Monday, December 28, 2009

The Chaos With Global Currencies and The Creation of Regional Central Banks

Re, the current chaos in global currencies, where everyone is sick and tired of the US Dollar losing its value (see Freddie and Fannie's unlimited license to print money now), I posted this on another site that was suggesting the creation of three regional central baks: Americas, Euro/Middle East/Africa, and Asia-Pacific.

Re. creation of regional central banks.

This could be quite difficult too. For example, the regional bank of the Americas: While Canada and the US are aligned, many countries in Latin America are moving to opposite economic and political sides. Brazil now does most of its trade now with China, not with the U.S. Brazil owns hundreds of billions of US debt (unless they were swapped for IMF FDRs, the ones India swapped for gold, but we digress). Who knows, they might cut their losses soon but they desperately need a new currency benchmark as the USD collapsed 40% this year alone.

US/Canada are better aligned with some Euro countries, but then we'd would be back at dividing into developed nations versus the rest of the world. If there is a universal solution for currencies I just have a hard time seeing it. Countries might be better off developing their own partnerships (e.g., Brazil/China), which is the way it seems to be going already.

As for Canada, after snubbing China in recent years it has no ready solution to its currency woes it seems. Canada is stuck with the U.S.

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