CFR member in Washington Post: time to ditch the dollar for new currency

[Zydeco]

http://www.washingtonpost.com/wp-dyn/content/article/2007/11/11/AR2007111100998.html?hpid=opinionsbox1

For a quarter-century after World War II, money was based on a loose version of the gold standard. The U.S. dollar was pegged to gold; other currencies were pegged to the dollar; stable prices underpinned the prosperity and soaring trade of the 1950s and '60s. Then in 1971 Richard Nixon balked at the high interest rates necessary to maintain the dollar's link to gold. For the rest of the decade, inflation ripped. The cure, starting in 1979, involved two recessions in the United States and the Third World debt crisis.

Now we face another potential watershed in the world's system of money. Since the breaking of the gold link, the dollar has become the world's primary measure of value, so much so that bank deposits in Uruguay and bribes paid in Russia are mostly denominated in dollars. But the dollar, like the gold standard before it, is under pressure. Last week even Giselle Bundchen, the world's top supermodel, was reported to be steering clear of greenbacks.

Inflation was the cause of the gold standard's collapse as well as its main consequence. As long as the dollar was convertible, investors could choose between owning one dollar and owning one-35th of an ounce of gold; when inflation eroded the greenback's purchasing power, gold was the more attractive option. Foreigners traded in their dollars until U.S. gold stocks were close to exhaustion. Higher U.S. interest rates could have lured foreigners back into dollars. But Nixon wouldn't tolerate high rates the year before an election.

Today's problem is different. The Fed has kept a lid on inflation, but the dollar's vulnerability is caused by debt -- the debt of the federal government and of American households. Year after year, foreigners have provided Americans with the savings that they refuse to generate themselves, and this stream of money has supported the U.S. currency. But if foreigners tire of handing over their savings, the unsupported dollar is almost bound to fall. That is what has happened recently.

You can hardly blame the foreigners. They sent their money to the United States because they thought the U.S. financial system was transparent and sound; the subprime mortgage mess has forced them to think differently. They sent their money to the United States because the greenback was expected to hold its value, but its purchasing power has fallen sharply against oil, metals and other commodities. Once a currency ceases to act as a store of value, its days as a reserve currency -- that is, a currency in which foreigners are happy to hold savings for the long term -- may be numbered.

As in 1971, the Federal Reserve could do something. It could keep interest rates high enough to entice investors to hold dollars. But as in 1971, this is not an attractive option. The U.S. economy is reeling under the impact of an oil shock, a housing shock and financial turmoil. Forced to choose between upholding the dollar's role as an international store of value and avoiding domestic recession, the Fed is likely to prioritize recession-avoidance.

Nixon's Treasury secretary, John Connally, told furious Europeans that the dollar was "our currency, but your problem." The same could be said for today's dollar trouble, which is why French President Nicolas Sarkozy said plaintively last week that "the dollar cannot remain someone else's problem." For the United States, a falling dollar means pricier imports but also an export boom that could carry the U.S. economy through its housing bust. Yet for France and other countries that use the euro, a weak dollar means a loss of competitiveness -- not only against U.S. producers but also against dollar-pegging Asian exporters.

The falling dollar is a headache for the dollar-peggers, too. Their problem is the mirror image of the European one: Countries such as China and the Arab Gulf states are already experiencing an export boom that is overheating their economies. As a falling dollar drags down their currencies, this overheating gets worse. Meanwhile, they have accumulated vast piles of dollar assets that are now losing value. Saving on America's behalf turns out to be expensive.

So the world faces a dilemma. The last thing it wants is more dollar weakness, which is why central bankers in East Asia and the petro-states, which control most of the world's official reserves, are not about to dump U.S. bonds and trigger a collapse in the greenback. But the world may also draw the lesson that an alternative global currency needs to be the long-term goal. Households don't like saving in a currency that won't hold its value. Companies don't like building global supply chains based on a unit of account that fluctuates unstably.

