Arthur,
At 11:59 08/10/2008 -0400, you wrote:
Subject: RE: [Futurework] Will Justin Yifu Lin be the person?
Keith,
How have things worked with the Euro? My understanding is that it takes
away from individual countries the power to set interest rates appropriate
to economic conditions. National currencies at least offered the power to
devalue, revalue, raise or lower interest rates, etc. A universal
currency means that nations have to move in concert no matter conditions
locally.
Arthur
Very true, concerning the Euro. But I'm envisaging that a future world
currency would be issued by a retail universal bank, not the World Bank as
presently constituted (that is, as a consortium of central banks). Let me
call it a Universal Bank. It could be franchised to any retail bank,
business, pension fund or individuals which/who would initially pay for the
franchise in their own national currencies but then operate individually
with their new currency, and setting their own interest rates according to
local, regional, national circumstances. Each franchisee would sink or swim
according to the skill and competence of their own organisations and the
world currency would operate in the market place side by side with national
currencies in a similar sort of way that the world population is becoming
bilingual -- English and Another.
I believe that something like a new world currency will be forced into
existence because the retail banks and central banks are losing their
original primacy in the scheme of things. Retail banks are no longer the
main source of capital for new economically-important ideas (which need
relatively large amounts of investment) and are increasingly confined to
lending to individuals and existing types of local and middle-sized
businesses. (Large businesses now increasingly issue bonds when they want
capital.) Central banks are reaching the limits of the amount of cash they
can print because (developed) governments are reaching the end of their
borrowing ability -- that is, taxation powers (of both their own population
and of sizeable commercial operations, legal and illegal, that operate in
and out of their national boundaries).
There will always be a role for retail banks and central banks (using
national currencies) as we know them because of the mass of circular
financial activities and economic transactions going on within a
population. But there is now an increasing need for international payments
systems both for individual customers (catered for at present by credit
cards) on the one hand, and on the other for very large businesses which
would welcome a stable currency for their international transactions
without having to hedge their contracts against currency speculators.
Keith
Keith Hudson,
6 Upper Camden Place, Bath BA1 5HX
(044 1225 311636 or 312622)
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