A Quote by Joseph Stiglitz
The proposal for a new global reserve currency - or Special Drawing Rights - is a good idea for many reasons. Yes, for the Chinese it would cushion any fall in the value of the dollar per se because it would only be part of a basket of other currencies, including the yen and the euro.
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Most paper money initially existed as a substitute for gold. That's what gave it value. But right now what gives a currency value is other currency. Most countries hold reserves and the reserves are other currencies. If you are a backing up the euro with the dollar, what's backing up the dollar? I don't think it is going to go to a point where all you have is coins and bars of gold, but I do think that we are going to have to go back to a monetary system based in gold, not based on paper.
A dollar vigilante is a free market individual who protests the government monopoly and financial policies, such as fractional reserve banking and unbacked fiat currencies, by selling those same fiat currencies in favor of other assets, including gold and precious metals.
To the extent the dollar gains strength relative to other currencies, assets priced in those other currencies would become cheaper on a dollar basis.
Law Number XXXVI: The thickness of the proposal required to win a multimillion dollar contract is about one millimeter per million dollars. If all the proposals conforming to this standard were piled on top of each other at the bottom of the Grand Canyon it would probably be a good idea.
It is unlikely that others would even demand their money back overnight, for doing so would lead to the value of the dollar plummeting; what they would get back with be worth little. But what we are already seeing is an erosion of confidence of the dollar, which is seeing the dollar fall in value.
My single biggest financial concern is the loss of the dollar as the reserve currency. I can't imagine anything more disastrous to our country. . .you're already seeing things in the markets that are suggesting that confidence in the dollar is waning. . .I think you could see a 25% reduction in the standard of living in this country if the U.S. dollar was no longer the world's reserve currency. That's how valuable it is.
The fear is that if the dollar falls below 50% of the currency basket held by commercial and central banks and insurance companies, there may be a democratization of the way currencies are priced.
The United States is pushing as policy division of the world into rival currency camps - the dollar area on the one hand, and the Russia-Chinese-Shanghai Cooperation Organization group on the other, especially now that the IMF has changed its rules. People think that if there are rival currency groupings and national currencies are going bust, we might as well use gold as a safe haven.
Trading is a small part of the work of the stock exchanges. They are really to do with financial speculation, and they speculate on the value of the yen, the dollar, the pound, the franc, or the euro, at any given time. Billions are lost and billions are made by this speculation, and that's what the stock exchanges are about. They are for greedy minds.
The mark of a single currency is not only that all other currencies must be extinguished but that the capacity of other institutions to issue currencies must also be extinguished...In the case of the United Kingdom, that would involve Parliament binding its successors in a way that it has hitherto regarded as unconstitutional.
The reserve currency role seems to add prestige to an area and some people in Europe have talked about the desirability of the euro becoming an international reserve currency.
When the dollar was separated entirely from gold in 1971, it ceased being the official IMF world currency and finally had to compete with other currencies... From that point forward, its value increasingly became discounted.
We proclaim human intelligence to be morally valuable per se because we are human. If we were birds, we would proclaim the ability to fly as morally valuable per se. If we were fish, we would proclaim the ability to live underwater as morally valuable per se. But apart from our obviously self-interested proclamations, there is nothing morally valuable per se about human intelligence.
Any country whose currency is used as a reserve enjoys tremendous benefits because those currencies gain a significant discount to financing costs.
At the time of the formation of the euro, I would say most American economists said that's not a good idea; that's not a currency area that makes sense. And the answer from Europe was, 'How is Missouri and Mississippi a currency area?' But the flaw in that was not recognizing the importance of mobility.
As the dollar's exchange value declines, so will the value of dollar-denominated financial instruments, regardless of how many bonds the Federal Reserve purchases.
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