Most economists assume that the dollar will continue to act as the global currency because there is no alternative. But one of my colleagues at the Council on Foreign Relations, Benn Steil, has proposed another option -- a privately created currency that would confer an inflation-proof claim on gold or a basket of commodities. Steil calls his idea "digital gold," which has a nice back-to-the-future ring. The more the dollar slides, the less Steil's suggestion sounds like a fantasy from a movie studio.

smallaby@cfr.org

*****
How many lies can there be in one short op-ed piece? This guy is a shill for the bankers -- as is the entire MSM, the Washington Post in particular.

[freelance]

Digital Gold? Whassamatta, you ain't got no REAL gold?

Surely, they're not going to think they can push this scam on us. SHOW US THE GOLD!

[SeanEdwards]

But one of my colleagues at the Council on Foreign Relations, Benn Steil, has proposed another option -- a privately created currency that would confer an inflation-proof claim on gold or a basket of commodities.

Interesting. Is anyone else surprised that a CFR member would be advocating private hard currency?

What's next? Maybe Ben Bernanke arguing in favor of dismantling the Fed?

[johngr]

They were "predicting" a one-world currency back in 1988: http://66.102.9.104/search?q=cache:cpfSEVs9jrgJ:www.singleglobalcurren cy.org/documents/ArticleEconomist1988GetReadyforthePhoenix_001.doc+ http://www.singleglobalcurrency.org/documents/ArticleEconomist1988GetReadyforthePhoenix_001.doc&hl=sv&ct=clnk&cd=1&gl=se&client=firefox-a

[Furis]

Anything coming from the CFR makes me cringe..... nuff said.

[Cindy]

Digital Gold? Whassamatta, you ain't got no REAL gold?

Surely, they're not going to think they can push this scam on us. SHOW US THE GOLD!

I hope Americans are not fool enough to fall for digital gold currency.

[EvilEngineer]

I had imagined that the dump of the dollar was planned, using it as an excuse to pave the way for the Amero.

[nullvalu]

"a privately created currency that would confer an inflation-proof claim on gold or a basket of commodities"

Ok, if we have any economic geniuses in here, would someone please decipher this for me? This doesn't make much sense to me.

Also, there's no such thing as an inflation-proof currency, is there? Even with a true gold standard, there is still inflation - just caused by natural occurances, not artificial ones, and not as much as there is with fiat currency, right?

[steph3n]

no what it is, they are trying to steal RP's thunder, plain and simple, but they will do it some corrupt way :)

[Johnnybags]

handing it out to foreigners and getting entangled trying to prop up oil regimes wants to give us a new one? Shoot em.

[SeanEdwards]

"a privately created currency that would confer an inflation-proof claim on gold or a basket of commodities"

Ok, if we have any economic geniuses in here, would someone please decipher this for me? This doesn't make much sense to me.

Also, there's no such thing as an inflation-proof currency, is there? Even with a true gold standard, there is still inflation - just caused by natural occurances, not artificial ones, and not as much as there is with fiat currency, right?

I'm no expert, but it sounds to me like the guy is advocating privately offered currencies that are fully convertible with a quantity of some commodity, either gold, or some combination of valuable commodities. It's inflation-proof in that the money is basically a receipt for a real tangible object that preserves value. Theoretically a gold backed currency could suffer from inflation, say somebody figures out a cheap way to make gold from dirt. That's one point in favor of the basket of commodities approach because of the diversification of assets.

It's very paulian I think. I'm pretty sure I've heard Paul speak favorably of the very same concept. If something like this existed it would be a serious challenge to the central banks. What would you rather be paid in, Fed funny money, or receipts for physical quantities of precious metals?

[FunkBuddha]

So, they put us on a global currency, backed by gold.... Then everyone cheers and is happy for 20 years until they decide to unlink it from gold and inflate the shit out of it again?

[freelance]

Interesting. Is anyone else surprised that a CFR member would be advocating private hard currency?

What's next? Maybe Ben Bernanke arguing in favor of dismantling the Fed?

Actually, if you see my post just above yours, I do not believe that they're calling for hard currency. I believe that they're trying to make it appear that they're calling for hard currency.

They are talking about digital gold. DIGITAL gold! LOL! It doesn't get much softer than 1s and 0s floating around cyberspace.

