Single world currency

[Spindrift]

If the entire world adopted a single currency, would that be good or bad? Would it benefit undeveloped countries, developed countries, neither?

I'm not suggesting that it happen, I'm just curious to know what economic effects it would have. I realize an entire business sector (currency exchange) would disappear but what else would happen.

Couple of assumptions for this exercise so we can stay out of the political arena and stick to economics:
1) All countries of the world have agreed to this.
2) They have also agreed to a mechanism for controlling the currency. What the mechanism is is irrelevant to this discussion.

ETA: Of course, the currency should be the quatloo. :)

[drkitten]

If the entire world adopted a single currency, would that be good or bad? Would it benefit undeveloped countries, developed countries, neither?

Neither. Look at the problems the Eurozone is having, then multiply them by a zillionfold.

Basically, different countries have different economic needs at any one time; part of the problem in the Eurozone is that the PIIGS countries need to be able to devalue their currency to make their goods more competitive and their wage structure more reasonable (and also to make their debt loads more manageable), but devaluing the Euro is exactly what Germany and France don't need.

[Spindrift]

Neither. Look at the problems the Eurozone is having, then multiply them by a zillionfold.

Basically, different countries have different economic needs at any one time; part of the problem in the Eurozone is that the PIIGS countries need to be able to devalue their currency to make their goods more competitive and their wage structure more reasonable (and also to make their debt loads more manageable), but devaluing the Euro is exactly what Germany and France don't need.

But why would they have to devalue if everyone in the world was using that currency?

[drkitten]

But why would they have to devalue if everyone in the world was using that currency?

Because their cost structure is different and too high.

[Spindrift]

Because their cost structure is different and too high.

Okay, I get that. But doesn't that occur within the United States? A single currency seems to work well overall.

[daenku32]

Okay, I get that. But doesn't that occur within the United States? A single currency seems to work well overall.

Krugman educated me on this:
http://krugman.blogs.nytimes.com/2010/01/12/how-many-currencies/

It's a balance of some sort.

[Puppycow]

Okay, I get that. But doesn't that occur within the United States? A single currency seems to work well overall.

Because of the federal government. If every state was an independent country however, there would be problems.

The EU is like a loose confederation, not a federation with a strong central government.

Most US government debt is issued by the federal government and the federal government controls the central bank. In Europe, each country issues its own debt, but does not control the central bank. So if one country gets too deep in debt, it cannot devalue its currency as a way of reducing its debt obligations.

[webb5]

Because of the federal government. If every state was an independent country however, there would be problems.

The EU is like a loose confederation, not a federation with a strong central government.

Most US government debt is issued by the federal government and the federal government controls the central bank. In Europe, each country issues its own debt, but does not control the central bank. So if one country gets too deep in debt, it cannot devalue its currency as a way of reducing its debt obligations.

This is true; all nations in Europe that have merged into the political and financial European Union have effectively lost their powers of independent action. Article 107 of the Maastricht Treaty, which says: “Neither the European Central Bank, nor any national central bank, nor any member of their decision-making bodies shall seek or take instructions from any government or any body.”

These nations have signed away their sovereignty and independence. This should be a warning to all countries of the world to remain independent. The central bankers of the world want globalism and a one world currency.

There is little doubt that the internationalization of financial markets is of an entirely new intensity. One consequence will be a decline in the hegemony of the nation state and the eventual demise of national currencies. National governments already are unable to control their domestic money supplies except through the imposition of interest- rate mechanisms. We have already seen a move into regional currencies such as the Eurodollar, this will lead ultimately into a global currency if we allow this to happen. The role of national governments will be handed over to regions _________________

[Eddie Dane]

Neither. Look at the problems the Eurozone is having, then multiply them by a zillionfold.

Basically, different countries have different economic needs at any one time; part of the problem in the Eurozone is that the PIIGS countries need to be able to devalue their currency to make their goods more competitive and their wage structure more reasonable (and also to make their debt loads more manageable), but devaluing the Euro is exactly what Germany and France don't need.

I was going to say something really smart and meaningful in response to the OP.

But then, you already said it.

Curses!

[webb5]

China recently backed a call from Japan for Asian countries to launch a single currency trading bloc for the region, but whether there is sufficient political will for such a project remains to be seen.

http://www.dw-world.de/dw/article/0,,4818868,00.html?maca=en-en_nr-1893-xml-atom

IMF blueprint for a global currency – yes really
Director of the IMF’s strategy, policy and review department discusses how the IMF sees the International Monetary System evolving after the financial crisis. Which means, in the eyes of the IMF at least, the best way to ensure the stability of the international monetary system (post crisis) is actually by launching a global currency.

http://ftalphaville.ft.com/blog/2010/08/04/306346/imf-blueprint-for-a-global-currency-yes-really/

copy of IMF blueprint document for a global currency below

http://www.imf.org/external/np/pp/eng/2010/041310.pdf

Like it or not the international bankers want a global currency and with it more control

[CDFingers]

The only true disadvantage to a single world currency would fall to the currency speculators (money changers) after all the dust had settled.

CDFingers

[psionl0]

The only true disadvantage to a single world currency would fall to the currency speculators (money changers) after all the dust had settled.
Not to mention the countries that can no longer devalue their currencies to alleviate their financial problems. For them, it's debt debt and more debt.

[piojunbabia]

The One World Government will surely have its own currency. I hope its not dollar... or Euro... :)

[Puppycow]

The One World Government will surely have its own currency. I hope its not dollar... or Euro... :)

A single world currency would probably work best if there was single world government. And vice versa of course.

