The US should ditch the dollar – and join the euro

As US politicians argue over austerity measures and investors fret over the possibility of a US default, our publisher Bill Bonner, has a novel suggestion as to how to “solve America’s dollar crisis and protect the integrity of America’s public finances in a single stroke.

“Switch to the euro! The US should abandon the dollar and take up the euro as its currency.

“Sounds crazy? Un-American? But think of the advantages. First, the euro is more colourful. It’s more fun to look at and use.

“Second, the euro is worth more than the dollar; you don’t have to carry around so much currency.

“Third, when you travel to Europe, you won’t have to convert your money.

“Fourth, Europe is the world’s largest economic unit. Having a currency in common with it will make it easier for the US to trade.

“Fifth, the Fed doesn’t control the value of the euro. Instead, it is controlled by European bankers who, generally, are made of sterner stuff than Bernanke et al.

“Sixth, European bankers will not readily print euros just to help the US continue its programme of reckless spending.

“Seventh, unable to fiddle its own currency, and inflate away its debts, the US will have to cut spending.

“Eighth, the whiners, chiselers and something-for-nothing crowd in the US can moan all they want; Jean Claude Trichet won’t give a damn.”

You can read Bill’s original piece here. Sure it involves some serious lateral thinking – but perhaps having a harder-edged central bank in charge of the world’s most important currency (for now) wouldn’t be such a bad thing.

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15 Responses

  1. 27/05/2011, Michael Lewis wrote

    Make way for Noddy, NODDY,
    Shout a big Hooray,
    Let get ready, and steady its a happy day,
    Noddys Here. Make Way!!

  2. 27/05/2011, Will wrote

    And then the US really could become like Greece Eire and Portugal rather than condemn itself to a Japanese lost decade or two via it’s zombie bank-rollered politicians.

    The only thing madder than joining the Euro and giving up monetary sovereignty is not using that power for public purpose #MMT such as a Job Guarantee like Norway and abolish youth NEETS and long term unemployment as they have for the last 5 years.

  3. 27/05/2011, Nick wrote

    The most obvious consequence would be a collapse in the dollar.

    Thus pauperizing the entire developing world who use the dollar as their currency.

    And that’s before one considers the impact of an overnight 20% depreciation in the US economy.

    Which would probably result in the collapse of the global economy and a new Great Depression.

    But apart from that it would be great to get rid of all those nasty one dollar bills.

    Has Bill Bonner suggested make the leaf the official global currency yet ?

  4. 27/05/2011, JAW wrote

    Is it time for a single world currency? No, not the Euro, nor the Yuan, nor the US dollar, nor even the much beloved Zimbabwe dollar. They and all the others can continue to exist alongside, and be exchange traded against, a new world currency. Call it “World Money”? “Real Money”?

    Some economists have suggested the IMF special drawing rights is suited to be the world currency, especially as a world reserve currency. However the Dominique Strauss-Kahn affaire has emphasized just what a political appointment the head of the IMF and the World Bank are. Shoe-in Christine Legarde has never studied economics, has only a law degree, and mainly had a career as a lawyer. Most of us would consider it appropriate for the head of the IMF to have studied economics, just a little? It is time to get rid of all these political appointees who are little more than planted faithful party apparatchiks of the competing economically delinquent nation states.

  5. 27/05/2011, JAW wrote

    It is probably necessary to set up a new completely independent financial organization to issue and oversee the new world currency. Call it “World Currency Bank”? It needs to have a board of directors derived exclusively from the highest quality world universities with respected economics departments. The directors of the World Currency Bank should be governed by a constitution based on the Basel Banking Accord.

  6. 27/05/2011, JAW wrote

    The directors could be from…

    Harvard University, Dept of Economics.
    Massachusetts Institute of Technology, Dept of Economics.
    London School of Economics.
    Paris School of Economics.
    Universiteit van Tilburg, Netherlands, Center for Economic Research.
    University of British Columbia, Dept of Economics.
    University of Zurich, Wirtschaftswissenschaftliche Fakutat.
    Institut fur Wirtschaftsforschung, Munich.
    University of Melbourne, Faculty of Economics.
    Osaka University, Institute of Economic Research.
    Hong Kong University, Business School.
    Seoul National University, Division of Economics.
    University of Delhi, School of Economics.
    Beijing University, Guanghua School of Management.
    Fundacao Getulio Vargas, Rio de Janeiro, Escola de Pos-Graduacao em Economia.
    New Economics School, Moscow, Centre for Economic Research.
    University of Stellenbosch, S. Africa, Faculty of Economic Sciences.
    King Abdul Aziz University, Jeddah, Faculty of Economics.

  7. 27/05/2011, JAW wrote

    The IMF, the World Bank, the OECD, Bank for International Settlements, and the Basel Committee on Banking Supervision could all have non-voting representatives on the new Board.

    With intelligent people running the show, free from vested political interest, they may be trusted to create stable, honest, non-politically manipulated money? Hopefully.

    The idea would be that notes issued by the World Currency Bank will be legal tender in all countries, alongside the local currency. Shops etc to price everything in the two currencies. World currency to aim to have zero inflation, zero QE, zero volatility, zero default risk.

    A single world currency is an idea that must manifest itself one day. Maybe sooner than we think? It is necessary for an ethical financially stable world.

  8. 28/05/2011, Ian T. wrote

    A new world currency has already been proposed, the World Alternate New Currency ( or WANC ) . Participating countries are to cash in their currency and start using the WANC. But America has a problem in that the rest of the world knows that the dollar isn’t worth a WANC.
    http://www.youtube.com/watch?v=Mcw5arrp0Zo
    Gordon Brown has already stated that the WANC would be an important part of any stimulus package.
    Although the Vatican has stated that the church is opposed to anyone having a WANC.

  9. 29/05/2011, Supermarine Blues wrote

    @Ian

    That’s probably the most sensible thing on this thread.

    You shouldn’t joke about it – it will probably come to pass…

  10. 30/05/2011, James wrote

    The Euro in the States!! You are forgetting that the States is a country where only 37% of the people own a passport! This should give you an idea of the response you would get form the American people proposing a foreign currency!

    It would stop the Federal Reserve hindering the natural trend of the free market buy preventing a ‘bust’ and wrecking the Dollar by sending many emails to the mint saying PRINT MORE!!!!

    But hey although an interesting idea, it will never happen.

  11. 31/05/2011, Graham Sharkey wrote

    The US should most certainly ditch the dollar but I think it will be more a case of, hyperinflation making the dollar worthless.

    Joining the Euro? Yeah, sure. But all that would result in would be the Euro collapsing a lot quicker than is already expected.

    It would be like jumping off a sunken ship onto an already sinking one, either way, you die.

    I cannot look past a gold-standard as a remedy to the current debt issues and inflationary worries.

    Austrian economics and free markets are really the only solution to stop the Keynesian machine.

  12. 01/06/2011, Tony Wallsend wrote

    @Ian T. Do you forsee participating governments and bankers having a hands on role in the supply of this new currency, if so, do you have any concerns that it might lead to inflation?

  13. 01/06/2011, DavePage wrote

    “…Legarde has never studied economics, has only a law degree, and mainly had a career as a lawyer. Most of us would consider it appropriate for the head of the IMF to have studied economics, just a little?”

    Quite, but when the alternative was un-noted history graduate Gordon Brown, I’ll take Mme Legarde any day. At least she hasn’t completely pauperised the French and wrecked their society in her ascendancy…

  14. 08/06/2011, Bill wrote

    Does that mean that the amero will be dumped?

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