SHOW US THE GOLD! Do they HAVE any real gold left?

[fluoridatedbrainsoup]

So the global currency will be digital ... and he who doth not have the mark will be unable to buy anything, or go anywhere. Systems of control...

[Vvick727]

I'll excited to see rappers try and flash "digital gold" in their next music video.

[Johnnybags]

you let these guys control a new currency and they will steal. Screw the CFR who got us into this mess to begin with. Scumbags know the gig is up so they are trying to create a new shell game.

Can we give away billions to Israel in digital gold, if yes, i do not want it.

[Zydeco]

you let these guys control a new currency and they will steal. Screw the CFR who got us into this mess to begin with. Scumbags know the gig is up so they are trying to create a new shell game.

Exactly.

[SeanEdwards]

Actually, if you see my post just above yours, I do not believe that they're calling for hard currency. I believe that they're trying to make it appear that they're calling for hard currency.

They are talking about digital gold. DIGITAL gold! LOL! It doesn't get much softer than 1s and 0s floating around cyberspace.

SHOW US THE GOLD! Do they HAVE any real gold left?

Nothing wrong with digital gold. We're not going to be giving up the use of computers to move money around any time soon. As long as the ones and zeros guarantee ownership of an actual durable physical thing that holds value I don't see a problem.

[Original_Intent]

It sounds like they are taking a page from the Book of Paul. Currency tied to a set amount of a commodity. I don't trust them to not steal from it, but the concept is not a bad one. It sounds like something that Ron Paul would propose. As described it does seem inflation proof. the danger would be them ever unlinking it the way the dollar was unlinked from gold, but that danger and possibiolity is going to exist with any commodity based currency.

[SeanEdwards]

There's an awful lot of CFR paranoia in this thread. I don't think that club is anywhere near as monolithic as you all are making out.

The guy in the article proposed a total Ron Paul solution to monetary policy and you're all crucifying him just because he's associated with the CFR. If what he is saying is right, then it's right no matter what club he is a member of.

[Give me liberty]

Digital Gold? Whassamatta, you ain't got no REAL gold?

Surely, they're not going to think they can push this scam on us. SHOW US THE GOLD!

Digital Gold:eek:
Oh god what on earth are they smoking?

[steph3n]

they are going to base their currency on the digital gold processors from AMD and Intel, permenently tied to the AMD Opteron 8000 series and Intel Xeon MP's we are assured then the end of the currency in less thana year as utter failure due to 6000% inflation.

then they will claim see, it is failed experiment :D

[constituent]

Says it All (http://youtube.com/watch?v=K2TyF1CbsDs)

[Zydeco]

As long as the ones and zeros guarantee ownership of an actual durable physical thing that holds value I don't see a problem.

Bankers who can steal, do. There's a recent scandal with banks supposedly holding physical silver -- and charging for storage! -- but don't wind up even having the physical.

[Zydeco]

There's an awful lot of CFR paranoia in this thread. I don't think that club is anywhere near as monolithic as you all are making out.

It's not monolithic at all, but it's the most dangerous organization in the world.

And 99% of Americans have no idea what it's all about. Some of them throw around the word "paranoia."

[nullvalu]

Says it All (http://youtube.com/watch?v=K2TyF1CbsDs)

that has to be the weirdest thing i seen all week.

[SeanEdwards]

As long as the ones and zeros guarantee ownership of an actual durable physical thing that holds value I don't see a problem.

Bankers who can steal, do. There's a recent scandal with banks supposedly holding physical silver -- and charging for storage! -- but don't wind up even having the physical.

If there's a private market and competition the unscrupulous bankers will lose customers.

[freelance]

So the global currency will be digital ... and he who doth not have the mark will be unable to buy anything, or go anywhere. Systems of control...

EXACTLY! And without your National I.D./chip/whatever worse they dream up, you're SOL!

[nullvalu]

I think this Says it All (http://youtube.com/watch?v=5jmuhZY2mgs)

[SeanEdwards]

It's not monolithic at all, but it's the most dangerous organization in the world.

