*Perilous Times, Globalisation and The New World Order*
*
The New Global Currency - CFR chief: Monetary nationalism, sovereignty
should be abandoned*

May 10, 2007
Council on Foreign Relations

The director of international economics at the Council on Foreign
Relations has launched a scathing attack on sovereignty and national
currencies.

Benn Steil, writing in the current issue of CFR's influential Foreign
Affairs magazine, says "the world needs to abandon unwanted currencies,
replacing them with dollars, euros, and multinational currencies as yet
unborn."

In the article, "The End of National Currency," Steil clearly asserts
the dollar and the euro are temporary currencies, perhaps necessary
today. He argues "economic development outside the process of
globalization is no longer possible."

His inevitable conclusion is "countries should abandon monetary
nationalism."

Steil tempers his embrace of one world currency, writing, "Governments
should replace national currencies with the dollar or the euro or, in
the case of Asia, collaborate to produce a new multinational currency
over a comparably large and economically diversified area."

He concludes: "It is the market that made the dollar into global money –
and what the market giveth, the market can taketh away. If the tailors
balk and the dollar falls, the market may privatize money on its own."

The "tailors" Steil has in mind are the world's central bankers. He
advises that the U.S. needs "to perpetuate the sound money policies of
former Federal Reserve chairmen Paul Volker and Alan Greenspan and
return to long-term fiscal discipline." In our current era of large and
growing trade imbalances and over $35 trillion in GAAP (Generally
Accepted Accounting Principles) accounted federal deficits, these
targets appear unlikely.

Steil concludes "the foreign tailors, with their massive and growing
holdings of dollar debt" no longer feel "wealthy and secure" in the
economic environment of a resultant falling dollar. The inevitable
conclusion is that the dollar, too, may be on the way out.

Steil's essay is antagonistic to the ideas of sovereignty and national
currencies.

He writes, "The right course is not to return to a mythical past of
monetary sovereignty, with governments controlling local interest and
exchange rates in blissful ignorance of the rest of the world.
Governments must let go of the fatal notion that nationhood requires
them to make and control the money used in their territory."

Steil has ultimate confidence that economic globalism is irreversible,
with national currencies doomed to the dustbin of history.

"In order to globalize safely," he advises, "countries should abandon
monetary nationalism and abolish unwanted currencies, the source of much
of today's instability."

Steil believes continued economic growth demands a global flow of
capital unimpeded by the barriers inherent to "monetary nationalism." He
asserts barriers created by monetary nationalism, such as national
exchange rates or national monetary policy regimes, inevitably impede
capital flow and cause currency crises as a consequence.

Steil fundamentally argues, "Monetary nationalism is simply incompatible
with globalism."

Since Steil believes that only globalism offers the unrestrained flow of
capital needed for worldwide economic development, he contends even
re-establishing a gold standard would be counter-productive when the
only real solution is to abandon the idea that nations have any reason
to create currencies at all.

Throughout his analysis, Steil cautions that dependence upon the dollar
or the euro as global currencies is not fundamental to his argument.

He stresses that "the dollar's privileged status as today's global money
is not heaven-bestowed. The dollar is ultimately just another money
supported only by faith that others will willingly accept it in the
future in return for the same sort of valuable things it bought in the
past."

In other words, if the institutions of the U.S. government fail to
validate that faith, the dollar, too, merits being abandoned.

"Reckless U.S. fiscal policy is undermining the dollar's position even
as the currency's role as a global money is expanding," he notes.

Steil imagines the ultimate solution is to privatize a global currency
through a gold-based international monetary system.

"A new gold-based international monetary system surely sounds
far-fetched," he concludes. "But so, in 1900 did a monetary system
without gold. Modern technology makes a revival of gold money, through
private gold banks, possible even without government support."

Steve Previs, a vice president at Jeffries International Ltd., in
London, told CNBC Nov. 27, 2006, the amero "is the proposed new currency
for the North American Community which is being developed right now
between Canada, the U.S., and Mexico."

A video clip of the CNBC interview with Jeffries is now available for
viewing at YouTube.com.

Also reported is a continued slide in the value of the dollar on world
currency markets could set up conditions in which the adoption of the
amero as a North American currency gains momentum.

The amero was first proposed as a North American unitary currency by
Canadian economist Herbert G. Grubel of the Fraser Institute in
Vancouver, British Columbia.

In a publication entitled "The Case for the Amero," Grubel argued that a
North American monetary union would eliminate the costs of currency
trading and risk, furthering the development of a North American common
market along the model of the European Common Market.

Robert Pastor, director of the Center for North American Studies at
American University, supported Grubel's arguments for the amero.

In his 2001 book entitled Toward a North American Community, Pastor
supported Grubel's suggestion that the creation of the amero would be
accompanied by the creation of a Central Bank of North America, similar
to the European Central Bank.

Grubel's argument on the amero has also been published as a book in
Spanish, entitled El Amero: Una Moneda Comun para Améica del Norte,
published by CIDAC (Centro de Investigación para el Desarrollo), the
Center for Research for Development in Mexico.