caliboy93
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One global currency?

Fri Jun 07, 2019 7:57 pm

Should the world follow the example of the EU and have a global currency? Maybe we can call it the globe. Is this feasible, and what would be the pros and cons of this?
 
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Dutchy
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Re: One global currency?

Fri Jun 07, 2019 8:15 pm

Could you answer the question, instead of proposing it only.
Many happy landings, greetings from The Netherlands!
 
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einsteinboricua
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Re: One global currency?

Fri Jun 07, 2019 8:21 pm

Currency unions work for certain countries. It may be possible to have a global currency, but the US Dollar already serves that purpose. The IMF has what's called the SDR as a type of currency which is weighed by a basket of currencies.

The con of such a global currency is the politics of economics. Say that all countries use the new currency called Terra. Let's say that Japan and China experience a slowdown, India and Brazil implode, and the US and Canada are growing faster than expected. Exactly who sets the interest rate such that Japan and China grow faster, India and Brazil recover, and the US and Canada don't overheat?

What is the central bank authority? Does the US get the biggest say because it's the largest economy? Does a country like Niger get equal say as the US? Who regulates that central bank? If China and Russia aren't happy with the officers, can they unilaterally act to remove them? What if their complaint is overruled?

The euro, when you look at it, has been controversial. Southern Europe's economy grows at a different rate than Northern Europe, and their base differs. There's a reason there's talk of the PIGS (all Southern European countries) but none about EU core like Germany, Belgium, France, and the Netherlands.
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noviorbis77
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Re: One global currency?

Fri Jun 07, 2019 9:48 pm

Not sure it would work.

Much like the Euro hasn’t.
 
afcjets
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Re: One global currency?

Fri Jun 07, 2019 10:03 pm

It's called mark of the beast.
 
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TheFlyingDisk
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Re: One global currency?

Fri Jun 07, 2019 11:30 pm

Greece got to where it was back in 2008/2009 because it can't control its own monetary policy on the account of being part of the Euro.

So it won't work to have one global currency.
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KentB27
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Re: One global currency?

Sat Jun 08, 2019 8:47 am

Theoretically it would be possible to have a global currency. I personally don't think it would work though. Here are my thoughts:

-Who would decide what the currency is worth?
-How would the vast differences in economic development and purchasing power around the world be dealt with?
-How would countries with very strong currencies like the United Kingdom and Kuwait cope? How would countries with extremely weak currencies like Venezuela and Laos cope?
-I think some countries would experience hyperinflation, while others might experience deflation. Both of which are bad. I don't think you can cleanly convert the monetary value of everything in every country in the world to one currency and not have some amount of economic distortion.
-How would you get countries that don't get along with each other to agree to adopt the same currency?
-The only pro I could possibly see is that the same currency would be accepted everywhere.

Overall, I think that some countries would probably benefit from a global currency while other countries would suffer immensely. I just don't see how a global currency could be implemented in a way that is beneficial to every country.

I am by no means an economic expert. Feel free to poke holes in any of my thoughts. These are just some of the potential issues I would foresee if the World adopted a global currency.
 
c933103
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Re: One global currency?

Sat Jun 08, 2019 10:26 am

einsteinboricua wrote:
Currency unions work for certain countries. It may be possible to have a global currency, but the US Dollar already serves that purpose. The IMF has what's called the SDR as a type of currency which is weighed by a basket of currencies.

The con of such a global currency is the politics of economics. Say that all countries use the new currency called Terra. Let's say that Japan and China experience a slowdown, India and Brazil implode, and the US and Canada are growing faster than expected. Exactly who sets the interest rate such that Japan and China grow faster, India and Brazil recover, and the US and Canada don't overheat?

What is the central bank authority? Does the US get the biggest say because it's the largest economy? Does a country like Niger get equal say as the US? Who regulates that central bank? If China and Russia aren't happy with the officers, can they unilaterally act to remove them? What if their complaint is overruled?

The euro, when you look at it, has been controversial. Southern Europe's economy grows at a different rate than Northern Europe, and their base differs. There's a reason there's talk of the PIGS (all Southern European countries) but none about EU core like Germany, Belgium, France, and the Netherlands.

The obvious solution would be pledge everything to gold and then you have interest rate not up to people to control and it can work without central bank. But then, such system seems to come with great disadvantages that caused everyone in the world abandoned it after tried it previously
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Redd
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Re: One global currency?

Sat Jun 08, 2019 11:21 am

TheFlyingDisk wrote:
Greece got to where it was back in 2008/2009 because it can't control its own monetary policy on the account of being part of the Euro.