And 99% of Americans have no idea what it's all about. Some of them throw around the word "paranoia."

"most dangerous organization in the world"

:rolleyes:

The guy in the article was speaking Ron Paul. I don't give a damn where he's from.

If you're going to insist that his suggestion is part of some evil plot, merely because of the CFR after his name, then what you are saying is that Paul's monetary policy is part of the same evil plot, because they're exactly the same: private commodity backed currencies.

Here's an interview where Paul mentions his support for a marketplace of commodity backed currencies:

http://www.youtube.com/watch?v=URgXOJm1P6w&eurl=http://electronpaul2008.wordpress.com/2007/11/10/larry-kudlow-interviews-ron-paul/

[nullvalu]

No, I think Zydeco is saying that, if a new currency were to be proposed, it should not be started by the same elitist and secretive organization that has also proposed the NAU.

Fair?

[Shellshock1918]

chooo chooo all aboard the what-the-f**k train kiddies, next stop, one world government!

[RP4ME]

Did anyone catch teh operative words - a Private digital currency....hmmm me smells a rat! Sound sliek another central banking scheme to me! No thanks - Ill take our OWN currency valued by elected offcials per teh constitution!

CFR was on NPR 2 mos ago saying how sovereign nations states were an utter failure and we nned global governance and well as ONE currency! Im sure its alreayd to go.......we just need a final event to trigge rtotal dollar collapse and then they will be waiting!

For thsoe of you that think teh GOd of teh Bible is a myth.....thsi is all prophecy coming to pass, one of hundreds that have already come to pass in suprising detail! Ask teh God of this Universe if HE is not who HE said he is in the Bible! See what he says and then place your faith in Him before things get nasty here on earth and its too late. He loves YOU!

[rodent]

"a privately created currency that would confer an inflation-proof claim on gold or a basket of commodities"

Ok, if we have any economic geniuses in here, would someone please decipher this for me? This doesn't make much sense to me.

Also, there's no such thing as an inflation-proof currency, is there? Even with a true gold standard, there is still inflation - just caused by natural occurances, not artificial ones, and not as much as there is with fiat currency, right?

Basket of commodities meaning your new currency (say 1 dollar) would be x amount of gold, y amount of oil, z amount of copper, etc. The different commodities would make up a "basket."

Personally, I think the CFR has this goal: they want to introduce the digital gold, create one global currency, then 50 years down the line, delink the commodities from the currency. At that point, the "money changers" in society will get absolute and total control over the world's economy.

[PatriotG]

Today's problem is different. The Fed has kept a lid on inflation, but the dollar's vulnerability is caused by debt -- the debt of the federal government and of American households. Year after year, foreigners have provided Americans with the savings that they refuse to generate themselves, and this stream of money has supported the U.S. currency. But if foreigners tire of handing over their savings, the unsupported dollar is almost bound to fall. That is what has happened recently.


Can someone please explain this or is it total BS?

Im going to meditate and will elaborate further a bit later


Jeeeez!

[SeanEdwards]

Today's problem is different. The Fed has kept a lid on inflation,

I think that's a false statement. There's a lot of debate regarding how to even measure inflation. I think the Fed has done a good job of underreporting inflation, and keeping inflation off the minds of the public.

But I see the inflation every time I buy groceries. It's been going on for years. A steak that 10 years ago cost me $5, is now $14+. More than 100% price growth in a decade. That isn't 2% yearly inflation. Not even close.

Food and energy prices are excluded from the Fed's inflation calculations.

[Corydoras]

The CFR seems to be realizing that fiat money can't go on forever... they want to go back to a gold-type alternative currency...
:)
but unlike Ron Paul, they want it to be a privately controlled global currency!
:eek:

Sebastian Mallaby, a fellow for International Economics with the Council on Foreign Relations, in the Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/11/AR2007111100998.html


But the world may also draw the lesson that an alternative global currency needs to be the long-term goal. Households don't like saving in a currency that won't hold its value. Companies don't like building global supply chains based on a unit of account that fluctuates unstably.

