Toward a Global Currency and World
Government
by Andrew Gavin Marshall
www.globalresearch.ca/, April
6, 2009
[Andrew G. Marshall is a Research Associate
of the Centre for Research on Globalization (CRG). He is currently
studying Political Economy and History at Simon Fraser University]
Introduction
Following the 2009 G20 summit, plans were
announced for implementing the creation of a new global currency
to replace the US dollar's role as the world reserve currency.
Point 19 of the communiqué released
by the G20 at the end of the Summit stated,
"We have agreed to support a general
SDR allocation which will inject $250bn (£170bn) into the
world economy and increase global liquidity."
SDRs, or Special Drawing Rights, are,
"a synthetic paper currency issued by the International Monetary
Fund."
As the Telegraph reported,
"the G20 leaders have activated the
IMF's power to create money and begin global 'quantitative easing'.
In doing so, they are putting a de facto world currency into play.
It is outside the control of any sovereign body. Conspiracy theorists
will love it." [1]
The article continued in stating that,
"There is now a world currency in
waiting. In time, SDRs are likely to evolve into a parking place
for the foreign holdings of central banks, led by the People's
Bank of China."
Further, "The creation of a Financial
Stability Board looks like the first step towards a global financial
regulator," or, in other words, a global central bank.__It
is important to take a closer look at these "solutions"
being proposed and implemented in the midst of the current global
financial crisis. These are not new suggestions, as they have
been in the plans of the global elite for a long time. However,
in the midst of the current crisis, the elite have fast-tracked
their agenda of forging a New World Order in finance.
It is important to address the background
to these proposed and imposed "solutions" and what effects
they will have on the International Monetary System (IMS) and
the global political economy as a whole._
A New Bretton-Woods
In October of 2008, Gordon Brown, Prime
Minister of the UK, said that we,
"must have a new Bretton Woods -
building a new international financial architecture for the years
ahead."
He continued in saying that,
"we must now reform the international
financial system around the agreed principles of transparency,
integrity, responsibility, good housekeeping and co-operation
across borders."
An article in the Telegraph reported that
Gordon Brown would want,
"to see the IMF reformed to become
a 'global central bank' closely monitoring the international economy
and financial system." [2]
On October 17, 2008, Prime Minister Gordon
Brown wrote an op-ed in the Washington Post in which he said,
"This week, European leaders came
together to propose the guiding principles that we believe should
underpin this new Bretton Woods: transparency, sound banking,
responsibility, integrity and global governance.
We agreed that urgent decisions implementing
these principles should be made to root out the irresponsible
and often undisclosed lending at the heart of our problems.
To do this, we need cross-border supervision
of financial institutions; shared global standards for accounting
and regulation; a more responsible approach to executive remuneration
that rewards hard work, effort and enterprise but not irresponsible
risk-taking; and the renewal of our international institutions
to make them effective early-warning systems for the world economy."
[3]
In early October 2008, it was reported
that,
"as the world's central bankers gather
this week in Washington DC for an IMF-World Bank conference to
discuss the crisis, the big question they face is whether it is
time to establish a global economic 'policeman' to ensure the
crash of 2008 can never be repeated."
Further,
"any organization with the power
to police the global economy would have to include representatives
of every major country - a United Nations of economic regulation."
A former governor of the Bank of England
suggested that,
"the answer might already be staring
us in the face, in the form of the Bank for International Settlements
(BIS)," however, "The problem is that it has no teeth.
The IMF tends to couch its warnings about economic problems in
very diplomatic language, but the BIS is more independent and
much better placed to deal with this if it is given the power
to do so." [4]
__Emergence of Regional Currencies __On
January 1, 1999, the European Union established the Euro as its
regional currency. The Euro has grown in prominence over the past
several years. However, it is not to be the only regional currency
in the world. There are moves and calls for other regional currencies
throughout the world.__In 2007, Foreign Affairs, the journal of
the Council on Foreign Relations, ran an article titled, The End
of National Currency, in which it began by discussing the volatility
of international currency markets, and that very few "real"
solutions have been proposed to address successive currency crises.
The author poses the question,
"will restoring lost sovereignty
to governments put an end to financial instability?"
He answers by stating that,
"This is a dangerous misdiagnosis,"
and that, "The right course is not to return to a mythical
past of monetary sovereignty, with governments controlling local
interest and exchange rates in blissful ignorance of the rest
of the world. Governments must let go of the fatal notion that
nationhood requires them to make and control the money used in
their territory.
National currencies and global markets
simply do not mix; together they make a deadly brew of currency
crises and geopolitical tension and create ready pretexts for
damaging protectionism. In order to globalize safely, countries
should abandon monetary nationalism and abolish unwanted currencies,
the source of much of today's instability."
The author explains that,
"Monetary nationalism is simply incompatible
with globalization. It has always been, even if this has only
become apparent since the 1970s, when all the world's governments
rendered their currencies intrinsically worthless."
The author states that,
"Since economic development outside
the process of globalization is no longer possible, countries
should abandon monetary nationalism. Governments should replace
national currencies with the dollar or the Euro or, in the case
of Asia, collaborate to produce a new multinational currency over
a comparably large and economically diversified area."
Essentially, according to the author,
the solution lies in regional currencies.[5]__In October of 2008,
"European Central Bank council member
Ewald Nowotny said a 'tri-polar' global currency system is developing
between Asia, Europe and the U.S. and that he's skeptical the
U.S. dollar's centrality can be revived." [6]
_The Union of South American Nations _The
Union of South American Nations (UNASUR) was established on May
23, 2008, with the headquarters to be in Ecuador, the South American
Parliament to be in Bolivia, and the Bank of the South to be in
Venezuela.
As the BBC reported,
"The leaders of 12 South American
nations have formed a regional body aimed at boosting economic
and political integration in the region," and that, "The
Unasur members are Argentina, Bolivia, Brazil, Chile, Colombia,
Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela."
[7]
The week following the announcement of
the Union, it was reported that,
"Brazilian President Luiz Inacio
Lula da Silva said Monday that South American nations will seek
a common currency as part of the region's integration efforts
following the creation of the Union of South American Nations."
He was quoted as saying,
"We are proceeding so as, in the
future, we have a common central bank and a common currency."
[8]
_The Gulf Cooperation Council and a Regional
Currency _In 2005, the Gulf Cooperation Council (GCC), a regional
trade bloc among Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and
the United Arab Emirates (UAE), announced the goal of creating
a single common currency by 2010.
It was reported that,
"An economically united and efficient
GCC is clearly a more interesting proposition for larger companies
than each individual economy, especially given the impediments
to trade evident within the region. This is why trade relations
within the GCC have been a core focus of late."
Further,
"The natural extension of this trend
for increased integration is to introduce a common currency in
order to further facilitate trade between the different countries."
It was announced that,
"the region's central bankers had
agreed to pursue monetary union in a similar fashion to the rules
used in Europe."[9]
In June of 2008, it was reported that,
"Gulf Arab central bankers agreed
to create the nucleus of a joint central bank next year in a major
step forward for monetary union but signaled that a new common
currency would not be in circulation by an agreed 2010 target."[10]
In 2002, it was announced that the,
"Gulf states say they are seeking
advice from the European Central Bank on their monetary union
program."
In February of 2008, Oman announced that
it would not be joining the monetary union.