So it won't work to have one global currency.



Greece got to where it got to because of corruption and incompetence. Regardless of if they had or hadn't adopted the Euro they would have been in this mess.
 
blueflyer
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Re: One global currency?

Sat Jun 08, 2019 1:02 pm

Isn't Facebook working on one already?

Not that it will ever happen. Governments the world over have learned their lesson with Bitcoin. Regulators the world over will land on them like flies the moment this Facebook currency has any practical use.

TheFlyingDisk wrote:
Greece got to where it was back in 2008/2009 because it can't control its own monetary policy on the account of being part of the Euro.

And it got into the Euro to begin with with some very creative accounting from the Greek government and a sudden urge to believe in fairy tales on the EU's side.
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Tugger
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Re: One global currency?

Sat Jun 08, 2019 4:31 pm

China would NEVER join.

For reasons that are obvious.

Tugg
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prebennorholm
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Re: One global currency?

Wed Jun 12, 2019 4:08 am

Redd wrote:
Greece got to where it got to because of corruption and incompetence. Regardless of if they had or hadn't adopted the Euro they would have been in this mess.

If Greece had kept the Drachme instead of joining the Euro, then they would have been in a different sort of mess. More like present day Venezuela - hyper inflation.

That said, it is possible that if they had kept the Drachme, then it would have been more difficult to hide the corruption and incompetence for so long time. Had it been realized and stopped earlier, then the crisis would likely have become less severe. On the other hand, with the Drachme, the economically stable EU and Euro-zone countries would have had less incentive to assist recovery from the mess.

In any case, Greece is a good example to show why a global currency is impossible. Every currency must be governed by one single body which has power to properly balance national budgets. For Greece the ECB has that power on paper, but the Greek politicians fooled them.
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BN747
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Re: One global currency?

Wed Jun 12, 2019 4:12 am

It's headed that direction, slowly but surely.

Bit Coin. though not there is the first truly global currency- and we are moving more in that direction versus away from it.

BN747
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mchei
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Re: One global currency?

Wed Jun 12, 2019 4:45 am

Have a look at Scandinavia: Denmark, Sweden and Norway are economically strong, have very good relationships to each other - but each country has its own currency, even though they are a part of the EU (which is only half-true for Norway, though).
It keeps their independence and makes decision making easier, I guess.
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Bongodog49
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Re: One global currency?

Wed Jun 12, 2019 8:39 am

I thought we already had a global currency - $
At the end of the day there's not many places in the World where a fist full of dollars will be refused :yes: :yes:

I'm posting this as an Englishman, so don't accuse me of over inflated national pride.
 
aviationaware
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Re: One global currency?

Wed Jun 12, 2019 9:34 am

caliboy93 wrote:
Should the world follow the example of the EU and have a global currency? Maybe we can call it the globe. Is this feasible, and what would be the pros and cons of this?


The Euro is not working. So how would a single global currency work, when global differences in competitiveness and economic standard are much starker than even those in the Euro zone?

Bongodog49 wrote:
I thought we already had a global currency - $
At the end of the day there's not many places in the World where a fist full of dollars will be refused :yes: :yes:


The only reason for this is that the US Dollar is freely convertible to any other currency based on the trust the parties involved put into the US financial system to honor the value of that dollar. That's a completely different mechanic than actually having the USD as the main functional currency.
 
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Dutchy
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Re: One global currency?

Wed Jun 12, 2019 10:04 am

aviationaware wrote:
caliboy93 wrote:
Should the world follow the example of the EU and have a global currency? Maybe we can call it the globe. Is this feasible, and what would be the pros and cons of this?


The Euro is not working. So how would a single global currency work, when global differences in competitiveness and economic standard are much starker than even those in the Euro zone?


Does the US Dollar work? Seems to me that the differences in competitiveness are also quite steep in the US?
Many happy landings, greetings from The Netherlands!
 
aviationaware
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Re: One global currency?

Wed Jun 12, 2019 10:26 am

Dutchy wrote:
Seems to me that the differences in competitiveness are also quite steep in the US?


Not really. Massachusetts at #1 has double the nominal GDP per capita compared to Mississippi at #50. In the Euro zone, Ireland at #1 has four times the nominal GDP per capita of Greece and Greece is not even in last position here. Bulgaria, on the brink of joining the Euro within the next few years, has a tenth of Ireland's nominal GDP per capita.

This comparison ignores outliers like DC and Luxembourg.

