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You can spend greenbacks in all 3 countries
From the Wall Street Journal:
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.
http://www.marke ch.com/news/story/Do-we-need-a-North/story.aspx?guid={D10536AF-F929-4AF9-AD10-250B4057A907}
TODD HARRISON
How realistic is a North American currency?
Commentary: Uniting U.S., Canada, Mexico money could result from crisis
By Todd Harrison
Last update: 6:12 a.m. EST Jan. 28, 2009
Comments: 561 "World, hold on. Instead of messing with our future, open up inside." -- Bob Sinclair
NEW YORK (Marke ch) -- 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. See Marke ch column on New World Order.
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 counterintuitive to forecast a "prolonged socioeconomic malaise entirely more depressing than a recession." See Minyanville column.
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. See Minyanville column.
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 Grubel first introduced a potential manifestation of this concept in 1999. The North American Currency -- called the "Amero" in select circles -- would effectively comingle the Canadian dollar, U.S. dollar and Mexican peso.
On its 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 compete better on a global stage.
Experience has taught us, however, that 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 co-dependent 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. We may need to let a two-tier currency gain traction if the dollar meaningfully debases from current levels.
If this dynamic plays out -- and I've got no insight 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 ulative 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.
You can spend greenbacks in all 3 countries
I doubt it will be that big of a deal, really.
For the average person that is.
its gonna happen. Its just a matter of time.
Honestly, that's a really long article so I didn't read it all
But There really should be a North American + Central American Currency.
El Salvador uses Dollars, Panama uses Dollars as well as Where I am, Costa Rica.
The price of things including the cable bill are in dollars, and the funny thing is you can't pay in dollars, just local currency, so you end up spending more local currency to make the equivalent of a dollar.
Well, they're already using dollars. Seems we have a north American Currency already.
Too much corruption in South America right now for me to feel comfortable tying the value of the dollars I make to.
Besides...anyone who says the US currency is off 30% since 2002 doesn't know the currency markets enough to have a valid opinion.
For example...the US dollar's valuation vs the British Pound (the most common milestone)...is actually worth 10% more today than in 2002.
It's about the same with Canadian Dollar. The Eurodollar saw some gains in the last few years...but has plummeted against the dollar in the last 6 months (losing 80% of what it gained since 2004,) extremely volatile right now.
There may be reasons behind uniting a currency (more against it, imho)...but, first prove to me you know what your talking about before you propose something.
Last edited by SouthernFried; 02-02-2009 at 07:52 AM.
US = North America because Canada is simply ignorable compared to states. so it won't make a big difference if we expand $ to canada where immigrants take the majority of the population.
I'll take the hit. I overheard it at a party.
Canada is our number one trading partner.
beh. There'll be a day where we have a global currency.
Hopefully the dollar rally isn't a mirage. I'm inclined to think its a temporary safe harbor.
SF: Are you willing to entertain the idea that:-- might, taken all together, pose a serious risk to our currency?
- $7-8 trillion committed so far to bailing out our insolvent financial sector;
- plus $3-4 trillion more;
- plus trillion dollar deficits for the next few years;
- plus $10 trillion of sovereign debt;
- plus toxic CDS and MBS's transferred to the US balance sheet;
- plus a record bubble in treasurys;
- plus a food/fuel bubble that will reinflate whenever the economy gets going again;
Last edited by Winehole23; 02-02-2009 at 12:48 PM.
Just one more stepping stone to the end game global currency.
I don't like this at all. We don't need the Federal Reserve to begin with and all this is going to do is make even more money and give more control to the very en y that we desperately need to get away from.
Even a year ago, the Amero still seemed coo coo for cocoa puffs.
Now it is starting to look like a real possibility. I guess you could say NAFTA opened that door for us: that's when we (USA/Canada/Mexico)started to think -- and act -- as a regional economic bloc.
I agree whole heartedly. All the above pose great dangers to our currency...and our economy as a whole.
However, I don't see pegging the US dollar & Peso as any help with the above problems.
The problems you citied above have more to do with allowing our govt to create never ending debt (and even demanding more out-of-control spending as a way to solve the out-of-control spending.)
You'll get no argument from me. I was just wondering what the default plan was.I agree whole heartedly. All the above pose great dangers to our currency...and our economy as a whole.
However, I don't see pegging the US dollar & Peso as any help with the above problems.
The problems you citied above have more to do with allowing our govt to create never ending debt (and even demanding more out-of-control spending as a way to solve the out-of-control spending
Having a unified North American currency wouldn't rectify or even address these issues.
look up the AMERO..
you weeds people have been talking about this for years.....on this board.
anyone that is for this new "stimulus" bill doesn't think so
Default plan?
I've got an old Indian (er...native american) getup stored away for just such an occassion.
Actually, I really don't care. Seen this coming for over 30 yrs, hasn't been hard to figure out. Decided a long time ago there was nothing I could do about it...except make money on it.
It's amazing how relaxed about politics you can be, if your making money no matter if a currency goes up...or down. DC want's to spend itself into oblivion? Well ok then, mebbe it's time to start shorting the dollar again.
Best blood pressure medication in the world...
i dont care as long as my face gets to be on a bill
Clandestino was unique amongst mexicans of republican descent, as he also vouched vigorously for the replacement of the dollar with the Amero.
dudes, the dollar is going to get destroyed if/when the Fed starts indiscriminately buying back treasury bonds like they announced they were going to and if/when a big stimulus package gets passed at the same time.
ding ding
How exotic. Can you explain?
It was a BradLohaus thread awhile back....see if I can find it.
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