In November of 2008, it was announced
that the,
"Final monetary union draft says
Gulf central bank will be independent from governments of member
states."[11]
In March of 2009, it was reported that,
"The GCC should not rush into forming
a single currency as member states need to work out the framework
for a regional central bank, Saudi Arabia's Central Bank Governor
Muhammad Al Jasser."
Jasser was further quoted as saying,
"It took the European Union 45 years
to put together a single currency. We should not rush."
In 2008, with the global financial crisis,
new problems were posed for the GCC initiative, as,
"Pressure mounted last year on the
GCC members to drop their currency pegs as inflation accelerated
above 10 per cent in five of the six countries. All of the member
states except Kuwait peg their currencies to the dollar and tend
to follow the US Federal Reserve when setting interest rates."[12]
An Asian Monetary Union _In 1997, the
Brookings Institution, a prominent American think tank, discussed
the possibilities of an East Asian Monetary Union, stating that,
"the question for the 21st century
is whether analogous monetary blocs will form in East Asia (and,
for that matter, in the Western Hemisphere). With the dollar,
the yen, and the single European currency floating against one
another, other small open economies will be tempted to link up
to one of the three."
However,
"the linkage will be possible only
if accompanied by radical changes in institutional arrangements
like those contemplated by the European Union. The spread of capital
mobility and political democratization will make it prohibitively
difficult to peg exchange rates unilaterally. Pegging will require
international cooperation, and effective cooperation will require
measures akin to monetary unification."[13]
In 2001, Asia Times Online wrote an article
discussing a speech given by economist Robert A. Mundell at Bangkok's
Chulalongkorn University, at which he stated that,
"[t]he 'Asean plus three' (the 10
members of the Association of Southeast Asian Nations plus China,
Japan, and Korea) 'should look to the European Union as a model
for closer integration of monetary policy, trade and eventually,
currency integration'."[14]
On May 6, 2005, the website of the Association
of Southeast Asian Nations (ASEAN) announced that,
"China, Japan, South Korea and the
10 members of the Association of Southeast Asian Nations (ASEAN)
have agreed to expand their network of bilateral currency swaps
into what could become a virtual Asian Monetary Fund," and
that, "[f]inance officials of the 13 nations, who met in
the sidelines of the Asian Development Bank (ADB) annual conference
in Istanbul, appeared determined to turn their various bilateral
agreements into some sort of multilateral accord, although none
of the officials would directly call it an Asian Monetary Fund."[15]
In August of 2005, the San Francisco Federal
Reserve Bank published a report on the prospects of an East Asian
Monetary Union, stating that East Asia satisfies the criteria
for joining a monetary union, however, it states that compared
to the European initiative,
"The implication is that achieving
any monetary arrangement, including a common currency, is much
more difficult in East Asia."
It further states that,
"In Europe, a monetary union was
achievable primarily because it was part of the larger process
of political integration," however, "There is no apparent
desire for political integration in East Asia, partly because
of the great differences among those countries in terms of political
systems, culture, and shared history. As a result of their own
particular histories, East Asian countries remain particularly
jealous of their sovereignty."
Another major problem, as presented by
the San Francisco Fed, is that,
"East Asian governments appear much
more suspicious of strong supranational institutions," and
thus, "in East Asia, sovereignty concerns have left governments
reluctant to delegate significant authority to supranational bodies,
at least so far."
It explains that as opposed to the steps
taken to create a monetary union in Europe,
"no broad free trade agreements have
been achieved among the largest countries in the region, Japan,
Korea, Taiwan, and China."
Another problem is that,
"East Asia does not appear to have
an obvious candidate for an internal anchor currency for a cooperative
exchange rate arrangement. Most successful new currencies have
been started on the back of an existing currency, establishing
confidence in its convertibility, thus linking the old with the
new."
The report concludes that,
"exchange rate stabilization and
monetary integration are unlikely in the near term. Nevertheless,
East Asia is integrating through trade, even without an emphasis
on formal trade liberalization agreements," and that, "there
is evidence of growing financial cooperation in the region, including
the development of regional arrangements for providing liquidity
during crises through bilateral foreign exchange swaps, regional
economic surveillance discussions, and the development of regional
bond markets."
Ultimately,
"East Asia might also proceed along
the same path [as Europe], first with loose agreements to stabilize
currencies, followed later by tighter agreements, and culminating
ultimately in adoption of a common anchor-and, after that, maybe
an East Asia dollar."[16]
In 2007, it was reported that,
"Asia may need to establish its own
monetary fund if it is to cope with future financial shocks similar
to that which rocked the region 10 years ago," and that,
"Further Asian financial integration is the best antidote
for Asian future financial crises."[17]
In September of 2007, Forbes reported
that,
"An East Asian monetary union anchored
by Japan is feasible but the region lacks the political will to
do it, the Asian Development Bank said."
Pradumna Rana, an Asian Development Bank
(ADB) economist, said that,
"it appears feasible to establish
a currency union in East Asia - particularly among Indonesia,
Japan, (South) Korea, Malaysia, Philippines, Singapore and Thailand,"
and that, "The economic potential for monetary integration
in Asia is strong, even though the political underpinnings of
such an accord are not yet in place."
Further,
"the real integration at the trade
levels 'will actually reinforce the economic case for monetary
union in Asia, in a similar way that real-sector integration did
so in Europe," and ultimately, "the road to an Asian
monetary union could proceed on a 'multi-track, multi-speed' basis
with a seamless Asian free trade area the goal on the trade side."[18]
In April of 2008, it was reported that,
"ASEAN bank deputy governors and
financial deputy ministers have met in Vietnam's central Da Nang
city, discussing issues on the financial and monetary integration
and cooperation in the region."[19]
_African Monetary Union _Currently, Africa
has several different monetary union initiatives, as well as some
existing monetary unions within the continent.
One initiative is the,
"monetary union project of the Economic
Community of West African States (ECOWAS)," which is a "regional
group of 15 countries in West Africa."
Among the members are those of an already-existing
monetary union in the region, the West African Economic and Monetary
Union (WAEMU).
The ECOWAS consists of:
Benin
Burkina Faso
Cote d'Ivoire
Guinea
Guinea Bissau
Mali
Niger
Senegal
Sierra Leone
Togo
Cape Verde
Liberia
Ghana
Gambia
Nigeria [20]
The African Union was founded in 2002,
and is an intergovernmental organization consisting of 53 African
states. In 2003, the Brookings Institution produced a paper on
African economic integration.
In it, the authors started by stating
that,
"Africa, like other regions of the
world, is fixing its sights on creating a common currency. Already,
there are projects for regional monetary unions, and the bidding
process for an eventual African central bank is about to begin."
It states that,
"A common currency was also an objective
of the Organization for African Unity and the African Economic
Community, the predecessors of the AU," and further, that,
"The 1991 Abuja Treaty establishing the African Economic
Community outlines six stages for achieving a single monetary
zone for Africa that were set to be completed by approximately
2028.
In the early stages, regional cooperation
and integration within Africa would be strengthened, and this
could involve regional monetary unions. The final stage involves
the establishment of the African Central Bank (ACB) and creation
of a single African currency and an African Economic and Monetary
Union."
The paper further states that the African
Central Bank (ACB),
"would not be created until around
2020, [but] the bidding process for its location is likely to
begin soon," however, "there are plans for creating
various regional monetary unions, which would presumably form
building blocks for the single African central bank and currency."[21]
In August of 2008,
"Governors of African Central Banks
convened in Kigali Serena Hotel to discuss issues concerning the
creation of three African Union (AU) financial institutions,"
following "the AU resolution to form the African Monetary
Fund (AMF), African Central Bank (ACB) and the African Investment
Bank (AIB)."
