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dots_thots · Joined: 06 May 2008 Posts: 8 Location: Manchester, UK

Dollar crisis looms, China ponders reform: Mundell
http://www.reuters.com/article/reutersEdge/idUSL0221460620080603

"What you need to have is an International Monetary Fund that's going to take some of these excess dollars, put them into a substitution account inside the IMF or some other institution and then use that and create what is a new international currency," said Mundell.

"This kind of proposal would be very acceptable inside China. The Chinese are thinking in terms of this," he said.

This guy may simply be reporting the news and I don't know anything about him but it worries me when I see this kind of thing. On the one hand, there's talk of the weak dollar and the risk to non-US central bank dollar reserves but rather than conclude with the solution of a disciplined money system, he talks about a new international currency.

The Bretton woods agreement is mentioned. Under this agreement before it died, the US dollar was effectively pegged to gold and other currencies to the dollar, indirectly pegging them to gold. It is mentioned in this article as if this new international currency would be similar but there's no mention of a precious metal standard or a standard of any kind.

There's no suggestion at all that the new international currency would not be fiat every other currency is. So, the solution to fiat currency is to use another.

The details are sketchy I admit, but this article is defining the boundaries of the argument if you will. It's like they know people are on to them, so they get their false solutions into the public arena.

I'd always expected the dollar would die and up would pop the Amero or some equivalent as the "heroic" replacement. Then I could imagine them suggesting merging the Euro and the Amero together at some point to "stop all those annoying booms and busts, to smooth the business cycle" which is totally farcical. Under a pure gold standard there wouldn't be booms or busts.

I never thought of the United States' creditors reacting before this and sort of missing a step out completely. A super "alternate" currency with us all pegged to it, is to all intents and purposes is a de facto world currency.

I'm not actually against a world currency as long as it is a pure precious metal standard which occurs voluntarily country by country and is not centrally organised or decided upon. That would ensure freedom for everyone, honest spending, restraint on government and would actually massively choke all governments ability to wage war without breaking the standard.

Be wary...

cwesti · Joined: 04 Mar 2008 Posts: 16 Location: northwales uk

I am crap at this subject but I do grasp the basic concepts. I do agree with you on the subject of eventually merging the Amero with the Euro I also see that as inevitable. I wish I could put what I see into words, it's in my head but I cannot seem to express what I see, if that makes any scense. Good article though. CHEERS.
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