I wrote the following to a friend who asked me a very good question. It's worth sharing, I think:
"If there were a one world currency, how would we measure its value??"
I never really answered your question even though it was a good one. I did allude to the Soviet Union and that it may as well have been operating a "one world currency" during its 65 year life. Same for China where, until recently, the yuan was unbacked and couldn't be taken out of the country, or freely traded.
Apparently, a "one world" currency can work. But does it have a measurable value? Does ANY currency?
I've read a number of essays on value, and it is a funny thing. You and I might have it in our minds that your day's work has the same value as my bucket of apples. We could freely exchange one for the other and not have any need for money.
Money, though, is a convenient media for transference. You might sell your days' work to someone else and obtain a silver coin. At a time that's convenient, you could give me your silver coin for my bucket of apples. This works, one would think, because the silver coin ALSO has value.
But that's incorrect. You and I could as easily agree that a distinctive rock from my garden would be media for value transference. You paint my house and take my rock. Down the road a bit, I give you apples and take the rock back. That works too, although there's nothing special about the rock. It serves as money, but it is not valuable or even remotely useful.
The reason a rock... or even a handshake... could serve as money and appear to have transitory "value" is BECAUSE YOU AND I TRUST EACH OTHER.
Trust is the essential component. If two nations have it, then rocks or silly pieces of green paper, can be assigned exchange rates by nations... and people will begin to think that the rocks and paper actually have value. They DON'T have value, though, and when either nation takes advantage of its ability to spend complete junk that it didn't actually earn, that fact will eventually emerge.
If a world currency were created... say, an AMERO... it might be decided that it is equal to 1.00 Canadian dollar, 1.05 American dollars, and 11 Mexican pesos - based on the approximate exchange rates of the currencies at the time. Existing currencies get redeemed for Ameros, and prices are adjusted accordingly.
Thereafter, an economy's prices are affected primarily by whoever minds the Amero mint and, to a lesser extent, by changes (improvements, usually) in production that naturally occur over time.
Control of the mint is how the Federal Reserve system "stole" 97 percent of the "value" of the dollar in its 98 years. Moreover, it stole almost all of the production-related gains made in that time that should have IMPROVED the dollar's buying power. (A worker today accomplishes FAR more each day than he would have in 1913. Yet, somehow, it now takes a two-worker household to make ends meet. Back then, it was only one. Go figure.) Thus, in 98 years, Congress and the Fed have actually stolen something like 99.9 percent of what rightfully belonged to citizens who naively trusted them.
And that's the problem. If money is rooted in "faith" and "trust," and those two attributes prove misguided (as they always do when government has control and is the trusted body), then the money becomes junk. BACKED money, on the other hand, can be audited. There is accountability, and even when a crisis spurs government to fraudulently create unbacked money (as happened in the civil war), the fraud can be uncovered and rectified once the crisis has passed.
Government is not a thinking, reasoning entity. Contrary to most people's opinion, it has no honor or ethics. Backing, however, is a chain that can bind government to "its word" and keep it from straying too badly.
Without backing, money produced by government is, ultimately, going to be debased. The only question is, how much time will pass before the counterfeiting of money by a government:
o Gets publicized,
o Is widely recognized for what it is, and
o Turns highly toxic to those who hold it.
The U.S. dollar scam has certainly been publicized. The internet has seen to that.
The counterfeiting is well on its way to being widely recognized, especially by pissed off foreign governments.
And some of the early birds, or BEARS, are already migrating away from dollars and into assets they think are more reliable. (Hint: NONE of the other fiat currencies are more reliable, but at least some of them have more time remaining than does our dollar.)
After a dollar collapse, how could a world government institute a one-world-currency? That would be hard. The issuer probably wouldn't have anyone's trust. If someone you didn't know, gave you a rock in exchange for your day's work, would you accept it?? As you asked, how could the value of a new currency be measured . . . if it wasn't connected to at least SOMETHING you trusted?
Assuming the new currency was UNBACKED, assigning it an arbitrary value would have no meaning. Even Federal Reserve notes had gold backing at first. It took decades to pull away from that without causing a panic.
So, I think a move in that direction, if it comes at all, would have to come BEFORE the dollar's collapse is total. Trying to pull it off afterward would be doubly or TRIPLY difficult . . . and probably could only be accomplished if the new government was tyranical.
And although THAT is possible, I don't think it's very likely. An organization would need to be created, and vast powers would need to be bestowed upon it. The dollar's collapse, meanwhile, is already underway, and a pyramid scheme's collapse always accelerates with frightful speed near its conclusion. I don't really think there is enough time for a functional one-world government to take over.
Not this time, anyway. Perhaps later.
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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