UN wants to create a global currency, and replace the dollar...

[bucketokarma]

... because U.S. economy is so troubled and the dollar just keeps getting weaker. If they decide to do this though, everyone else's surplus will need to be spent, flooding the global market with U.S. dollars and further decreasing the value of our already low currency.

News story #1

Money-News, story #2


sorry, I didn't check to see if this is a repost or not.

[crosbike]

Everybody that has stored up money that the government doesn't know about will be screwed unless they invest it in lets saw property. I was talking to some folks in Canada during a family wedding and they told us a bunch of Europeans bought up a bunch of land in Canada and made huge mansions when they were switching to Euro's. This won't happen tho. The UN is full of vaginas.

[Danksters]

The UN is about as powerful as a wet fart IMHO. They don't do shit, and they certainly don't have the power to actually implement something of this scale. The dollar may be weaker relative to it's position 10 years ago, but it is still the strongest currency in the world. The US also wields outsized influence and control over the UN, IMF, and the World Bank, so America's interests will continue to play a pivotal role in world politics.

[Bigbike]

Can you say Revalations and the end times?

[Paco Lopez]

Meh, this isn't as radical as it sounds. The headline makes it sound like they want to eliminate the dollar and replace it with a new global currency the way they got rid of Deutschmarks, Francs, and Pesos and replaced them with the Euro. In reality it just means that they want to change the way exchange rates are calculated.

*Danger* History lesson follows for anyone who wants to understand why this isn't a big deal:

In 1944, during WWII, a bunch of the allied countries got together and agreed that all of their currencies would be pegged to a certain amount of gold. If their currency inflated or deflated too much they would have to take steps to bring it back into line (print more money or take some money out of the system and burn it). This made international trade easy: everything was priced in gold and the exchange rates were all fixed.

This worked great until Vietnam. The US was spending money it didn't have and this kept making it harder and harder to keep the dollar pegged to the right amount of gold. As a result, in 1971, America up and decided that we weren't going to peg the dollar to a certain amount of gold anymore. This meant we could spend all the imaginary money we wanted to. As a result of the US bailing on the gold standard all the other countries were pretty much forced to follow suit. Almost all of the world's currencies became "free-floating", meaning that they're not backed by anything other than people's faith that they're worth something. This is why today currencies go up and down based on the economic well-being of the country that issues them and exchange rates are always changing.

Now it's still convenient for the purposes of international trade to have what's called a "reserve currency" to basically play the role that gold used to: a common currency that commodities can be priced in on the international market. Since the US economy was the biggest and strongest it was logical for everybody to use dollars for this purpose. There is no international agreement that says it has to be this way, it just is because it's convenient. Over the last few years more and more markets started using the Euro for the same reason: it's backed by a big strong economy.

So nowadays the US is having some major economic difficulties, we've been spending money that we didn't have for years in Afghanistan and Iraq, Obama is signing trillion dollar checks for more money that we don't have, and the printing presses are spitting out dollar bills as fast as they can. This leads to some major instability in the value of the dollar, and when international trade is conducted in dollars this leads to some major instability in international markets. What should be a US economic problem becomes a world economic problem simply because other countries were all dumb enough to assume we were smart enough not to spend piles of money we don't have so they decided to use our currency to buy things from other countries.

So, what these articles are really talking about is creating a new reserve currency to play the role in international trade that gold used to play and the dollar and Euro are currently playing. Ideally the new currency wouldn't be tied to the fortunes of any one particular economy so that when somebody decides to start a war or spend a few trillion imaginary dollars on bailing out Wall Street tycoons it will only screw up the economy in that one country rather than worldwide.

[bucketokarma]

I typed up a long and wordy reply, only to have my internet cut out on me.... Rather than retyping it, I'll say this:

Thank you for that, good to know someone has been paying attention. What I was saying was simply that the rest of the world has large surpluses of US cash. If they no longer need it for international commerce emergencies, these countries will spend that surplus as soon as they can, unless the US makes some kind of agreement stating that this money will never hit the market. The global influx of US dollars will bring the value down even further, on top of it's current decline. There are many other complications, but I cannot speculate how things will turn out. I never said our money was going away, I just meant to say, if this change occurs, how much will our money be worth then? That will rest in the hands of a few groups like the UN, WTO, IMF, and the world bank, and I'm sure many others I either don't know about, or wouldn't expect to be able to have any say in these matters, like OPEC and the UAE.

[Paco Lopez]

I typed up a long and wordy reply, only to have my internet cut out on me.... Rather than retyping it, I'll say this:

Thank you for that, good to know someone has been paying attention. What I was saying was simply that the rest of the world has large surpluses of US cash. If they no longer need it for international commerce emergencies, these countries will spend that surplus as soon as they can, unless the US makes some kind of agreement stating that this money will never hit the market. The global influx of US dollars will bring the value down even further, on top of it's current decline. There are many other complications, but I cannot speculate how things will turn out. I never said our money was going away, I just meant to say, if this change occurs, how much will our money be worth then? That will rest in the hands of a few groups like the UN, WTO, IMF, and the world bank, and I'm sure many others I either don't know about, or wouldn't expect to be able to have any say in these matters, like OPEC and the UAE.

Yeah, I could tell from your original post that you got it but those headlines were definitely worded to give the wrong impression (not that you can control the media).

I'm not sure this is that big a threat to the US economy though. If the UN comes up with some new reserve currency all those countries with huge dollar reserves will have to use something to buy the new currency and it will probably end up being dollars. Rather than the dollars being dumped onto the market they will just be exchanged for UN Bucks, and the UN will have to use them to buy something to back their currency (probably a big pile of gold) and everything will be hunky dory.

Besides that, China is the biggest foreign holder of US currency and they hold about $2 trillion. Japan has about half that, and nobody else breaks half a trillion. Even if China and Japan dumped all their US currency at once it wouldn't be any worse than the imaginary $3 trillion check Obama cashed during his first month on the job.