But that would be a whole other can of worms.

[webb5]

If the entire world adopted a single currency, would that be good or bad? Would it benefit undeveloped countries, developed countries, neither?

I'm not suggesting that it happen, I'm just curious to know what economic effects it would have. I realize an entire business sector (currency exchange) would disappear but what else would happen.

Couple of assumptions for this exercise so we can stay out of the political arena and stick to economics:
1) All countries of the world have agreed to this.
2) They have also agreed to a mechanism for controlling the currency. What the mechanism is is irrelevant to this discussion.

ETA: Of course, the currency should be the quatloo. :)

First it would be bad. A one world currency would remove every nation’s ability to control finance. The creation of a single global currency would take it one step further, allowing a world central bank to control money around the entire world. The sovereignty of all nations is at stake. This will lead us to a giant step to a global new world order. I doubt very much if any nation will benefit. This is about the banks taking complete control.

[barium]

Neither. Look at the problems the Eurozone is having, then multiply them by a zillionfold.

Basically, different countries have different economic needs at any one time; part of the problem in the Eurozone is that the PIIGS countries need to be able to devalue their currency to make their goods more competitive and their wage structure more reasonable (and also to make their debt loads more manageable), but devaluing the Euro is exactly what Germany and France don't need.

Also, a world wide interest rate will make borrowing money cheap in countries where the economy is performing above average. That usually leads to real estate bubbles and similar problems.

[barium]

First it would be bad. A one world currency would remove every nation’s ability to control finance. The creation of a single global currency would take it one step further, allowing a world central bank to control money around the entire world. The sovereignty of all nations is at stake. This will lead us to a giant step to a global new world order. I doubt very much if any nation will benefit. This is about the banks taking complete control.

It would have to go the other way around for it not to result in chaos. First a one world government, then a one world bank. Even then I don't think it'd work very well unless income distribution was about equal among all administrative sectors of said one world government.

[drkitten]

First it would be bad. A one world currency would remove every nation’s ability to control finance. The creation of a single global currency would take it one step further, allowing a world central bank to control money around the entire world. The sovereignty of all nations is at stake. This will lead us to a giant step to a global new world order. I doubt very much if any nation will benefit. This is about the banks taking complete control.

But you've been telling us already that the banks have complete control because every country in the world already has a fiat currency with fractional reserve deposit.

So how would a world government be any worse?

Could it possibly be that even you know what your economic theories are horsefeathers?

[webb5]

But you've been telling us already that the banks have complete control because every country in the world already has a fiat currency with fractional reserve deposit.

So how would a world government be any worse?
If our governments weren’t so corrupted, they would tell the banks to go to hell and create their own money. The fact that our governments allow the banks to enslave us with debt does not mean we cannot reverse this. Most nations still have this sovereign right to reverse this. A single currency is a direct attack on this right. These rights and more are lost in a world government.

Could it possibly be that even you know what your economic theories are horsefeathers?
You still don’t get it do you! A bank lover like you will never learn!

[KoihimeNakamura]

You still don’t get it do you! A bank lover like you will never learn!

... how does that answer the question?


Sent from my Droid using Tapatalk

[psionl0]

So how would a world government be any worse?
I thought this discussion was about a single world currency.

[drkitten]

You still don’t get it do you! A bank lover like you will never learn!

Well, webb's completely irrelevant response is in COLOR!

That makes it twice as convincing as it would otherwise be.

[Puppycow]

If our governments weren’t so corrupted, they would tell the banks to go to hell and create their own money. The fact that our governments allow the banks to enslave us with debt does not mean we cannot reverse this. Most nations still have this sovereign right to reverse this. A single currency is a direct attack on this right. These rights and more are lost in a world government.

You still don’t get it do you! A bank lover like you will never learn!

I don't think you know what slavery means.

[Thunder]

can we call it "the Thundero"?

[psionl0]

can we call it "the Thundero"?
Why not? Your avatar reminds me of a lot of bank tellers that I have dealt with. ;)

[Loss Leader]

The big problem with a single currency is also its biggest strength - it ties the fates of all nations together. The largest countries (economically and demographically) would be able to swamp the economies of the smaller.

But the biggest problem is even simpler - uncertainty. No one knows what would happen. Unintended effects would run rampant in unforseen ways. Without a stable government that responds to the will of the people, this would be utter chaos.

It would be like setting off a nuke in Bangladesh just to see what would happen.

[The True Scotsman]

I thought this discussion was about a single world currency.

It was until Webb5 showed up, insistent on changing the topic to his pet conspiracy theory.

[talkie toaster]

If it ever happens you can bet your last Thundero on me not having enough of it.

[Checkmite]

... how does that answer the question?


A bank lover wouldn't understand.

[webb5]

Well, webb's completely irrelevant response is in COLOR!

That makes it twice as convincing as it would otherwise be.

This is a typical response of yours when your argument fails.

[webb5]

An advantage of a single currency is that there would be no volatility in prices for importers or exporters because of no exchange rate fluctuations.
The main disadvantage of a single currency is that the monetary policy of a world central bank could not work world wide. One section of the world could be in an economic boom while others could be in a slump.

A one case monetary control would not work. A tightening of monetary policy to fight inflation in one country will do much harm to a country facing an economic gloom or recession.

[Almo]

An advantage of a single currency is that there would be no volatility in prices for importers or exporters because of no exchange rate fluctuations.

I'm no economist, but wouldn't variances in local economies generate differences in abilities to earn the currency, which would lead to exchange rate differences in practice? Just a thought.