The Euro is a miscarriage born out of ideology. Anyone with a bit of economic sense can see that it can't work, but what do politicians care as long as they can loan four times the money for the same interest than when they had their own currency with their own credit risk, and what do citizens care as long as they don't have to trade their money when they are flying to another country for the weekend on a 10 Euro Ryanair fare? The Euro is a pipedream forced into reality and it will tear Europe apart in the long run.

Also, one distinction that cannot be overemphasized is the fact that in the US, all states are liable for their own debt only. If Mississippi defaults on their debt, they default and go bust. Bailouts of states are illegal. Now compare that to the EU where every state is basically liable for every other states debt. A total clusterfuck, an impossible design failure that they are now unable to rectify. And unwilling of course, because they're doubling down on it even as we speak.
 
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Dutchy
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Re: One global currency?

Wed Jun 12, 2019 10:40 am

aviationaware wrote:
Dutchy wrote:
Seems to me that the differences in competitiveness are also quite steep in the US?


Not really. Massachusetts at #1 has double the nominal GDP per capita compared to Mississippi at #50. In the Euro zone, Ireland at #1 has four times the nominal GDP per capita of Greece and Greece is not even in last position here. Bulgaria, on the brink of joining the Euro within the next few years, has a tenth of Ireland's nominal GDP per capita.

This comparison ignores outliers like DC and Luxembourg.

The Euro is a miscarriage born out of ideology. Anyone with a bit of economic sense can see that it can't work, but what do politicians care as long as they can loan four times the money for the same interest than when they had their own currency with their own credit risk, and what do citizens care as long as they don't have to trade their money when they are flying to another country for the weekend on a 10 Euro Ryanair fare? The Euro is a pipedream forced into reality and it will tear Europe apart in the long run.

Also, one distinction that cannot be overemphasized is the fact that in the US, all states are liable for their own debt only. If Mississippi defaults on their debt, they default and go bust. Bailouts of states are illegal. Now compare that to the EU where every state is basically liable for every other states debt. A total clusterfuck, an impossible design failure that they are now unable to rectify. And unwilling of course, because they're doubling down on it even as we speak.


At the moment the Euro is working fine, every citizen of the Netherlands has an extra income of between 1.500 - 5.000EURO because of the Euro / EU. Within the Eurozone, every country is still responsible for its own debt. We might help each other out, but they still are responsible.
Many happy landings, greetings from The Netherlands!
 
johns624
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Re: One global currency?

Wed Jun 12, 2019 12:55 pm

Bongodog49 wrote:
I thought we already had a global currency - $
At the end of the day there's not many places in the World where a fist full of dollars will be refused :yes: :yes:

I'm posting this as an Englishman, so don't accuse me of over inflated national pride.
I've always said that if you're in some 3rd World country and need something done quickly, you better have either USD or GBP. The locals may not like your country but they sure as hell like our money.
 
L410Turbolet
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Re: One global currency?

Wed Jun 12, 2019 12:56 pm

There should be an opt-out from Euro available for everyone.
 
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einsteinboricua
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Re: One global currency?

Wed Jun 12, 2019 1:30 pm

L410Turbolet wrote:
There should be an opt-out from Euro available for everyone.

That defeats the purpose of integration in the first place. The EU could be reformed to not require a currency union, but even then, to join the currency union, the country's finances will be closely monitored so that a Greece and Cyprus situation never happen again. The Baltic trio (Estonia, Latvia, and Lithuania) as well as Slovenia and Slovakia joined recently and they haven't been burdened by the euro.
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L410Turbolet
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Re: One global currency?

Wed Jun 12, 2019 3:05 pm

einsteinboricua wrote:
L410Turbolet wrote:
There should be an opt-out from Euro available for everyone.

That defeats the purpose of integration in the first place.


Is the purpose of integration stubborn enforcement of one-size-fits-all policies despite being an obvious failure?
 
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readytotaxi
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Re: One global currency?

Wed Jun 12, 2019 4:56 pm

The currency would be called the Elvis, and become live the day he returns to the planet.
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noviorbis77
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Re: One global currency?

Wed Jun 12, 2019 5:39 pm

Dutchy wrote:
aviationaware wrote:
Dutchy wrote:
Seems to me that the differences in competitiveness are also quite steep in the US?


Not really. Massachusetts at #1 has double the nominal GDP per capita compared to Mississippi at #50. In the Euro zone, Ireland at #1 has four times the nominal GDP per capita of Greece and Greece is not even in last position here. Bulgaria, on the brink of joining the Euro within the next few years, has a tenth of Ireland's nominal GDP per capita.

This comparison ignores outliers like DC and Luxembourg.

