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UN Calls for New Global Currency in Place of Greenback

Posted by Larry Doyle on September 9, 2009 11:04 AM |

What drove the U.S. dollar dramatically lower yesterday? How about a communique from none other than the United Nations Conference on Trade and Development. UNCTAD recently released a statement in which it proclaims:

Given the prevailing major shortcomings in the international financial and monetary system, UNCTAD draws attention to some elements of reform of the international financial architecture, which is long overdue. These include effective capital account management, strengthening the role of special drawing rights (LD’s highlight), and a multilaterally agreed framework for exchange rate management. These reforms imply a fundamental rethinking of global financial governance to stabilize trade and financial relations by reducing the potential for gains from speculative capital flows. This will reduce the likelihood of similar crises in the future and help create a stable macroeconomic environment conducive to growth and smooth structural change in developing countries.

I purposely highlight the UN’s desire to strengthen the role of special drawing rights. In layman’s terms, that means the UN wants to promote the currency of the IMF at the expense of the U.S. dollar.

When BRIC nations promote a move away from the U.S. dollar, one may view it as the competitive nature of international trade. When an entity such as the United Nations is also promoting a move away from the U.S. dollar as the international reserve currency, we are embarking on an entirely new slope along our economic landscape.

The fact that we have heard little to nothing from our power base in Washington leads me to believe that Obama, Geithner, Bernanke, Summers, et al are comfortable with a decline in the value of our currency.

In my opinion, that comfort can be a very dangerous long term maneuver. How so? Economic growth requires capital. If investors deem our currency to be weakening, the capital will flow elsewhere . . . and elements of our quality of life may go right along with it.

LD

  • TD

    LD,

    Before you get too worked up about this report, consider the source. Heiner Flassbeck, co-author and a UNCTAD director is one of Germany’s most left-wing economists. He was at the DIW institute at Berlin for many years when the DIW would often issue a dissenting opinion to the German ‘Five Institutes’ report, and later served Finance Minister Oskar Lafontaine, as State Secretary, in Lafontain’s attempts to establish a European-wide Keynesian fiscal and monetary policies.

    The amusing thing about the report is that it calls for, ‘establishing a new currency to protect emerging markets from the “confidence game” of financial speculation.’ At the end of the day, that is exactly what any fiat currency is – a confidence game. Meanwhile gold is $1000 an ounce.

    TD

  • Mike

    Hey LD,

    What do you think about the Amero and the formation of the North American Union? Is there truth behind this matter or just another topic for conspiracy theorists to blab about?

    It’s certainly in line with the current weakness of the dollar..

  • Larry Doyle

    Mike,

    Sounds like some material for the late night talk shows or some bantering over a cocktail but not much more than that.

    I’m interested when we start to see Americans illegally entering Mexico in search of opportunities.

  • Moy

    I think it is time the Americans started doing some work to feed their bellies. It has been long time since they have worked hard. Since then they are living on the savings of China, Japan and others. I also read about the Chinese govt issuing yuan bonds. I hope all this economic upheavals do not lead to a crash in the dollar.






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