A Quote by Joseph Stiglitz
The momentum today behind the idea of a new global reserve currency reflects, in effect, the rise of the rest in world politics and economics, led by China.
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China likes the idea of sovereign rights when it comes to organizing their politics as they see fit, and their economics. But they may grudgingly come to understand certain things differently in the area of climate or disease. China is a country fairly integrated into the world. Yet China is uncomfortable with this idea because they worry it will constrain their freedom, politically and economically, to do what they believe they need to do to maintain political stability and cohesion.
My observation is China is thinking more as a global player than regionally, in both politics and economics.
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.
...the French Revolution gave rise to ideas which led beyond the ideas of the entire old world order. The revolutionary movement which began in 1789... gave rise to the communist idea which Babeuf's friend Buonarroti re-introduced in France after the Revolution of 1830. This idea, consistently developed, is the idea of the new world order.
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.
China needs a currency that reflects underlying economic fundamentals.
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.
I do think some digital currency will end up being the reserve currency of the world. I see a path where that's going to happen.
Today's China is not in the least shut out from the rest of the world. Trends come to us from all over the world. And the Internet is really developed in China. We get news from all over the world.
China's accumulation of reserves is a result of the IMF's mismanagement of the Asian financial crisis a decade or so ago. If countries know they can't rely on the IMF to help them, their best defense is their own reserve cushion. In a time of spreading global recession, too much emphasis on savings in surplus countries like China can impede prospects for global growth.
But Australia faces additional regional and global challenges also crucial to our nation's future - climate change, questions of energy and food security, the rise of China and the rise of India. And we need a strong system of global and regional relationships and institutions to underpin stability.
I hold all idea of regulating the currency to be an absurdity; the very terms of regulating the currency and managing the currency I look upon to be an absurdity; the currency should regulate itself; it must be regulated by the trade and commerce of the world; I would neither allow the Bank of England nor any private banks to have what is called the management of the currency.
What there is no dispute about is whether or not China is a currency manipulator. They are a currency manipulator. They actively intervene every single day to keep the value of their currency less than it would be against the dollar than if it floated freely. We think. Even China barely disputes that.
I've often said that the desire to lecture China on how it should behave in the world is wrong. China was around for thousands of years even before America existed. It could even be that China's growing power will allow itself to be slowed down. But as long as this immense empire doesn't fall apart, it will become an important factor in global politics.
It so happens that because all the economies are strongly inter-connected and aggregated, there is trade that is happening not just from China to the rest of the world, but from the rest of the world to China as well, and that is going to continue.
Power is global and politics is local. That must change. We need a new language for understanding new global power formations as well as new international modes of politics to fight them. Social movements must move outside of national boundaries and join with others across the globe to fight the savagery of neoliberal global politics and central to such a task is the work of intellectuals, artists, cultural workers, and others who can fashion new tools and social movements in the fight against the current anti-democratic threats being imposed all over the globe.
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