The central bank governors,
"agreed that when established, the
ACB would solely issue and manage Africa's single currency and
monetary authority of the continent's economy."[22]
On March 2, 2009, it was reported that,
"The African Union will sign a memorandum
of understanding this month with Nigeria on the establishment
of a continental central bank," and that, "The institution
will be based in the Nigerian capital, Abuja, African Union Commissioner
for Economic Affairs Maxwell Mkwezalamba told reporters."
Further,
"As an intermediate step to the creation
of the bank, the pan- African body will establish an African Monetary
Institute within the next three years, he said at a meeting of
African economists in the city," and he was quoted as saying,
"We have agreed to work with the Association of African Central
Bank Governors to set up a joint technical committee to look into
the preparation of a joint strategy."[23]
The website for the Kenyan Ministry of
Foreign Affairs reported that,
"The African Union Commissioner for
Economic Affairs Dr. Maxwell Mkwezalamba has expressed optimism
for the adoption of a common currency for Africa," and that
the main theme discussed at the AU Commission meeting in Kenya
was, "Towards the Creation of a Single African Currency:
Review of the Creation of a Single African Currency: Which optimal
Approach to be adopted to accelerate the creation of the unique
continental currency."[24]
_A North American Monetary Union and the
Amero_In January of 2008, I wrote an article documenting the moves
toward the creation of a North American currency, likely under
the name Amero. [North-American Monetary Integration: Here Comes
the Amero]
I will briefly outline the information
presented in that article here.__In 1999, the Fraser Institute,
a prominent and highly influential Canadian think tank, published
a report written by Economics professor and former MP, Herbert
Grubel, called, The Case for the Amero: The Economics and Politics
of a North American Monetary Union.
He wrote that,
"The plan for a North American Monetary
Union presented in this study is designed to include Canada, the
United States, and Mexico," and a "North American Central
Bank, like the European Central Bank, will have a constitution
making it responsible only for the maintenance of price stability
and not for full employment."[25]
He opined that,
"sovereignty is not infinitely valuable.
The merit of giving up some aspects of sovereignty should be determined
by the gains brought by such a sacrifice," and that, "It
is important to note that in practice Canada has given up its
economic sovereignty in many areas, the most important of which
involve the World Trade Organization (formerly the GATT), the
North American Free Trade Agreement," as well as the International
Monetary Fund and World Bank.[26]
Also in 1999, the C.D. Howe Institute,
another of Canada's most prominent think tanks, produced a report
titled, From Fixing to Monetary Union: Options for North American
Currency Integration. In this document, it was written that,
"The easiest way to broach the notion
of a NAMU [North American Monetary Union] is to view it as the
North American equivalent of the European Monetary Union (EMU)
and, by extension, the Euro."[27]
It further stated that the fact that,
"a NAMU would mean the end of sovereignty
in Canadian monetary policy is clear. Most obviously, it would
mean abandoning a made-in-Canada inflation rate for a US or NAMU
inflation rate."[28]
In May of 2007, Canada's then Governor
of the Central Bank of Canada, David Dodge, said that,
"North America could one day embrace
a Euro-style single currency," and that, "Some proponents
have dubbed the single North American currency the 'Amero'."
Answering questions following his speech,
Dodge said that, "a single currency was 'possible'."[29]
In November of 2007, one of Canada's richest
billionaires, Stephen Jarislowsky, also a member of the board
of the C.D. Howe Institute, told a Canadian Parliamentary committee
that,
"Canada should replace its dollar
with a North American currency, or peg it to the U.S. greenback,
to avoid the exchange rate shifts the loonie has experienced,"
and that, "I think we have to really seriously start thinking
of the model of a continental currency just like Europe."[30]
Former Mexican President Vicente Fox,
while appearing on Larry King Live in 2007, was asked a question
regarding the possibility of a common currency for Latin America,
to which he responded by saying,
"Long term, very long term. What
we propose together, President Bush and myself, it's ALCA, which
is a trade union for all of the Americas. And everything was running
fluently until Hugo Chavez came. He decided to isolate himself.
He decided to combat the idea and destroy the idea."
Larry King then asked,
"It's going to be like the Euro dollar,
you mean?" to which Fox responded, "Well, that would
be long, long term. I think the processes to go, first step into
is trading agreement. And then further on, a new vision, like
we are trying to do with NAFTA."[31]
In January of 2008, Herbert Grubel, the
author who coined the term "Amero" for the Fraser Institute
report, wrote an article for the Financial Post, in which he recommends
fixing the Canadian loonie to the US dollar at a fixed exchange
rate, but that there are inherent problems with having the US
Federal Reserve thus control Canadian interest rates.
He then wrote that,
"there is a solution to this lack
of credibility. In Europe, it came through the creation of the
Euro and formal end of the ability of national central banks to
set interest rates. The analogous creation of the Amero is not
possible without the unlikely co-operation of the United States.
This leaves the credibility issue to be
solved by the unilateral adoption of a currency board, which would
ensure that international payments imbalances automatically lead
to changes in Canada's money supply and interest rates until the
imbalances are ended, all without any actions by the Bank of Canada
or influence by politicians.
It would be desirable to create simultaneously
the currency board and a New Canadian Dollar valued at par with
the U.S. dollar. With longer-run competitiveness assured at U.S.90¢
to the U.S. dollar."[32]
In January of 2009, an online publication
of the Wall Street Journal, called Market Watch, discussed the
possibility of hyperinflation of the United States dollar, and
then stated, regarding the possibility of an Amero,
"On its face, while difficult to
imagine, it makes intuitive sense. The ability to combine Canadian
natural resources, American ingenuity and cheap Mexican labor
would allow North America to compete better on a global stage."
The author further states that,
"If forward policy attempts to induce
more debt rather than allowing savings and obligations to align,
we must respect the potential for a system shock. We may need
to let a two-tier currency gain traction if the dollar meaningfully
debases from current levels," and that, "If this dynamic
plays out - and I've got no insight that it will - the global
balance of powers would fragment into four primary regions: North
America, Europe, Asia and the Middle East. In such a scenario,
ramifications would manifest through social unrest and geopolitical
conflict."[33]
__A Global Currency__The Phoenix _In 1988,
The Economist ran an article titled, Get Ready for the Phoenix
(below insert), in which they wrote,
"THIRTY years from now, Americans,
Japanese, Europeans, and people in many other rich countries and
some relatively poor ones will probably be paying for their shopping
with the same currency. Prices will be quoted not in dollars,
yen or D-marks but in, let's say, the phoenix. The phoenix will
be favored by companies and shoppers because it will be more convenient
than today's national currencies, which by then will seem a quaint
cause of much disruption to economic life in the late twentieth
century."
The article stated that,
"The market crash [of 1987] taught
[governments] that the pretence of policy cooperation can be worse
than nothing, and that until real co-operation is feasible (i.e.,
until governments surrender some economic sovereignty) further
attempts to peg currencies will flounder."
