Is The Global Currency Reserve A Done Deal?

A U.N. panel of economists is attempting to steer the world away from using the American dollar and towards a global currency reserve. The plan is supposedly designed to help jump start the economies of prosperous nations and prevent future global economic crises. Fools.

Whether the international currency reserve changes or not will not have an impact on future crises. Let me explain something to these economists. Crises have occurred throughout history. No matter what action is taken now, at some point future economic downturns, and yes crises, WILL occur. Why?

As the saying in Ecclesiastes 3:1 goes, "To everything there is a season, and a time to every purpose under heaven."

In other words, there are bulls and there are bears, there are periods of prosperity and periods of poverty. There are times of war and times of peace. Thinking that some new economic plan can change the ebb and flow is ridiculous. You can't stop the tide. As economists you should no better than to make such a foolish statement.

When I was younger, I saw Star Wars with my father, a civil engineer. We watched Luke Skywalker speeding through the desert in his hovering vehicle (apologies to all Star Wars geeks - I loved the series but I don't recall what the vehicle was called). My father casually observed, "a vehicle floating like that is impossible". I had to admonish my father - I told him as an engineer he should know better than to make a statement like that. Nothing is impossible. Something might not be technically feasible currently, but that doesn't mean some day it wouldn't become a reality. Look at flight, space flight, computers, lasers, and even television. 200 years ago all would have been considered impossible.

My point is that making such blanket statements is foolish. No matter what economic 'solutions' these economists bring to the table, economic hardship has always occurred. For the foreseeable future, it always will occur. [Avoided falling into my own trap there.]

Getting back to the dollar, is dumping it a good idea? There are pros and cons to America in doing so. But the reality is, even after Geithner's silly stumble, he was reasonably quick to correct himself and state that for the foreseeable future, the dollar would be the international standard currency reserve. So is the global currency reserve or the basket currency China had been suggesting a done deal? Hardly. Is it something likely to be argued at the upcoming G20 meeting? For sure. But at this point I don't see the change coming. Perhaps things would have been different if the Dow had continued to fall and was below 5000, and similar struggles were snowballing in other countries at the rates they were back in Q4 2008. But my gut feeling is that the talks about changing the currency, regardless of what Russia, China and France might say, will not gather any momentum. I could be wrong, but I don't see this as being Bretton Woods redux.