How Realistic is a North American Currency?

Minyanville ^ | 28 Jan 2009 | Todd Harrison

[BGHater]

“World, hold on. Instead of messing with our future, open up inside.” --Bob Sinclair

Thomas Jefferson once said “when you reach the end of your rope, tie a knot in it and hang on.” As the global financial system pushes on a string, investors are desperately trying to hold tight.

The New World Order is upon us, full of hope, promise and a fair amount of fear. In our recent discussion regarding the direction of our country, we noted the risks of catering to conventional wisdom and the implications for the U.S. dollar.

The Minyanville mantra is to provide financial news you need to know before you know you need it. That’s a fine line to walk as foresight often flies in the face of mainstream acceptance.

In 2006, it seemed counter-intuitive to forecast a “prolonged socioeconomic malaise entirely more depressing than a recession.”

For years, the notion of an “invisible hand” was conspiracy theory until we learned that The Working Group on Financial Markets was a central policy tool.

And now, as we gaze across our historically significant horizon, we must open our minds to thoughts and ideas that may seem foreign to folks conditioned by the past and stunned by the present.

Currency Crossroads

As governments take on more risk—as they price assets on behalf of the market and transfer debt from private to public—the common denominator, or release valve, becomes the currency.

If our economic condition is allowed to take medicine in the form of debt destruction, the greenback will appreciate and asset classes, as a whole, will deflate. If we continue to inject drugs that mask symptoms rather than address the disease, the likelihood of a seismic readjustment increases in kind.

The deflationary forces in the marketplace are pervasive and the “other side” of our current equation—hyperinflation—may be years away. Given the magnitude, breadth and pace of the global financial epidemic, however, we must explore each side of the twisted ride.

Years ago, the Federal Reserve wrote a “solution paper” regarding the need to combat zero bound interest rates. The concern was the flight of capital from the U.S. and an option discussed was a two-tiered currency, one for U.S. citizens and one for foreigners.

Canadian economist Herbert G. Grubel first introduced a potential manifestation of this concept in 1999. The North American Currency—called the “Amero” in select circles—would effectively commingle the Canadian Dollar, U.S. Dollar and Mexico Peso. On it’s face, while difficult to imagine, it makes intuitive sense. The ability to combine Canadian natural resources, American ingenuity and cheap Mexican labor would allow North America to better compete on a global stage.

As we’ve learned through experience, however, perceived solutions introduced by policy makers and politicians don’t always have the desired effect.

Unintended Consequences

I’ve long contended that much like the Internet prophecy proved true—but not before the tech crash—so too would globalization, albeit not without painful yet necessary debt destruction.

To get through this, we need to go through this. If we’re not allowed to go through it, foreigners will seek alternative avenues. Remember, for holders of dollar-denominated assets, seeds of discontent have been sowing under the surface for years with the greenback off 30% since 2002.

More likely than not, global leaders will watch how our new administration attempts to tackle the financial crisis before taking drastic steps. They understand that codependent risk exists as a function of the derivatives that interweave our financial infrastructure. If they could disassociate from our economic ecosystem without inflicting massive damage on themselves, they would have done so long ago.

If forward policy attempts to induce more debt rather than allowing savings and obligations to align, we must respect the potential for a system shock—such as a two-tier currency—to gain traction if, and likely after, the dollar meaningfully debases from current levels.

If this dynamic plays out—and I’ve got no insight or edge that it will—the global balance of powers would fragment into four primary regions: North America, Europe, Asia and the Middle East. In such a scenario, ramifications would manifest through social unrest and geopolitical conflict.

This particular path isn’t something one would wish for but the cumulative imbalances that steadily built in our finance-based economy must be resolved one way or another. Therein lies the critical crossroads we together face as our wary world attempts to find its way.

Scary? Yes. Probable? Not so much, at least for the time being. Possible? Certainly, although I’ll again offer that it could take years before the pieces of this prickly puzzle fall into place.

Effective money management dictates weighing the entire probability spectrum of potential outcomes and factoring them into our decision making process. While the notion of a seismic currency shift may seem obscure, we must respect the possibility long before it becomes front-page news.

For if we’ve learned anything through the last few years, proactive thought provocation is a necessary precursor to effective preparedness.