Amazingly the article states that,
"Several more big exchange-rate upsets,
a few more stock-market crashes and probably a slump or two will
be needed before politicians are willing to face squarely up to
that choice. This points to a muddled sequence of emergency followed
by patch-up followed by emergency, stretching out far beyond 2018-except
for two things. As time passes, the damage caused by currency
instability is gradually going to mount; and the very trends that
will make it mount are making the utopia of monetary union feasible."
Further, the article stated that,
"The phoenix zone would impose tight
constraints on national governments. There would be no such thing,
for instance, as a national monetary policy. The world phoenix
supply would be fixed by a new central bank, descended perhaps
from the IMF. The world inflation rate-and hence, within narrow
margins, each national inflation rate-would be in its charge.
Each country could use taxes and public spending to offset temporary
falls in demand, but it would have to borrow rather than print
money to finance its budget deficit."
The author admits that,
"This means a big loss of economic
sovereignty, but the trends that make the phoenix so appealing
are taking that sovereignty away in any case. Even in a world
of more-or-less floating exchange rates, individual governments
have seen their policy independence checked by an unfriendly outside
world."
The article concludes in stating that,
"The phoenix would probably start
as a cocktail of national currencies, just as the Special Drawing
Right is today. In time, though, its value against national currencies
would cease to matter, because people would choose it for its
convenience and the stability of its purchasing power."
The last sentence states,
"Pencil in the phoenix for around
2018, and welcome it when it comes."[34]
***********
Get Ready for the Phoenix_Source: The
Economist
September 09, 1988
Vol. 306, pp 9-10
from SingleGlobalCurrency Website
_THIRTY years from now, Americans, Japanese,
Europeans, and people in many other rich countries, and some relatively
poor ones will probably be paying for their shopping with the
same currency. Prices will be quoted not in dollars, yen or D-marks
but in, let's say, the phoenix. The phoenix will be favored by
companies and shoppers because it will be more convenient than
today's national currencies, which by then will seem a quaint
cause of much disruption to economic life in the last twentieth
century.
_At the beginning of 1988 this appears
an outlandish prediction. Proposals for eventual monetary union
proliferated five and ten years ago, but they hardly envisaged
the setbacks of 1987. The governments of the big economies tried
to move an inch or two towards a more managed system of exchange
rates - a logical preliminary, it might seem, to radical monetary
reform. For lack of co-operation in their underlying economic
policies they bungled it horribly, and provoked the rise in interest
rates that brought on the stock market crash of October.
These events have chastened exchange-rate
reformers. The market crash taught them that the pretence of policy
co-operation can be worse than nothing, and that until real co-operation
is feasible (i.e., until governments surrender some economic sovereignty)
further attempts to peg currencies will flounder.
_But in spite of all the trouble governments
have in reaching and (harder still) sticking to international
agreements about macroeconomic policy, the conviction is growing
that exchange rates cannot be left to themselves. Remember that
the Louvre accord and its predecessor, the Plaza agreement of
September 1985, were emergency measures to deal with a crisis
of currency instability. Between 1983 and 1985 the dollar rose
by 34% against the currencies of America's trading partners; since
then it has fallen by 42%. Such changes have skewed the pattern
of international comparative advantage more drastically in four
years than underlying economic forces might do in a whole generation.
_In the past few days the world's main
central banks, fearing another dollar collapse, have again jointly
intervened in the currency markets (see page 62). Market-loving
ministers such as Britain's Mr. Nigel Lawson have been converted
to the cause of exchange-rate stability. Japanese officials take
seriously he idea of EMS-like schemes for the main industrial
economies. Regardless of the Louvre's embarrassing failure, the
conviction remains that something must be done about exchange
rates.
_Something will be, almost certainly
in the course of 1988. And not long after the next currency agreement
is signed it will go the same way as the last one. It will collapse.
Governments are far from ready to subordinate their domestic objectives
to the goal of international stability.
Several more big exchange-rate upsets,
a few more stock-market crashes and probably a slump or two will
be needed before politicians are willing to face squarely up to
that choice. This points to a muddled sequence of emergency followed
by a patch-up followed by emergency, stretching out far beyond
2018 - except for two things.
As time passes, the damage caused by currency
instability is gradually going to mount; and the very tends that
will make it mount are making the utopia of monetary union feasible.
_The new world economy_The biggest change
in the world economy since the early 1970's is that flows of money
have replaced trade in goods as the force that drives exchange
rates. as a result of the relentless integration of the world's
financial markets, differences in national economic policies can
disturb interest rates (or expectations of future interest rates)
only slightly, yet still call forth huge transfers of financial
assets from one country to another.
These transfers swamp the flow of trade
revenues in their effect on the demand and supply for different
currencies, and hence in their effect on exchange rates. As telecommunications
technology continues to advance, these transactions will be cheaper
and faster still. With uncoordinated economic policies, currencies
can get only more volatile.
_Alongside that trend is another - of
ever-expanding opportunities for international trade. This too
is the gift of advancing technology. Falling transport costs will
make it easier for countries thousands of miles apart to compete
in each others' markets. The law of one price (that a good should
cost the same everywhere, once prices are converted into a single
currency) will increasingly assert itself. Politicians permitting,
national economies will follow their financial markets - becoming
ever more open to the outside world.
This will apply to labour as much as to
goods, partly thorough migration but also through technology's
ability to separate the worker form the point at which he delivers
his labour. Indian computer operators will be processing New Yorkers'
paychecks.
_In all these ways national economic
boundaries are slowly dissolving. As the trend continues, the
appeal of a currency union across at least the main industrial
countries will seem irresistible to everybody except foreign-exchange
traders and governments. In the phoenix zone, economic adjustment
to shifts in relative prices would happen smoothly and automatically,
rather as it does today between different regions within large
economies (a brief on pages 74-75 explains how.) The absence of
all currency risk would spur trade, investment and employment.
_The phoenix zone would impose tight
constraints on national governments. There would be no such thing,
for instance, as a national monetary policy. The world phoenix
supply would be fixed by a new central bank, descended perhaps
from the IMF. The world inflation rate - and hence, within narrow
margins, each national inflation rate- would be in its charge.
Each country could use taxes and public spending to offset temporary
falls in demand, but it would have to borrow rather than print
money to finance its budget deficit.
With no recourse to the inflation tax,
governments and their creditors would be forced to judge their
borrowing and lending plans more carefully than they do today.
This means a big loss of economic sovereignty, but the trends
that make the phoenix so appealing are taking that sovereignty
away in any case. Even in a world of more-or-less floating exchange
rates, individual governments have seen their policy independence
checked by an unfriendly outside world.
_As the next century approaches, the
natural forces that are pushing the world towards economic integration
will offer governments a broad choice. They can go with the flow,
or they can build barricades. Preparing the way for the phoenix
will mean fewer pretended agreements on policy and more real ones.
It will mean allowing and then actively promoting the private-sector
use of an international money alongside existing national monies.
That would let people vote with their
wallets for the eventual move to full currency union. The phoenix
would probably start as a cocktail of national currencies, just
as the Special Drawing Right is today. In time, though, its value
against national currencies would cease to matter, because people
would choose it for its convenience and the stability of its purchasing
power.
_The alternative - to preserve policymaking
autonomy- would involve a new proliferation of truly draconian
controls on trade and capital flows. This course offers governments
a splendid time. They could manage exchange-rate movements, deploy
monetary and fiscal policy without inhibition, and tackle the
resulting bursts of inflation with prices and incomes polices.
It is a growth-crippling prospect.
Pencil in the phoenix for around 2018,
and welcome it when it comes.
