Washington D.C. officialdom, including our own Congresswoman Woolsey, had better pay a great deal more attention to signals the world (and indeed, some of our own states) are giving regarding our dollar as a viable reserve currency.
Let’s go back a bit to March 2009. That was when China made headlines when it
called for the creation of a new currency to eventually replace the dollar as the world’s standard, proposing a sweeping overhaul of global finance that reflects developing nations’ growing unhappiness with the U.S. role in the world economy.
Since then, chatter in powerful circles has only increased on this issue. Within the last ten days, a number of eye-opening statements have been made by various entities:
The International Monetary Fund (IMF) called for an alternative to the dollar. The U.S. has dominated the IMF since its inception, yet here it is stating
The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.
On Valentine’s Day, France, generally known for being more independent from the U.S. than some of our other allies, also got on the bandwagon:
France, as current head of the Group of 20 countries, will help the transition to a global financial system based on ‘several international currencies’, French Economy Minister Christine Lagarde said today.
Rep. Ron Paul (R-TX) has been warning about our currency’s lack of solid backing for decades. He has steadily recommended a return to the gold standard. World Bank President Robert Zoellick caused a bit of a stir in November 2010 when he first made headlines for supposedly endorsing a return to the gold standard and then clarified his remarks two days later by saying
that he was referring to the need for gold to play a role in a new international monetary system, which would need to balance the values of the dollar, the euro, the yen, the pound and eventually the Chinese yuan.
“Gold is now being used, being viewed, as an alternative monetary asset. This is not the same as a gold standard,” he said in prepared remarks.
Note that Mr. Zoellick too considered “a new international monetary system” as pretty much a given.
Some of our own states have decided the dollar should not be trusted even for internal use. A South Carolina lawmaker is proposing a gold or silver-backed currency “in case the Federal Reserve collapses and hyper-inflation ensues.” A Virginia legislator has similar thoughts. And as the latter article notes, other states are also eying alternatives should the dollar collapse.
That the dollar could and would fail would not have occupied so many prominent people in the past. However, these days, it is a very real possibility. Yet most of the politicians in Washington simply keep on spending as though there were no reckoning! Rep. Woolsey is one of those in Congress who won’t accept the fact that our dollar is not invincible and not totally elastic. She will be one of those most responsible when that day of reckoning for the dollar does descend upon us.