R.P.

[Sundog]

How about we just take over Canada and Mexico?

[BuffaloJack]

We ALREADY have a North American currency. It’s called the U.S. Dollar.

[chuck_the_tv_out]

“New World Order”

Apparently they’re perfectly happy with that branding, and see no need to change it. Arrogant.

[ClearCase_guy]

Our sovereignty is under attack from about 7 different directions. There are people -- here and abroad -- who want us to crease to exist as a powerful nation state.

And I'm pretty sure they're going to succeed in their efforts, one way or another.

[silverleaf]

Right.

Who here wants to trade their USdollars for pesos? (crickets)

OK, who wants to trade their USdollars for Canadian money? (crickets)

but just google amero March 2008 - the die may already have been cast

[B-Chan]

Once the sovereignity of the US is gone, anyone who swore an oath to the US Constitution is no longer bound to defend it. At that point, anything goes.

[SwinneySwitch]

SPP ping!

[wolfcreek]

Here's one of the *Invisable Hands* you speak of. (Now Sec Of the Treasury)

Geithner was a senior fellow in the Economics Department of the Council on Foreign Relations and director of the Policy Development and Review Department at the International Monetary Fund. After obtaining an M.A. in International Economics and East Asian Studies from Johns Hopkins University’s School of Advanced International Studies in 1985, Geithner went to work for Kissinger and Associates. In 1988, he joined the International Affairs division of the U.S. Treasury Department and was named president of the Federal Reserve Bank of New York in 2003. He is also a member of the Rockefeller “financial advisory body,” the Group of Thirty, an organization comprised of members from the Bank of England, the European Central Bank, the Federal Reserve, Citicorp and Citibank, the China Construction Bank, Morgan Stanley, JP Morgan Chase, in short the very heart of the international banking elite.

In June, Gary Weiss wrote that Geithner was a “central figure” in the “drama” that was J.P. Morgan Chase acquisition of Bear Stearns. “It was Geithner’s Federal Reserve bank, not the Treasury, that came up with the $29 billion loan that made the deal possible or, more precisely, acceptable to J.P. Morgan.” In other words, Geithner was taking orders directly from the international bankers. He is also cozy with AIG, Lehman, and Goldman Sachs.

http://www.zimbio.com/Timothy+Geithner/articles/12/Obama+Picks+CFR+Insider+Head+Treasury

This, my FRiends, is no tin-foil hat theory.

[Philo-Junius]

I can’t decide if the Senate confirmation of Geithner is more like the refusal of the Roman Senate to demand enforcement of the Agrarian Laws or its refusal to try the assassins of the Gracchi.

Either way, Spengler was right—this is the dawning of the Age of Caesars

[wolfcreek]

Its intentions

The late Carroll Quigley (Bill Clinton’s mentor), Professor of History at Georgetown University, member of the CFR, stated in his book, “Tragedy & Hope”:

“The CFR is the American Branch of a society which originated in England, and which believes that national boundaries should be obliterated, and a one-world rule established.”

Rear Admiral Chester Ward, a former member of the Cfr for 16 years, warned the American people of the organization’s intentions:

“The most powerful clique in these elitist groups have one objective in common — they want to bring about the surrender of the sovereingty of the national independence of the United States. A second clique of international members in the CFR comprises the Wall Street international bankers and their key agents. Primarily, they want the world banking monopoly from whatever power ends up in the control of global government.”

And Dan Smoot, a former member of the FBI Headquarters staff in Washington, D.C., summarized the organization’s purpose as follows:

“The ultimate aim of the CFR is to create a one-world socialist system, and to make the U.S. an official part of it.”

In other words, the CFR’s activities are treasonous to the U.S. Constitution. Their goal is to put an end to the United States of America, and to make the country a part of their global government scheme.

http://www.prolognet.qc.ca/clyde/cfr.html

Wake up America. The Commies are here.

[dforest]

No doubt in my mind anymore. We had some great FReepers who have disappeared who I used to discuss this with. The naysayers drove them away by treating them as tin foilers.

Just a matter of time.