**************
Recommendations for a Global Currency_In
1998, the IMF Survey discussed a speech given by James Tobin,
a prominent American economist, in which he argued that,
"A single global currency might offer
a viable alternative to the floating rate." He further stated
that, "there was still a great need" for "lenders
of last resort."[35]
In 1999, economist Judy Shelton addressed
the US House of Representatives Committee on Banking and Financial
Services.
In her testimony, she stated that,
"The continued expansion of free
trade, the increased integration of financial markets and the
advent of electronic commerce are all working to bring about the
need for an international monetary standard - a global unit of
account."
She further explained that,
"Regional currency unions seem to
be the next step in the evolution toward some kind of global monetary
order. Europe has already adopted a single currency. Asia may
organize into a regional currency bloc to offer protection against
speculative assaults on the individual currencies of weaker nations.
Numerous countries in Latin America are
considering various monetary arrangements to insulate them from
financial contagion and avoid the economic consequences of devaluation.
An important question is whether this
process of monetary evolution will be intelligently directed or
whether it will simply be driven by events. In my opinion, political
leadership can play a decisive role in helping to build a more
orderly, rational monetary system than the current free-for-all
approach to exchange rate relations."
She further stated that,
"As we have seen in Europe, the sequence
of development is (1) you build a common market, and (2) you establish
a common currency. Indeed, until you have a common currency, you
don't truly have an efficient common market."
She concludes by stating,
"Ideally, every nation should stand
willing to convert its currency at a fixed rate into a universal
reserve asset. That would automatically create a global monetary
union based on a common unit of account. The alternative path
to a stable monetary order is to forge a common currency anchored
to an asset of intrinsic value. While the current momentum for
dollarization should be encouraged, especially for Mexico and
Canada, in the end the stability of the global monetary order
should not rest on any single nation."[36]
Paul Volcker, former Governor of the Federal
Reserve Board, stated in 2000, that,
"If we are to have a truly global
economy, a single world currency makes sense."
In a speech delivered by a member of the
Executive Board of the European Central Bank, it was stated that
Paul Volcker,
"might be right, and we might one
day have a single world currency. Maybe European integration,
in the same way as any other regional integration, could be seen
as a step towards the ideal situation of a fully integrated world.
If and when this world will see the light of day is impossible
to say. However, what I can say is that this vision seems as impossible
now to most of us as a European monetary union seemed 50 years
ago, when the process of European integration started."[37]
In 2000, the IMF held an international
conference and published a brief report titled, One World, One
Currency: Destination or Delusion?, in which it was stated that,
"As perceptions grow that the world
is gradually segmenting into a few regional currency blocs, the
logical extension of such a trend also emerges as a theoretical
possibility: a single world currency. If so many countries see
benefits from currency integration, would a world currency not
maximize these benefits?"
It outlines how,
"The dollar bloc, already underpinned
by the strength of the U.S. economy, has been extended further
by dollarization and regional free trade pacts. The Euro bloc
represents an economic union that is intended to become a full
political union likely to expand into Central and Eastern Europe.
A yen bloc may emerge from current proposals
for Asian monetary cooperation. A currency union may emerge among
Mercosur members in Latin America, a geographical currency zone
already exists around the South African rand, and a merger of
the Australian and New Zealand dollars is a perennial topic in
Oceania."
The summary states that,
"The same commercial efficiencies,
economies of scale, and physical imperatives that drive regional
currencies together also presumably exist on the next level-the
global scale."
Further, it reported that,
"The smaller and more vulnerable
economies of the world-those that the international community
is now trying hardest to help-would have most to gain from the
certainty and stability that would accompany a single world currency."[38]
Keep in mind, this document was produced
by the IMF, and so its recommendations for what it says would
likely "help" the smaller and more vulnerable countries
of the world, should be taken with a grain - or bucket - of salt.__Economist
Robert A. Mundell has long called for a global currency.
On his website, he states that the creation
of a global currency is,
"a project that would restore a needed
coherence to the international monetary system, give the International
Monetary Fund a function that would help it to promote stability,
and be a catalyst for international harmony."
He states that,
"The benefits from a world currency
would be enormous. Prices all over the world would be denominated
in the same unit and would be kept equal in different parts of
the world to the extent that the law of one price was allowed
to work itself out. Apart from tariffs and controls, trade between
countries would be as easy as it is between states of the United
States."[39]
_Renewed Calls for a Global Currency_On
March 16, 2009, Russia suggested that,
"the G20 summit in London in April
should start establishing a system of managing the process of
globalization and consider the possibility of creating a supra-national
reserve currency or a 'super-reserve currency'."
Russia called for,
"the creation of a supra-national
reserve currency that will be issued by international financial
institutions," and that, "It looks expedient to reconsider
the role of the IMF in that process and also to determine the
possibility and need for taking measures that would allow for
the SDRs (Special Drawing Rights) to become a super-reserve currency
recognized by the world community."[40]
On March 23, 2009, it was reported that
China's central bank,
"proposed replacing the US dollar
as the international reserve currency with a new global system
controlled by the International Monetary Fund."
The goal would be for the world reserve
currency that is,
"disconnected from individual nations
and is able to remain stable in the long run, thus removing the
inherent deficiencies caused by using credit-based national currencies."
The chief China economist for HSBC stated
that,
"This is a clear sign that China,
as the largest holder of US dollar financial assets, is concerned
about the potential inflationary risk of the US Federal Reserve
printing money."
The Governor of the People's Bank of China,
the central bank,
"suggested expanding the role of
special drawing rights, which were introduced by the IMF in 1969
to support the Bretton Woods fixed exchange rate regime but became
less relevant once that collapsed in the 1970s."
Currently,
"the value of SDRs is based on a
basket of four currencies - the US dollar, yen, euro and sterling
- and they are used largely as a unit of account by the IMF and
some other international organizations."
However,
"China's proposal would expand the
basket of currencies forming the basis of SDR valuation to all
major economies and set up a settlement system between SDRs and
other currencies so they could be used in international trade
and financial transactions. Countries would entrust a portion
of their SDR reserves to the IMF to manage collectively on their
behalf and SDRs would gradually replace existing reserve currencies."[41]
On March 25, Timothy Geithner, Treasury
Secretary and former President of the New York Federal Reserve,
spoke at the Council on Foreign Relations, when asked a question
about his thoughts on the Chinese proposal for the global reserve
currency, Geithner replied that,
"I haven't read the governor's proposal.
He's a remarkably - a very thoughtful, very careful, distinguished
central banker. Generally find him sensible on every issue. But
as I understand his proposal, it's a proposal designed to increase
the use of the IMF's special drawing rights.
And we're actually quite open to that
suggestion. But you should think of it as rather evolutionary,
building on the current architectures, than - rather than - rather
than moving us to global monetary union."[42]
In late March, it was reported that,
"A United Nations panel of economists
has proposed a new global currency reserve that would take over
the US dollar-based system used for decades by international banks,"
and that, "An independently administered reserve currency
could operate without conflicts posed by the US dollar and keep
commodity prices more stable."[43]
A recent article in the Economic Times
stated that,
"The world is not yet ready for an
international reserve currency, but is ready to begin the process
of shifting to such a currency. Otherwise, it would remain too
vulnerable to the hegemonic nation," as in, the United States.[44]
Another article in the Economic Times
started by proclaiming that,
"the world certainly needs an international
currency."
