuts and soon begin a series of interest rate increases.

As for the risk of further credit-market blow-ups, the Fed's new lending facilities and the discount window are more appropriate tools for case-by-case illiquidity issues than blunt interest-rate mechanisms.

Neither current market imbalances nor the longer-term threat posed by moral hazard can be eradicated easily. And the considerable fiscal challenges facing the U.S. economy are not the responsibility of the central bank. But inflation and an unstable dollar are mortal enemies of prosperity. With inflation, millions are burdened by cost-of-living increases, real profit contraction, capital decumulation, and an inability to easily make contracts, calculate entrepreneurially, or invest.