A UN panel of expert economists pressed Thursday for a new global currency reserve scheme to replace the volatile, dollar-based system and for coordinated steps by rich countries to stimulate their economies. "A new Global Reserve System – what may be viewed as a greatly expanded SDR (Special Drawing Rights), with regular or cyclically adjusted emissions calibrated to the size of reserve accumulations, could contribute to global stability, economic strength and global equity," the panel said. As part of several recommendations to tackle the global financial crisis, the panel also noted recovery would require all developed countries, in the short term, to take "strong, coordinated and effective actions to stimulate their economies." And it stressed the need to "lay the basis for the long-run reforms that will be necessary if we are to have a more stable and more prosperous global economy and avoid future global crises." The commission, led by US economist Joseph Stiglitz (pictured above left), a frequent critic of globalization and unbridled free markets, is primarily aimed at finding solutions for developing countries. – AFP
Dominant Social Theme: Wow, an idea whose time has come.
Free-Market Analysis: We've been on this for a while, and we didn't want to return to it – but we don't really have a choice. It's a big deal, this new, potential world currency. And in fact, this publication is built around the idea that there are certain social memes – dominant social themes – that the monetary elite floats continuously. Not all of these themes are beneficial to everyone but they are certainly helpful to the bottom line of those who promote them. And this latest venture – this new kind of currency – certainly qualifies as a big-time meme.
Yes, it is fairly obvious that the monetary elite – central bankers and others – have decided for one reason or another that now is a good time to plump for a global currency. Like everything else in this modern day and age, the promotion is not especially obvious, unless you look for it. The average person may have heard vaguely of the idea of the IMF as an uber-regulator, but we've got the specifics because that is our job – and therefore so do you if you are a regular reader of the Bell.
For us, and you, it is not hard to track. Central bankers worldwide have an affinity for concentrations of power and a good financial crisis is an excuse to consolidate power internationally. And that is just what they have set out to do, it seems. Of course they needed a problem, a crisis actually. And they have got one. And with the crisis to solve, the rest is relatively easy, if you just get together and figure out where you want to go. And apparently they have – the leaders of the G20, the bankers and all the rest.
And where is it that they want to go? They want to move to a new era of globalized regulation that will apparently include extracting trading data from every private financial entity in the world. They want broad, overarching regulations that will ensure that there is no real monetary secrecy left in the world. They want an international currency that can evolve into a true global money – and they believe that the IMF can be the incubator for such an evolution.
And how do we know this? Because the promotion is evident. Here is a little timeline of the events we've reported on – all taking place perhaps in the last month.
– British Prime Minister Gordon Brown mentions IMF expansion favorably in a keynote speech.
– French President Nicolas Sarkozy mentions the IMF as well – indicating it needed more funding and authority.
-The IMF issues its own study indicating that it is an abject failure but that maybe it wouldn't be if only it had more money and power.
– The Kremlin weighs in and mentions the IMF and how it ought to have more power and monetary authority.
– Then a Chinese central banker named Zhou (who just happens to a member of the Group of Thirty) pipes up to explain that the IMF would be a good jumping off point for a global currency.
– Then the IMF brings out another study that says the world is in a terrible way – implication being it ought to be fixed (along with the IMF, no doubt.)
– In an interview at the American Council on Foreign Relations, Treasury Secretary Tim Geithner allows that an IMF super-currency (he didn't call it that) might not be such a bad idea.
– A day later the United Nations, under whose auspices the IMF operates, indicates that the IMF would provide a good launching pad for a new currency as well.
Now perhaps all this is just coincidence – a bunch of powerful people getting the same bright idea all at once. But maybe not. It sure smells like a promotion – a dominant social theme in the making. We are not gaming folk, but we would bet at the next G20 summit that a communiqué will be issued that names the IMF as the logical candidate for increased regulatory authority and even plants the seeds of a new, global currency.
It is perfectly natural for powerful people to get together and decide on the shape of the world to come. But we would be more comfortable with the whole process were it a bit more above-board, a little less secret … and a little less, well, promotional. We'd like to see these issues thrown open for a more general discussion. Instead, we anticipate another fait accompli.