The Euro is a miscarriage born out of ideology. Anyone with a bit of economic sense can see that it can't work, but what do politicians care as long as they can loan four times the money for the same interest than when they had their own currency with their own credit risk, and what do citizens care as long as they don't have to trade their money when they are flying to another country for the weekend on a 10 Euro Ryanair fare? The Euro is a pipedream forced into reality and it will tear Europe apart in the long run.

Also, one distinction that cannot be overemphasized is the fact that in the US, all states are liable for their own debt only. If Mississippi defaults on their debt, they default and go bust. Bailouts of states are illegal. Now compare that to the EU where every state is basically liable for every other states debt. A total clusterfuck, an impossible design failure that they are now unable to rectify. And unwilling of course, because they're doubling down on it even as we speak.


At the moment the Euro is working fine, every citizen of the Netherlands has an extra income of between 1.500 - 5.000EURO because of the Euro / EU. Within the Eurozone, every country is still responsible for its own debt. We might help each other out, but they still are responsible.


But individual nations cannot determine their own interest rates can they?

Plus are all the civil servants in Med countries forced to take paycuts, will they agree that the Euro has worked for them?
 
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stl07
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Re: One global currency?

Wed Jun 12, 2019 6:36 pm

The US dollar is already the official currency for many countries like say Panama. Other countries have the US dollar at a 1:1 conversion rate, basically making their currency the US dollar also
Interesting how every thread is spammed with "bring back paid membership, there are too many spammers"
 
aviationaware
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Re: One global currency?

Wed Jun 12, 2019 7:04 pm

Dutchy wrote:
Within the Eurozone, every country is still responsible for its own debt. We might help each other out, but they still are responsible.


That's factually wrong unfortunately. You are being lied to by politics. The Target2 balances effectively constitute a debt union. The southern countries are factually bankrupt even without that debt, if you take the Target balances into account they are beyond repair and of course every single day the people in Germany, the Netherlands and Austria pay for it because the low interest rates are decimating their savings. The people of Germany lose 40 billion a year to this, much more than the government saves due to low interest rates. It's a net loss.

Dutchy wrote:

At the moment the Euro is working fine


That statement constitutes ostrichism of the worst kind.
 
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Dutchy
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Re: One global currency?

Wed Jun 12, 2019 7:12 pm

aviationaware wrote:
Dutchy wrote:
Within the Eurozone, every country is still responsible for its own debt. We might help each other out, but they still are responsible.


That's factually wrong unfortunately. You are being lied to by politics. The Target2 balances effectively constitute a debt union. The southern countries are factually bankrupt even without that debt, if you take the Target balances into account they are beyond repair and of course every single day the people in Germany, the Netherlands and Austria pay for it because the low interest rates are decimating their savings. The people of Germany lose 40 billion a year to this, much more than the government saves due to low interest rates. It's a net loss.

Dutchy wrote:

At the moment the Euro is working fine


That statement constitutes ostrichism of the worst kind.


Since over 90% of all "money" is born with interest (e.g. loans), it is probably a good thing that the interest rates are low. Great to get loans to get the revenue up.
Target 2 is indeed interesting, but if you think like this, then the USD should have gone by now.
Many happy landings, greetings from The Netherlands!
 
aviationaware
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Re: One global currency?

Thu Jun 13, 2019 12:58 am

Dutchy wrote:
Since over 90% of all "money" is born with interest (e.g. loans)


Over 90% as in 100%. All money in circulation is fiat money.

Dutchy wrote:
it is probably a good thing that the interest rates are low.


Probably or definitely? Low interest rates have several inherent problems, the most pressing of which are:
1) They are not market rates at this stage, i.e. if the interest rate was determined by the market it would be much higher, especially in Europe. This constitutes an intervention in the market which is not a good thing. It means we are back to square one where the financial crisis started - the market is interfered with and the market participants react in a logical way which magnifies the debt crisis.
2) Interest rates in Europe are already rock bottom, so the ECB has no legal instruments left to counter deflationary tendencies. This puts the northern European countries like Germany, Austria and the Netherlands in direct danger of experiencing the fate of Japan of a deflationary spiral. At the same time, the ECB can also not raise interest rates because that would mean immediate default of at least Greece, Italy, Spain and Portugal. This is a direct result of the faulty design and implementation of the Euro.

Dutchy wrote:
Great to get loans to get the revenue up.

See above.

Dutchy wrote:
Target 2 is indeed interesting, but if you think like this, then the USD should have gone by now.


Care to elaborate on this? As I mentioned going in, the US does not know interstate bailout. It's illegal. So the entire problem posed by the Target balances is not existent in the US.

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