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U.N. panel says world should ditch dollar
Wed Mar 18, 2009 11:16am EDT
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By Jeremy Gaunt, European Investment Correspondent
LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.
Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.
"It is a good moment to move to a shared reserve currency," he said.
Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.
Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.
"Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar's slide between 2002 and mid-2008," CMC Markets said in a note.
Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.
It has significantly reduced the dollar's share in its own reserves in recent years. (Article off of Drudge Report)
The US is terribly over extended, the national debt just topped $11 trillion, the ratio of Debt to GDP is close to 10% (5 percent is supposed to be the danger mark) and our government is spending like drunken sailors, like there is no tomorrow(maybe they know something we dont). This nation was once the worlds largest lender, we are now the worlds largest debtor!
The only thing keeping our currency afloat is that many nations hold our dollars as a reserve currency. They hold US dollars because it has always been a stable reliable currency of near constant value. That value is plummenting and so is the confidence of these many nations. If all the nations that hold our currency in reserve loose faith and dump these trillions of dollars onto the market, coupled with the trillions our own government is dumping into circulation the runaway inflation would certainly drive the dollar into extinction. This is when the S really hits the fan!
The American people will wake up and find the money they spent their lives saving is worthless (its already lost 85% of its value just since 1975 when Nixon took us off the gold standard)
I wonder if the Govt suspects this is coming so they aren't worrying about the debt since they know the currency is about to tank anyway.
(hey, if you knew your money was going to be worthless next month wouldn't you go spend what you have while it will still buy something)
If you are paying attention to whats happening, the Govt is running out of stop-gaps. The prime fed to bank lending rate is almost 0%, can't cut that anymore, now they just printed up a trillion dollars worth of IOU's (treasury bonds) so they can throw another trillion at the banking industry which seem to be a black hole sucking up money with no apparent effect. The Govt seems to have show no regard to the unimaginable amount of money that their blowing (ever wonder why?)
Stay tuned folks its gonna get wild!
Cam
Wed Mar 18, 2009 11:16am EDT
Email | Print |
Share
| Reprints | Single Page
[-] Text [+]
Video
Video Thumbnail
Ditch the dollar?
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By Jeremy Gaunt, European Investment Correspondent
LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.
Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.
"It is a good moment to move to a shared reserve currency," he said.
Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.
Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.
"Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar's slide between 2002 and mid-2008," CMC Markets said in a note.
Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.
It has significantly reduced the dollar's share in its own reserves in recent years. (Article off of Drudge Report)
The US is terribly over extended, the national debt just topped $11 trillion, the ratio of Debt to GDP is close to 10% (5 percent is supposed to be the danger mark) and our government is spending like drunken sailors, like there is no tomorrow(maybe they know something we dont). This nation was once the worlds largest lender, we are now the worlds largest debtor!
The only thing keeping our currency afloat is that many nations hold our dollars as a reserve currency. They hold US dollars because it has always been a stable reliable currency of near constant value. That value is plummenting and so is the confidence of these many nations. If all the nations that hold our currency in reserve loose faith and dump these trillions of dollars onto the market, coupled with the trillions our own government is dumping into circulation the runaway inflation would certainly drive the dollar into extinction. This is when the S really hits the fan!
The American people will wake up and find the money they spent their lives saving is worthless (its already lost 85% of its value just since 1975 when Nixon took us off the gold standard)
I wonder if the Govt suspects this is coming so they aren't worrying about the debt since they know the currency is about to tank anyway.
(hey, if you knew your money was going to be worthless next month wouldn't you go spend what you have while it will still buy something)
If you are paying attention to whats happening, the Govt is running out of stop-gaps. The prime fed to bank lending rate is almost 0%, can't cut that anymore, now they just printed up a trillion dollars worth of IOU's (treasury bonds) so they can throw another trillion at the banking industry which seem to be a black hole sucking up money with no apparent effect. The Govt seems to have show no regard to the unimaginable amount of money that their blowing (ever wonder why?)
Stay tuned folks its gonna get wild!
Cam
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