So many things have changed during the past six decades. The Bretton Woods
conference of 1944 created the World Bank and the International Monetary Fund
as a means of creating a better and more stable postwar world. While useful
for a time, these institutions are no longer considered to be of much use in
the current complex, globalized and highly competitive world. Moreover, their
intentions are viewed with suspicion. The World Bank has been seen as the tool
of the US, as an instrument for ensuring that what it funds meets the
requirements of the Washington Consensus.
At the time of Bretton Woods, and for a few decades thereafter, Keynesianism
had many of the attributes of theology. Governments were to run surpluses when
times were good, but deficits when things got bad. Government was viewed as
being able to get the economy moving when private enterprise could not do so.
But at the time, private enterprise was viewed mainly as a producer of goods
and services, and as being able to quickly respond to increasing government
expenditures on infrastructure or whatever.
What has happened since then is that private enterprise and the world in which
it operates have become much difficult to define. Deficit spending a la Keynes
may no longer work because governments cannot be sure of what will happen if
they overspend -- the level of uncertainty is much too high. Institutions that
are supposed to have a global focus will work for some governments and in some
situations, but not universally. A global currency would not be acceptable
because different needs and focuses exist from country to country. Currency is
used to attain certain national ends. China uses the US$ to keep the value of
its own currency low, thereby promoting exports. Mugabe keeps printing money
to stay in power. The day of devices, such as the gold standard, that maintain
currencies at common values, is long gone.
>From all of this, it would seem to me that we have entered a time of universal
>flop about, with nobody sure of where they want to go, where they may really
>be going and what things will be like when (and if) they get there. We seem
>to have no alternative but to live through it.
Ed
----- Original Message -----
From: Keith Hudson
To: futurework
Sent: Thursday, October 09, 2008 9:59 AM
Subject: Re: [Futurework] Will Justin Yifu Lin be the person?
Arthur,
At 07:35 09/10/2008 -0400, you wrote:
I don't see the advantage of having flexible McDollars. Either there is a
universal currency with fixed terms, interest rates, etc. or there is an array
of national currencies. Flexible McDollars means that the value inherent in
the brand can't be trusted: the trust that adheres or is associated with a
strong reserve currency as the pound or dollar (at least that is the way it
used to be)
But as I've tried to describe before, it is already the case that there are
any number of different interest rates available from different bodies for
different purposes within a country of one currency.
Constructing a new universal currency seems an interesting idea, but
allowing local changes to suit local conditions seems to rob the brand of its
strength which in the end is : Trust and confidence.
It is as though McDonald's around the world could make changes at will to
suit local conditions: What then is a McDonald's? (I realize that McDonald's
does make changes locally but these are well thought out and ((I would
imagine)) are made in ways that don't threaten the brand.)
Exactly. A world currency would have exactly the same value everywhere (when
exchanged with national currencies or used for international trade or consumer
purchases on the Net) but access to loans from a franchisee would carry
different interest rates and conditions according to the discernment of the
franchisee as to the ability of the applicant and other circumstances. If an
applicant found the terms too onerous then he could apply to another franchisee
just as wannabe entrepreneurs do now in approaching venture capital companies.
Keith
arthur
________________________________
From: [EMAIL PROTECTED] on behalf of Keith Hudson
Sent: Thu 10/9/2008 3:20 AM
To: futurework
Subject: Re: [Futurework] Will Justin Yifu Lin be the person?
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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19:19
Keith Hudson,
6 Upper Camden Place, Bath BA1 5HX
(044 1225 311636 or 312622)
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