Further, the article stated that,
"With an unwillingness to accept
dollars and the absence of an alternative, international payments
system can go into a freeze beyond the control of monetary authorities
leading the world economy into a Great Depression," and that,
"In order to avoid such a calamity, the international community
should immediately revive the idea of the Substitution Account
mooted in 1971, under which official holders of dollars can deposit
their unwanted dollars in a special account in the IMF with the
values of deposits denominated in an international currency such
as the SDR of the IMF."[45]
Amidst fears of a falling dollar as a
result of the increased open discussion of a new global currency,
it was reported that,
"The dollar's role as a reserve currency
won't be threatened by a nine-fold expansion in the International
Monetary Fund's unit of account, according to UBS AG, ING Groep
NV and Citigroup Inc."
This was reported following the recent
G20 meeting, at which,
"Group of 20 leaders yesterday gave
approval for the agency to raise $250 billion by issuing Special
Drawing Rights, or SDRs, the artificial currency that the IMF
uses to settle accounts among its member nations. It also agreed
to put another $500 billion into the IMF's war chest."[46]
In other words, the large global financial
institutions came to the rhetorical rescue of the dollar, so as
not to precipitate a crisis in its current standing, so that they
can continue with quietly forming a new global currency.____Creating
a World Central Bank __In 1998, Jeffrey Garten wrote an article
for the New York Times advocating a "global Fed."
Garten was former Dean of the Yale School
of Management, former Undersecretary of Commerce for International
Trade in the Clinton administration, previously served on the
White House Council on International Economic Policy under the
Nixon administration and on the policy planning staffs of Secretaries
of State Henry Kissinger and Cyrus Vance of the Ford and Carter
administrations, former Managing Director at Lehman Brothers,
and is a member of the Council on Foreign Relations.
In his article written in 1998, he stated
that,
"over time the United States set
up crucial central institutions - the Securities and Exchange
Commission (1933), the Federal Deposit Insurance Corporation (1934)
and, most important, the Federal Reserve (1913). In so doing,
America became a managed national economy. These organizations
were created to make capitalism work, to prevent destructive business
cycles and to moderate the harsh, invisible hand of Adam Smith."
He then explained that,
"This is what now must occur on a
global scale. The world needs an institution that has a hand on
the economic rudder when the seas become stormy. It needs a global
central bank."
He explains that,
"Simply trying to coordinate the
world's powerful central banks - the Fed and the new European
Central Bank, for instance - wouldn't work," and that, "Effective
collaboration among finance ministries and treasuries is also
unlikely to materialize. These agencies are responsible to elected
legislatures, and politics in the industrial countries is more
preoccupied with internal events than with international stability."
He then postulates that,
"An independent central bank with
responsibility for maintaining global financial stability is the
only way out. No one else can do what is needed: inject more money
into the system to spur growth, reduce the sky-high debts of emerging
markets, and oversee the operations of shaky financial institutions.
A global central bank could provide more money to the world economy
when it is rapidly losing steam."
Further,
"Such a bank would play an oversight
role for banks and other financial institutions everywhere, providing
some uniform standards for prudent lending in places like China
and Mexico. [However, t]he regulation need not be heavy-handed."
Garten continues,
"There are two ways a global central
bank could be financed. It could have lines of credit from all
central banks, drawing on them in bad times and repaying when
the markets turn up. Alternately - and admittedly more difficult
to carry out - it could be financed by a very modest tariff on
all trade, collected at the point of importation, or by a tax
on certain global financial transactions."
Interestingly, Garten states that,
"One thing that would not be acceptable
would be for the bank to be at the mercy of short-term-oriented
legislatures."
In essence, it is not to be accountable
to the people of the world.
So, he asks the question,
"To whom would a global central bank
be accountable? It would have too much power to be governed only
by technocrats, although it must be led by the best of them. One
possibility would be to link the new bank to an enlarged Group
of Seven - perhaps a ''G-15'' [or in today's context, the G20]
that would include the G-7 plus rotating members like Mexico,
Brazil, South Africa, Poland, India, China and South Korea."
He further states that,
"There would have to be very close
collaboration" between the global bank and the Fed, and that,
"The global bank would not operate within the United States,
and it would not be able to override the decisions of our central
bank. But it could supply the missing international ingredient
- emergency financing for cash-starved emerging markets. It wouldn't
affect American mortgage rates, but it could help the profitability
of American multinational companies by creating a healthier global
environment for their businesses."[47]
In September of 2008, Jeffrey Garten wrote
an article for the Financial Times in which he stated that,
"Even if the US's massive financial
rescue operation succeeds, it should be followed by something
even more far-reaching - the establishment of a Global Monetary
Authority to oversee markets that have become borderless."
He emphasized the,
"need for a new Global Monetary Authority.
It would set the tone for capital markets in a way that would
not be viscerally opposed to a strong public oversight function
with rules for intervention, and would return to capital formation
the goal of economic growth and development rather than trading
for its own sake."
Further, the,
"GMA would be a reinsurer or discounter
for certain obligations held by central banks. It would scrutinize
the regulatory activities of national authorities with more teeth
than the IMF has and oversee the implementation of a limited number
of global regulations. It would monitor global risks and establish
an effective early warning system with more clout to sound alarms
than the BIS has."
Moreover,
"The biggest global financial companies
would have to register with the GMA and be subject to its monitoring,
or be blacklisted. That includes commercial companies and banks,
but also sovereign wealth funds, gigantic hedge funds and private
equity firms."
He recommends that its board,
"include central bankers not just
from the US, UK, the eurozone and Japan, but also China, Saudi
Arabia and Brazil. It would be financed by mandatory contributions
from every capable country and from insurance-type premiums from
global financial companies - publicly listed, government owned,
and privately held alike."[48]
In October of 2008, it was reported that
Morgan Stanley CEO John Mack stated that,
"it may take continued international
coordination to fully unlock the credit markets and resolve the
financial crisis, perhaps even by forming a new global body to
oversee the process."[49]
In late October of 2008, Jeffrey Garten
wrote an article for Newsweek in which he stated that,
"leaders should begin laying the
groundwork for establishing a global central bank."
He explained that,
"There was a time when the U.S. Federal
Reserve played this role [as governing financial authority of
the world], as the prime financial institution of the world's
most powerful economy, overseeing the one global currency. But
with the growth of capital markets, the rise of currencies like
the Euro and the emergence of powerful players such as China,
the shift of wealth to Asia and the Persian Gulf and, of course,
the deep-seated problems in the American economy itself, the Fed
no longer has the capability to lead single-handedly."
He explains the criteria and operations
of a world central bank, saying that,
"It could be the lead regulator of
big global financial institutions, such as Citigroup or Deutsche
Bank, whose activities spill across borders," as well as
"act as a bankruptcy court when big global banks that operate
in multiple countries need to be restructured. It could oversee
not just the big commercial banks, such as Mitsubishi UFJ, but
also the 'alternative' financial system that has developed in
recent years, consisting of hedge funds, private-equity groups
and sovereign wealth funds-all of which are now substantially
unregulated."
Further, it,
"could have influence over key exchange
rates, and might lead a new monetary conference to realign the
dollar and the yuan, for example, for one of its first missions
would be to deal with the great financial imbalances that hang
like a sword over the world economy."