Most economists assume that the dollar will continue to act as the global currency because there is no alternative. But one of my colleagues at the Council on Foreign Relations, Benn Steil, has proposed another option – a privately created currency that would confer an inflation-proof claim on gold or a basket of commodities.

Steil calls his idea "digital gold," which has a nice back-to-the-future ring. The more the dollar slides, the less Steil's suggestion sounds like a fantasy from a movie studio.


Then, in the CFR's Foreign Affairs journal:
http://www.foreignaffairs.org/20070501faessay86308/benn-steil/the-end-of-national-currency.html


PRIVATIZING MONEY

It is widely assumed that the natural alternative to the dollar as a global currency is the euro. Faith in the euro's endurance, however, is still fragile -- undermined by the same fiscal concerns that afflict the dollar but with the added angst stemming from concerns about the temptations faced by Italy and others to return to monetary nationalism. But there is another alternative, the world's most enduring form of money: gold.

It must be stressed that a well-managed fiat money system has considerable advantages over a commodity-based one, not least of which that it does not waste valuable resources. There is little to commend in digging up gold in South Africa just to bury it again in Fort Knox. The question is how long such a well-managed fiat system can endure in the United States. The historical record of national monies, going back over 2,500 years, is by and large awful.

At the turn of the twentieth century -- the height of the gold standard -- Simmel commented, "Although money with no intrinsic value would be the best means of exchange in an ideal social order, until that point is reached the most satisfactory form of money may be that which is bound to a material substance." Today, with money no longer bound to any material substance, it is worth asking whether the world even approximates the "ideal social order" that could sustain a fiat dollar as the foundation of the global financial system. There is no way effectively to insure against the unwinding of global imbalances should China, with over a trillion dollars of reserves, and other countries with dollar-rich central banks come to fear the unbearable lightness of their holdings.

So what about gold? A revived gold standard is out of the question. In the nineteenth century, governments spent less than ten percent of national income in a given year. Today, they routinely spend half or more, and so they would never subordinate spending to the stringent requirements of sustaining a commodity-based monetary system. But private gold banks already exist, allowing account holders to make international payments in the form of shares in actual gold bars. Although clearly a niche business at present, gold banking has grown dramatically in recent years, in tandem with the dollar's decline. A new gold-based international monetary system surely sounds far-fetched. But so, in 1900, did a monetary system without gold. Modern technology makes a revival of gold money, through private gold banks, possible even without government support.

[SeanEdwards]

Paul favors a market of privately owned currencies also.

Competition ensures honesty.

[Corydoras]

You're right, privately owned, my bad.

CurrencieS-- not a single sole global one, though.

[derdy]

lol 'digital gold' how could they counterfeit that I wonder?

[Malakai0]

This is not the type of currency Ron Paul advocates.


Ron wants OUR CONGRESS running and OUR TREASURY minting the money. Not the international bankers. If they own most of the gold (IMF is rumored to own over 50% of the gold in the world already), they can still manipulate the money supply at will.

You're seeing the endgame here when it comes to monetary policy. The bankers have been trying to get control of all the worlds money since WWI (and probably before that less publicly), now they are promoting it as the savior to the dollar crisis.

If it doesn't work they still have the Amero idea to fall back on. Either way I have a feeling our money (in theory) made by the US owned by the US is coming to an end. It has actually been like this for quite awhile but not widely known, this will be.

[freelance]

Digital gold? SHOW ME THE GOLD! WHERE is it?

[fluoridatedbrainsoup]

Digital, of course, the easier to track you with ;)

[PatriotG]

Inflation goes up every time you print new dollars. A house in 1971 may have gone for $50,000, while today that same house is going for $500,000. It’s not supply and demand; all you need to do is look out the window. You will see new homes, and new apartments going up all over the place.

The key to what this guy said is this, “alternative global currency.” It’s all about the agenda, and the agenda is a new world order with a global currency.

Lets keep the republic intact. Enough said.

PatriotG

[fluoridatedbrainsoup]

Says it All (http://youtube.com/watch?v=K2TyF1CbsDs)
This link made my morning! Now I have to download the entire movie. I love talking heads, but I didn't know they had movies. I = clueless, but learning...