One-World Government – Impossible / One-World-Currency Inevitable

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Electronic money

COMMENT: Hello Martin,

Finally you have raised the issue of the “global currency reset.” I have always been of the same opinion expressed by you that in a floating currency regime an administrative devaluation is not possible.
What would be the basis of the new reserve currency? A link to a metal or to a (somewhat) floating basket of currencies? And wouldn’t the latter still be prone to going super nova as fiscal authorities get overextended in unison?
This is the focus of a lot of conspiracy theorizing so I await your response eagerly. Thanks for your many acute insights.
ANSWER: These are two separate things entirely – a one world government and a one-world currency. If the conspiracy theory assumes one-world government is NECESSARY to have a one-world currency, that is DEAD wrong. It is impossible to ever get a one-world government because there are huge cultural differences between countries even when the language is the same – i.e. US, Britain, Canada, and Australia just to mention a few with the same language.
Just look at the chaos in Europe. I travel everywhere. I love learning new cultures and languages. The language is the product of thinking. In Japanese you never say this is “MY” business card. That is like saying this is “MY” business card you lowlife schmuck. You just say business card – Meishi des. Yet in America, if you just said business card, that would be taken as arrogant and not polite.
This goes directly to the story of the Tower of Babel that multiple languages were created to prevent cooperation. This is why Europe has failed and Thatcher was correct. There can be no political union, only an economic one. The idea that one federalized Europe would prevent war was bogus for it is now the federalization of Europe that threatens violence. However, the EU Commission will not fight to save the tens-of-thousands of jobs they created. Even Merkel surrendered Germany’s sovereignty over its banks to Brussels – the unelected body of bureaucrats.
The assumption that there needs to be this one-world government to create a one-world currency is nonsense. The ONLY political solution will be to create a independent reserve currency. This will be the result of the debt crisis for countries will have to default. However, a reserve currency needs no backing for the value of a currency has always been its image or CONFIDENCE.
Money is simply a medium of exchange between two objects – not a store of wealth. On one side maybe labor and the other side something tangible like food. That does not matter. Money historically has NEVER been a store of value – it is only a economic language of exchange. Those who claim it must be a store of value are afraid to invest and therefore expect money to retain its value yet expect wages to rise along with the value of their house – brain-dead self-interest!
Therefore, money represents the the combined collective productive forces of the people of that nation. If this were not true, then it would have been impossible to have a floating exchange rate since 1971 or for Japan and China to have risen to the second largest economy in the world without gold. And if you say money has to be gold, sorry, the gold standard has never been a lasting trend. Floating exchange rate system have been the norm throughout history with brief intermissions of attempts at fixing the value of money that always fail.
The reserve currency currently being the dollar creates political tension with China and Russia as they are forced to used the currency of an adversary. China’s currency is still less than 10% of world trade flows and trade is still a tiny fraction of capital flows. The bulk of the money flows are due to investment. The total US economy of about $17 trillion and the total of China’s exports is about $2.2 trillion with Europe about $1.5 trillion. The numbers show the reality behind the dollar. Qatar has the highest GDP per capita at $102,000 with the USA at $54,000. Germany at $39,000, France at $35,000, Russia at $18,000 and China is at $9.800 (Source World Fact Book).
Athens - Imitation
Reserve Currencies are nothing new. They have always existed by default being the largest economy. There are numerous contemporary imitations of the dominant currency of the era. When Athens was the largest economy, their currency was imitated in Asia to Northern and Eastern Europe. An imitation is different from a counterfeit insofar as they do not seek to defraud someone but to expand the money supply with the same metal standard.
Roman-Greek Denominations
Even the first silver coinage of Rome was denominated in Greek drachms. This is a reflection that they had to adopt the Greek currency reserve type status in order to conduct foreign trade. The Punic Wars were all over trade. Rome did not introduce its own currency until 211AD – the denarius that is the denomination that dictated the world.
During the Imperial Roman era when Rome became the largest economy, we see imitations of their coinage even in India. Again, an imitation is not cheating with fake metal. An imitation is creating coinage to facilitate the local economy that came to reply upon the reserve currency if you will from Rome. Dollars circulate today in China and Russia. They are everywhere as it has always been.
This is why QE1-3 did not create inflation. I have explained that the dollar was being absorbed throughout the entire world. The very same thing has taken place since ancient times. I have stated I do not offer my opinion – just the facts. History repeats because the passions of man never change. There is a long history of reserve currencies and it is not merely the metal value, it was the image on the coin that was acceptable because of CONFIDENCE. Hence, imitations of the reserve currency circulated rather than creating their own coinage with the same metal content.
The next step in the evolutionary process of the financial system will be to replace the dollar with an international reserve currency. It requires no backing – just CONFIDENCE. Such a reserve currency is exempt from fiscal mismanagement since it would not be the currency of a given government. Each nation would retain its currency that would float against the reserve. You would need to convert your local currency to the reserve for international transactions.
We do not need a one-world government to issue a one world currency. It would only be a reserve currency against which everything would then be measured. No big deal. That ends the political tensions and retains the sovereignty of a nation unlike the euro that has been a complete failure.