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On 29 March, it was reported that "[a] United Nations —_ He served on the White House Council on International panel of economists has proposed a new global Economic Policy under the Nixon administration and on currency reserve that would take over the US dollar- he policy planning staffs of Secretaries of State Henry based system used for decades by international banks" issinger and Cyrus Vance of the Ford and Carter and that "{a]n independently administered reserve administrations. He is a former Managing Director of currency could operate without conflicts posed by the Lehman Brothers and is a member of the Council on US dollar and keep commodity prices more stable". Foreign Relations. In his article, he stated: "...over time An article in the Economic Times of 3 April stated: "The he United States set up crucial central institutions— world is not yet ready for an international reserve he Securities and Exchange Commission (1933), the currency, but is ready to begin the process of shifting to Federal Deposit Insurance Corporation (1934) and, most such a currency. Otherwise, it would remain too important, the Federal Reserve (1913). In so doing, vulnerable to the hegemonic nation {as in the United | America became a managed national economy. These States]."“* organizations were created to make capitalism work, to Another article in the Economic Times of 3 April started — prevent destructive business cycles and to moderate the by proclaiming that "the world certainly needs an arsh, invisible hand of Adam Smith." international currency". Further, it stated: "With an He then explained: "This is what now must occur on a unwillingness to accept dollars and the absence of an __ global scale. The world needs an institution that has a alternative, [the] internationa and on the economic rudder payments system can go into a 7 . when the seas become stormy. freeze beyond the control o ...the large global financial t needs a global central bank." monetary authorities, leading institutions came to the He continued: "Simply trying to the world economy into a Grea rhetorical rescue of the coordinate the world's powerful Depression. In order to avoid central banks—the Fed and the such a calamity, the dollar...so that they can new European Central Bank, for international community should continue with quietly instance—wouldn't work... immediately revive the idea o . "Effective collaboration the Substitution Accoun forming anew global among finance ministries and mooted in 1971, under whic currency. treasuries is also unlikely to official holders of dollars can materialize. These agencies are deposit their unwanted dollars responsible to elected in a special account in the IMF with the values of _ legislatures, and politics in the industrial countries is deposits denominated in an international currency such more preoccupied with internal events than with as the SDR of the IMF".” international stability.” Amidst fears of a falling dollar as a result of the He then postulated: "An independent central bank increased open discussion of a new global currency, with responsibility for maintaining global financial Bloomberg reporters wrote on 3 April: "The dollar's role _ stability is the only way out. No one else can do what is as a reserve currency won't be threatened by a nine-fold needed: inject more money into the system to spur expansion in the International Monetary Fund's unit o growth, reduce the sky-high debts of emerging markets, account, according to UBS AG, ING Groep NV and and oversee the operations of shaky financial Citigroup Inc." This report followed the recent G20 institutions. A global central bank could provide more meeting in London: "Group of 20 leaders yesterday [2 money to the world economy when it is rapidly losing April] gave approval for the agency to raise $250 billion steam..." Further, he said: "Such a bank would play an by issuing Special Drawing Rights, or SDRs, the artificia oversight role for banks and other financial institutions currency that the IMF uses to settle accounts among its everywhere, providing some uniform standards for member nations. It also agreed to put another $500 prudent lending in places like China and Mexico. billion into the IMF's war chest." In other words, the However,] [t]he regulation need not be heavy- large global financial institutions came to the rhetorica anded..." rescue of the dollar so as not to precipitate a crisis in its Garten continued: "There are two ways a global current standing, so that they can continue with quietly central bank could be financed. It could have lines of forming a new global currency. credit from all central banks, drawing on them in bad imes and repaying when the markets turn up. CREATING A WORLD CENTRAL BANK Alternately—and admittedly more difficult to carry In 1998, Jeffrey Garten wrote an article” for the New | out—it could be financed by a very modest tariff on all York Times of 23 September, advocating a "global Fed". rade, collected at the point of importation, or by a tax Garten is a former Dean of the Yale School of — oncertain global financial transactions." Management and former Undersecretary of Commerce Interestingly, Garten stated: "One thing that would for International Trade in the Clinton administration. | not be acceptable would be for the bank to be at the ...the large global financial institutions came to the dollar...so that they can continue with quietly forming a new global currency. CREATING A WORLD CENTRAL BANK In 1998, Jeffrey Garten wrote an article” for the New York Times of 23 September, advocating a "global Fed". Garten is a former Dean of the Yale School of Management and former Undersecretary of Commerce for International Trade in the Clinton administration. 18 ¢ NEXUS rhetorical rescue of the www.nexusmagazine.com AUGUST — SEPTEMBER 2009