Thursday, March 19, 2009

Imagine a supranational reserve currency...

It's easy if you try. Moscow has, according to The Moscow Times. And China, according to the Financial Times.

Regarding a supranational reserve currency, or even a national reserve currency, any such animal will likely need a nominal gold tie in order to establish credibility...which is why we remarked to a friend (some time ago) that gold is to be owned at all costs, even if it sells down to $5, in which case an opportunity to reduce its average cost would be present.

But why would such a thing even be feasible? Well, let's see how all this new debt - what are we up, $3 trillion so far? - and the taxes that will be of necessity be levied to pay for it - affect the economy. And see how that affects our leverage with current and prospective purchasers of our debt. And see if there isn't a massive loss of confidence in "the full faith and credit of the U.S. Government" -- and why shouldn't there be? -- and let's see if the dollar doesn't get trashed or otherwise abandoned.

The "merged currency" mechanism was employed effectively in creating the Euro -- the pitiful condition of the underlying economies notwithstanding. And we all know that global problems and global egos call for global thinking -- BIG thinking. (And we all know just fallible BIG thinking is).

Hey, we're in the age of messianism -- of sweeping solutions to all our "problems." People won't settle for less...

(Seeking Alpha provided the link to the Moscow Times).

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