by Robert C. Sage

Created on: March 01, 2008

A single global currency should be expected to work as well as a unified global government. "Big brother" would certainly look out for the interests of the privileged elites. As it stands, the American currency is already controlled by the money center bankers. American money supply which closely correlates to inflation is already decided by secret meetings of the Federal Reserve Governors, the domain of wealthy bankers. Would it really be prudent and appropriate for our bankers to consolidate and rule over the entire world's economics through a single currency? Given the current sub-prime mortgage-induced crisis in asset backed derivatives, a single global currency could be a foolhardy risk of putting all of our eggs in one basket. Economics is not an exact science and it is subject to prejudices and manipulations, so the existence of multiple credible currencies actually improves economic stability for all.

A single global currency could be subject to domination by a major power. Thus, it could become the method of exerting unfair advantage over less power countries. Sure, on the face of things, it could provide the ultimate in stability for currency values, since there would be only one currency. However, it would require giving up significant freedom of maneuvering in terms of monetarist policy. That means that the central bankers could have virtual unilateral control over economic policies. Instead of being able to fine-tune national monetary supply, we could be forced to accept decisions taken by non-Americans. It would definitely put an inordinate amount of stress on guiding the single currency. There would be a constant challenge of dealing with the dynamic of the spending due to individual governmental fiscal policies, varying economic growth rates for different countries/regions and the monetary policy set by the single currency administration.

In the case of the Euro, the consolidation into a single currency has not been without some
painful adjustments. The less affluent, former members of the eastern block, found that open borders and the common currency caused prices of staples to rise, because their cheaper goods flowed to consumers in the west who paid more. Prices adjusted due to the principles of supply and demand. Companies with international competitive advantages saw their business expand, while those who were unable to compete successfully contracted. The European Economic Community (EEC) did however retain tariff barriers versus the rest

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