Wednesday, June 17, 2009

The End of National Currency

If the Council on Foreign Relations wasn't so full of influential powerful traditional men and women from around the world, I'd write this off as ranting from some deluded conspiracy theorist. But it's no joke -- these people really think like this and carry weight with people that matter.

In "THE RISE OF MONETARY NATIONALISM", Benn Steil, Director of International Economics, argues that national currencies create nothing but trouble for the global economy. The premise is that the troubles we've seen are created by the inability to manage economic activity because of a lack of an organized over-arching system of "good" currencies so those dumb little "emerging" nations don't mess people up with their uninformed and inexperienced economic planning.

I like the implications of the first part -- if we just had a lot fewer currencies, maybe one global one in fact, then we could regulate and manage a perfect economic world. Those darn national currency speculators are just nothing but trouble for everyone, wrecking all our lives. What we need are professionals to plan the global economy. He even goes so far as to say, "The economics profession has failed to offer anything resembling a coherent and compelling response to currency crises." Poor Benn, he appears to have been isolationg himself.

George Reisman offers a much better answer to the many global crisis in his essay, "Our Financial House of Cards". Lo and behold, he's part of the economic profession, too! The reason you won't find this in prestigious [cough] institutions like the Council of Foreign Relations is it doesn't provide men and women with the power they want over other people's lives.

It never ceases to amaze me how those who are afraid of the Moral Majority and "Right Wing Radical Religious Zealots" have no problem putting some other group in control over their private free-will behaviors. Oh no, we don't want religious slavery, but economic slavery, that's fine. How 'bout we just liberate ourselves from slavery, period?

If you plan to be an investor for 30 years you might want to read these two points of view and consider how you'll protect yourselves when "they" sell the idea of one global currency. It shouldn't be too hard. Imagine how your little lone nation has messed up your finances, then imagine what it would be like if they do it on a global scale and remove your ability to allocate your assets in some safe harbor. I suspect it won't be a very obscure idea in the next 5 years when all the global money printing press operators have had their fill and we start reaping the consequences of our new love for Quantitative Easing.

And all this time I thought it was the unregulated credit futures and derivative speculators that got us into trouble this time. Ha, so glad I now know better who the real villains are. Do you?

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