He further postulates that,
"A global central bank would not
eliminate the need for the Federal Reserve or other national central
banks, which will still have frontline responsibility for sound
regulatory policies and monetary stability in their respective
countries. But it would have heavy influence over them when it
comes to following policies that are compatible with global growth
and financial stability.
For example, it would work with key countries
to better coordinate national stimulus programs when the world
enters a recession, as is happening now, so that the cumulative
impact of the various national efforts do not so dramatically
overshoot that they plant the seeds for a crisis of global inflation.
This is a big threat as government spending everywhere goes into
overdrive."[50]
In January of 2009, it was reported that,
"one clear solution to avoid a repeat
of the problems would be the establishment of a "global central
bank" - with the IMF and World Bank being unable to prevent
the financial meltdown."
Dr. William Overholt, senior research
fellow at Harvard's Kennedy School, formerly with the Rand Institute,
gave a speech in Dubai in which he said that,
"To avoid another crisis, we need
an ability to manage global liquidity. Theoretically that could
be achieved through some kind of global central bank, or through
the creation of a global currency, or through global acceptance
of a set of rules with sanctions and a dispute settlement mechanism."[51]
Guillermo Calvo, Professor of Economics,
International and Public Affairs at Columbia University wrote
an article for VOX in late March of 2009.
Calvo is the former Chief Economist of
the Inter-American Development Bank, and is currently a Research
Associate at the National Bureau of Economic Research (NBER) and
President of the International Economic Association and the former
Senior Advisor in the Research Department of the IMF.__He wrote
that,
"Credit availability is not ensured
by stricter financial regulation. In fact, it can be counterproductive
unless it is accompanied by the establishment of a lender of last
resort (LOLR) that radically softens the severity of financial
crisis by providing timely credit lines. With that aim in mind,
the 20th century saw the creation of national or regional central
banks in charge of a subset of the capital market.
It has now become apparent that the realm
of existing central banks is very limited and the world has no
institution that fulfils the necessary global role. The IMF is
moving in that direction, but it is still too small and too limited
to adequately do so."
He advocates that,
"the first proposal that I would
like to make is that the topic of financial regulation should
be discussed together with the issue of a global lender of last
resort."
Further, he proposed that,
"international financial institutions
must be quickly endowed with considerably more firepower to help
emerging economies through the deleveraging period."[52]
__A "New World Order" in Banking
__In March of 2008, following the collapse of Bear Stearns, Reuters
reported on a document released by research firm CreditSights,
which said that,
"Financial firms face a 'new world
order'," and that, "More industry consolidation and
acquisitions may follow after JPMorgan Chase & Co."
Further,
"In the event of future consolidation,
potential acquirers identified by CreditSights include JPMorganChase,
Wells Fargo, US Bancorp, Goldman Sachs and Bank of America."[53]
In June of 2008, before he was Treasury
Secretary in the Obama administration, Timothy Geithner, as head
of the New York Federal Reserve, wrote an article for the Financial
Times following his attendance at the Bilderberg 2008 conference,
in which he wrote that,
"Banks and investment banks whose
health is crucial to the global financial system should operate
under a unified regulatory framework," and he said that,
"the US Federal Reserve should play a "central role"
in the new regulatory framework, working closely with supervisors
in the US and around the world."[54]
In November of 2008, The National, a prominent
United Arab Emirate newspaper, reported on Baron David de Rothschild
accompanying Prime Minister Gordon Brown on a visit to the Middle
East, although not as a "part of the official party"
accompanying Brown.
Following an interview with the Baron,
it was reported that,
"Rothschild shares most people's
view that there is a New World Order. In his opinion, banks will
deleverage and there will be a new form of global governance."[55]
In February of 2009, the Times Online
reported that a,
"New world order in banking [is]
necessary," and that, "It is increasingly evident that
the world needs a new banking system and that it should not bear
much resemblance to the one that has failed so spectacularly."[56]
But of course, the ones that are shaping
this new banking system are the champions of the previous banking
system.
The solutions that will follow are simply
the extensions of the current system, only sped up through the
necessity posed by the current crisis.____An Emerging Global Government
__A recent article in the Financial Post stated that,
"The danger in the present course
is that if the world moves to a 'super sovereign' reserve currency
engineered by experts, such as the 'UN Commission of Experts'
led by Nobel laureate economist Joseph Stiglitz, we would give
up the possibility of a spontaneous money order and financial
harmony for a centrally planned order and the politicization of
money. Such a regime change would endanger not only the future
value of money but, more importantly, our freedom and prosperity."[57]
Further,
"An uncomfortable characteristic
of the new world order may well turn out to be that global income
gaps will widen because the rising powers, such as China, India
and Brazil, regard those below them on the ladder as potential
rivals."
The author further states that,
"The new world order thus won't necessarily
be any better than the old one," and that, "What is
certain, though, is that global affairs are going to be considerably
different from now on."[58]
In April of 2009, Robert Zoellick, President
of the World Bank, said that,
"If leaders are serious about creating
new global responsibilities or governance, let them start by modernizing
multilateralism to empower the WTO, the IMF, and the World Bank
Group to monitor national policies."[59]
David Rothkopf, a scholar at the Carnegie
Endowment for International Peace, former Deputy Undersecretary
of Commerce for International Trade in the Clinton administration,
and former managing director of Kissinger and Associates, and
a member of the Council on Foreign Relations, recently wrote a
book titled, Superclass: The Global Power Elite and the World
They are Making, of which he is certainly a member.
When discussing the role and agenda of
the global "superclass", he states that,
"In a world of global movements
and threats that don't present their passports at national borders,
it is no longer possible for a nation-state acting alone to fulfill
its portion of the social contract."[60]
He writes that,
"even the international organizations
and alliances we have today, flawed as they are, would have seemed
impossible until recently, notably the success of the European
Union - a unitary democratic state the size of India. The evolution
and achievements of such entities against all odds suggest not
isolated instances but an overall trend in the direction of what
Tennyson called 'the Parliament of Man,' or 'universal law'."
He states that he is,
"optimistic that progress will continue
to be made," but it will be difficult, because it "undercuts
many national and local power structures and cultural concepts
that have foundations deep in the bedrock of human civilization,
namely the notion of sovereignty."[61]
He further writes that,
"Mechanisms of global governance
are more achievable in today's environment," and that these
mechanisms "are often creative with temporary solutions to
urgent problems that cannot wait for the world to embrace a bigger
and more controversial idea like real global government."[62]
In December of 2008, the Financial Times
ran an article written by Gideon Rachman, a past Bilderberg attendee,
who wrote that,
"for the first time in my life, I
think the formation of some sort of world government is plausible,"
and that, "A 'world government' would involve much more than
co-operation between nations. It would be an entity with state-like
characteristics, backed by a body of laws. The European Union
has already set up a continental government for 27 countries,
which could be a model. The EU has a supreme court, a currency,
thousands of pages of law, a large civil service and the ability
to deploy military force."
He then asks if the European model could
"go global," and states that there are three reasons
for thinking that may be the case.
First, he states, "it is increasingly
clear that the most difficult issues facing national governments
are international in nature: there is global warming, a global
financial crisis and a 'global war on terror'."
Secondly, he states that, "It could
be done," largely as a result of the transport and communications
revolutions having "shrunk the world."
Thirdly, this is made possible through
an awakening "change in the political atmosphere," as
"The financial crisis and climate change are pushing national
governments towards global solutions, even in countries such as
China and the US that are traditionally fierce guardians of national
sovereignty."
