Tuesday, March 24, 2009

Our largest creditor demands a new global currency: bring on the black helicopters and the North American Union

From Al Jazeera:

The head of the Chinese central bank has called for a new global currency controlled by the International Monetary Fund (IMF), saying such a move would give governments particularly in the developing world the ability to manage their economies more efficiently.

In an online essay Zhou Xiaochuan, governor of the People's Bank of China, said the global financial crisis had exposed the danger of relying on one nation's currency for international payments.

The essay, released on the bank's website late on Monday, did not mention the US dollar by name, but the vast majority of international finance is carried out in dollars.

The comments come ahead of a major meeting of leaders from the Group of 20 major economies in London which will focus on measures to alleviate the global economic crisis.

During the meeting, beginning on April 2, China is expected to call for developing economies to have a bigger say in global finance and step up pressure for changes to a system dominated by the US dollar and Western governments.

The unusual step of publishing Zhou's essay in both Chinese and English versions is seen as indicating his comments are aimed at an international audience ahead of the G20 meeting.

China has become increasingly assertive in economic issues and while the global financial crisis has hit Chinese export industries hard, its leaders are also viewing the crisis as a potential opportunity to increase China's global clout.

Here's a safe bet: President Obama will not dismiss this out of hand, but call for discussion and study.


David said...

It should be very concerning. It is a vote of non confidence. The sad part is that they have a valid point. The world shouldn't suffer from our current fiscal insanity.

Anonymous said...

The world will continue to gravitate toward the most reliable currency. I would guess that we have about four years, Obama's first term, to demonstrate that we are putting our house back in order, following several decades of decline, thus validating China's investment in our paper. I'm sure Obama is concerned.

It should also be noted that China is part of our problem, in that they arbitrarily hold the value of their currency virtually constant, thus vastly favoring their export business, especially to the US. They also have massive pollution problems and horrible working conditions for their people, of little concern to our corporations as judged by the outflow of American jobs to China and others in the East.

The lowest price carries with it the cost of unintended consequences like pollution, poor working conditions, sacrifices of human rights, and loss of domestic jobs. Our government must have a voice against these problems.

Under laissez faire economics, we have been heading in the same direction as China, wrt neglecting pollution issues, neglecting workplace health concerns, and developing a highly stratified society with the bulk of the wealth in the upper several percent of the population. A more balanced government - business relationship is required to save us from ourselves.

I think President Obama understands this well, as his recovery programs include addressing these issues, to the consternation of those who would beat on him in order to push forward ideologies that have been demonstrated to be flawed in terms of practical, more desirable results for the average American family.

Perry Hood

Hube said...

You forgot to close the talking points playbook at the conclusion of your last comment, Perry.

Delaware Watch said...

But Obama did dismiss it out of hand last night during his press conference. When asked if he thinks the world needs a world currency he said "No." End of discussion.

Tyler Nixon said...

No Dana. He said "I don't believe that there's a need for a global currency."

Adding "at this time" would have completed this hedge.

So it is hardly a resounding 'no'.

As we know, Obama's "belief" could change as easily as the rest of his positions.

Also, what does anyone expect the POTUS to say?

Personally I would have expected a more resounding statement of confidence in the U.S. dollar.

So, hardly "end of discussion."

RSmitty said...

Jason Scott (queue Hube) and I have every-so-often been predicting the North American Union since about mid-'06. It's gonna happen, or some whacked out "official" synergy plan that will lock Mexico-US-Canada as a unit, while recognizing what will effectively be superficial borders on a map. I just want some duty-free AUTHENTIC tacos with some griddled fatback. Is that so wrong?