[wolfcreek]

The fact that Geithner father, Peter worked with Obama
s mother through the Ford Foundation boggles the mind but, explains alot.

there seems to be a tie between the Geithner family and the Obama family that goes back more than 20 years ago. Apparently, Timothy Geithner’s father, Peter Giethner, is the Director of the Ford Foundation’s Asian program, a role he has been involved in for years. In the 1980’s, Peter Geithner oversaw Ford Foundation’s microfinance programs in the Indonesia region. These programs were being developed by Stanley Ann Dunham Soetoro…… Barack Obama’s mother! It certainly is a very small world, or was Obama reaching back to make a special thank you to someone who worked with his mother.

http://james4america.wordpress.com/2009/01/14/geithners-confirmation-marred-by-tax-problems-geithner-appointment-another-thank-you-to-obama-family-associate/

[Kimberly GG]

.....”There was a moment early in the Fox and Bush administrations when North American leaders appeared to grasp the essence of such a vision. In February 2001, Fox and Bush jointly endorsed the Guanajuato Proposal, which read, “After consultation with our Canadian partners, we will strive to consolidate a North American economic community whose benefits reach the lesser-developed areas of the region and extend to the most vulnerable social groups in our countries.” Unfortunately, they never translated that sentiment into policy (with the exception of the symbolic but substantively trivial $40 million Partnership for Prosperity).

All three governments share the blame for this failure. President Bush’s primary goal seemed at first to open the Mexican oil sector to U.S. investors, while then-Canadian Prime Minister Chrétien showed no interest in working with Mexico. President Fox, for his part, put forth too ambitious an agenda with too much emphasis on radical reform of U.S. immigration policy. Bush’s initial response was polite, but he soon realized he could not deliver and postponed consideration. The illegal immigration issue remains thorny and unsolved. Ultimately, however, it is more symptom than cause: the way to reduce illegal immigration is to make Mexico’s economy grow faster than that of the U.S.

The Council on Foreign Relations Task Force Report spells out such a vision. Let me summarize and amplify some of its recommendations.”.....

...”At the same time, our Task Force recommends that all three governments define and defend a continental perimeter. “...

http://www.cfr.org/publication/8173/north_american_community_approach_to_security.html

[Kimberly GG]

“He is also a member of the Rockefeller “financial advisory body,” the Group of Thirty, an organization comprised of members from the Bank of England, the European Central Bank, the Federal Reserve, Citicorp and Citibank, the China Construction Bank, Morgan Stanley, JP Morgan Chase, in short the very heart of the international banking elite.”

Ahhh, the “Powers that Be”. IMO, ANY president is but a puppet on their strings and it always seems, just beneath the surface, always the name Rockefeller.

[Kimberly GG]

Yes...the naysayers will be along any moment to remind us that the CFR is merely a “think tank”.

[Philo-Junius]

Obama exposing Geithner to the Senate in the light of his tax-evasion would not be a “thank-you” unless Geithner and those backing him had sufficient influence to ensure his nomination was approved.

If Obama had been the sole or even primary decision-maker here he certainly could have nominated someone without the baggage.

This being the case, I think most people misunderstand who patronises whom in the relationship between the interests Obama represents and those Geithner represents.

Geithner is not there to serve Obama, he’s there to manage him.

[Wallace T.]

I suspect that many of those accusing people of being tinfoilers have been on the payroll of the executive department of Federal government, neo-conservative activists, and the Republican Party. The Democrats now control the executive department and neo-conservative organizations and the GOP are hard up financially and have less time to patrol conservative websites to denounce libertarian, paleoconservative, and conspiracist dissent. Last year's meltdown of the financial markets and the 2006 and 2008 election debacles have been major losses of face for the neo-conservatives and Republican moderates.

[wolfcreek]

I am convinced also. There are too many *coincidences* and relationships to over look.

I have had several FReepers tell me this was all studied and found to be nothing more than fiction. I have since realized they have fallen victim to the propaganda from these various groups and have been sidetracked by our supposed 2 party system. All the while the forces of Socialism reeking the benefits.

Obviously there are still many who believe this to be fiction, conspiracy, whatever. (judging from the lack of replies I receive on the subject vs how much material I post) I can't convince those who don't wish to listen. (but I'll keep trying)

[dforest]

They are not going to believe it until they are living it. Even then they will deny it.

Oh well.