He quoted an adviser to French President
Nicolas Sarkozy as saying,
"Global governance is just a euphemism
for global government," and that the "core of the international
financial crisis is that we have global financial markets and
no global rule of law."
However, Rachman states that any push
towards a global government "will be a painful, slow process."
He then states that a key problem in this
push can be explained with an example from the EU, which,
"has suffered a series of humiliating
defeats in referendums, when plans for 'ever closer union' have
been referred to the voters. In general, the Union has progressed
fastest when far-reaching deals have been agreed by technocrats
and politicians - and then pushed through without direct reference
to the voters. International governance tends to be effective,
only when it is anti-democratic."[63]
In November of 2008, the United States
National Intelligence Council (NIC), the US intelligence community's
"center for midterm and long-term strategic thinking,"
released a report that it produced in collaboration with numerous
think tanks, consulting firms, academic institutions and hundreds
of other experts, among them are,
the Atlantic Council of the United States
the Wilson Center
RAND Corporation
the Brookings Institution
American Enterprise Institute
Texas A&M University
the Council on Foreign Relations
Chatham House in London.[64]
The report, titled, Global Trends 2025
- A Transformed World, outlines the current global political and
economic trends that the world may be going through by the year
2025.
In terms of the financial crisis, it states
that solving this,
"will require long-term efforts to
establish a new international system."[65]
It suggests that as the "China-model"
for development becomes increasingly attractive, there may be
a "decline in democratization" for emerging economies,
authoritarian regimes, and "weak democracies frustrated by
years of economic underperformance."
Further, the dollar will cease to be the
global reserve currency, as there would likely be a "move
away from the dollar."[66]__It states that the dollar will
become,
"something of a first among equals
in a basket of currencies by 2025. This could occur suddenly in
the wake of a crisis, or gradually with global rebalancing."[67]
The report elaborates on the construction
of a new international system, stating that,
"By 2025, nation-states will no longer
be the only - and often not the most important - actors on the
world stage and the 'international system' will have morphed to
accommodate the new reality. But the transformation will be incomplete
and uneven."
Further, it would be,
"unlikely to see an overarching,
comprehensive, unitary approach to global governance. Current
trends suggest that global governance in 2025 will be a patchwork
of overlapping, often ad hoc and fragmented efforts, with shifting
coalitions of member nations, international organizations, social
movements, NGOs, philanthropic foundations, and companies."
It also notes that,
"Most of the pressing transnational
problems - including climate change, regulation of globalized
financial markets, migration, failing states, crime networks,
etc. - are unlikely to be effectively resolved by the actions
of individual nation-states. The need for effective global governance
will increase faster than existing mechanisms can respond."[68]
The report discusses the topic of regionalism,
stating that,
"Greater Asian integration, if it
occurs, could fill the vacuum left by a weakening multilaterally
based international order but could also further undermine that
order. In the aftermath of the 1997 Asian financial crisis, a
remarkable series of pan-Asian ventures - the most significant
being ASEAN+3 - began to take root. Although few would argue that
an Asian counterpart to the EU is a likely outcome even by 2025,
if 1997 is taken as a starting point, Asia arguably has evolved
more rapidly over the last decade than the European integration
did in its first decade(s)."
It further states that,
"movement over the next 15 years
toward an Asian basket of currencies-if not an Asian currency
unit as a third reserve-is more than a theoretical possibility."
It elaborates that,
"Asian regionalism would have global
implications, possibly sparking or reinforcing a trend toward
three trade and financial clusters that could become quasi-blocs
(North America, Europe, and East Asia)."
These blocs,
"would have implications for the
ability to achieve future global World Trade Organization agreements
and regional clusters could compete in the setting of trans-regional
product standards for IT, biotech, nanotech, intellectual property
rights, and other 'new economy' products."[69]
Of great importance to address, and reflecting
similar assumptions made by Rachman in his article advocating
for a world government, is the topic of democratization, saying
that,
"advances are likely to slow and
globalization will subject many recently democratized countries
to increasing social and economic pressures that could undermine
liberal institutions."
This is largely because,
"the better economic performance
of many authoritarian governments could sow doubts among some
about democracy as the best form of government. The surveys we
consulted indicated that many East Asians put greater emphasis
on good management, including increasing standards of livings,
than democracy."
Further,
"even in many well-established democracies,
surveys show growing frustration with the current workings of
democratic government and questioning among elites over the ability
of democratic governments to take the bold actions necessary to
deal rapidly and effectively with the growing number of transnational
challenges."[70]
__Conclusion__Ultimately, what this implies
is that the future of the global political economy is one of increasing
moves toward a global system of governance, or a world government,
with a world central bank and global currency; and that, concurrently,
these developments are likely to materialize in the face of and
as a result of a decline in democracy around the world, and thus,
a rise in authoritarianism.
What we are witnessing is the creation
of a New World Order, composed of a totalitarian global government
structure.__In fact, the very concept of a global currency and
global central bank is authoritarian in its very nature, as it
removes any vestiges of oversight and accountability away from
the people of the world, and toward a small, increasingly interconnected
group of international elites.__As Carroll Quigley explained in
his monumental book, Tragedy And Hope,
"[T]he powers of financial capitalism
had another far-reaching aim, nothing less than to create a world
system of financial control in private hands able to dominate
the political system of each country and the economy of the world
as a whole. This system was to be controlled in a feudalist fashion
by the central banks of the world acting in concert, by secret
agreements arrived at in frequent private meetings and conferences.
The apex of the system was to be the Bank
for International Settlements in Basle, Switzerland, a private
bank owned and controlled by the world's central banks which were
themselves private corporations."[71]
Indeed, the current "solutions"
being proposed to the global financial crisis benefit those that
caused the crisis over those that are poised to suffer the most
as a result of the crisis: the disappearing middle classes, the
world's dispossessed, poor, indebted people.
The proposed solutions to this crisis
represent the manifestations and actualization of the ultimate
generational goals of the global elite; and thus, represent the
least favorable conditions for the vast majority of the world's
people.__It is imperative that the world's people throw their
weight against these "solutions" and usher in a new
era of world order, one of the People's World Order; with the
solution lying in local governance and local economies, so that
the people have greater roles in determining the future and structure
of their own political-economy, and thus, their own society.
With this alternative of localized political
economies, in conjunction with an unprecedented global population
and international democratization of communication through the
internet, we have the means and possibility before us to forge
the most diverse manifestation of cultures and societies that
humanity has ever known.__The answer lies in the individual's
internalization of human power and destination, and a rejection
of the externalization of power and human destiny to a global
authority of which all but a select few people have access to.
To internalize human power and destiny
is to realize the gift of a human mind, which has the ability
to engage in thought beyond the material, such as food and shelter,
and venture into the realm of the conceptual.
Each individual possesses - within themselves
- the ability to think critically about themselves and their own
life; now is the time to utilize this ability with the aim of
internalizing the concepts and questions of human power and destiny:
Why are we here?
Where are we going?
Where should we be going?
How do we get there?
The supposed answers to these questions
are offered to us by a tiny global elite who fear the repercussions
of what would take place if the people of the world were to begin
to answer these questions themselves.
I do not know the answers to these questions,
but I do know that the answers lie in the human mind and spirit,
that which has overcome and will continue to overcome the greatest
of challenges to humanity, and will, without doubt, triumph over
the New World Order.
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