By: Terresa Monroe-Hamilton
Today, the UN came out with a plan for a global currency reserve system touted by Joseph Stiglitz who is a proponent of Keynesian economics and a detractor of globalization and unbridled free markets. Stiglitz served in the Clinton administration in the 90s. He is an unabashed socialist and he will be floating this horrid plan at the G20 Summit next week… Stiglitz doesn’t believe in the Constitution – he believes in control.
Already China, Russia and others have called for a new global currency reserve system. Even Timothy Geitner let it slip that the US would consider it, after President Obama the night before said the US wouldn’t. More of the same double talk from Geitner and Obama – nothing new there…
If this flies, the US dollar will crash and hyperinflation will ensue. A depression will certainly be upon us. One can only think that this is what our new leaders meant to happen all along. Just saying…
From the Contrarian Investors’ Journal:
Now, what happens if one day, the US dollar no longer becomes the reserve currency? When that day arrives, future generations of Americans will live far much worse their fathers and grandfathers. Why?
The never-ending ballooning Current Account Deficit (CAD) of the US is a reflection of the nation’s spending beyond its means (see Understanding the Balance of Payments for what Current Account Deficit means). The only reason why they can get away with it for so long is because of their reserve currency. As we said before in How does the US export inflation?,
Through this convention [of the US dollar being the world’s reserve currency], the US can expropriate resources from foreign countries by buying their goods and services with its own printed money.
Once the US dollar loses this special status, the nation loses its power to expropriate resources from foreign countries. Since the US has been doing this for decades, their economy’s capacity to cater to the nation’s needs has largely being eroded. In the jargon of the Austrian School of economic thought, the US had been eroding its economy’s capital structure and engaging in capital consumption. An analogy for this situation would be this: Let’s say a king had been spoon-fed with a silver spoon since a child. He was reliant on this servants to take care of his everyday needs as well as to cater to his every whims and fancy. One day, a revolution broke out and the king was overthrown. All of a sudden the king was reduced to a commoner. It is unlikely that he can fend for himself because he does not have any essential life skills every commoner has to learn from young.
That was written about a year ago folks and if Geitner, the UN and all their cronies get their way next week, let’s just say the America we have all loved and protected will be no more. It will still be America, but a far different one than the one we grew up in. There will be dark days ahead and many difficult decisions to make of the life and death variety. Mark my words…