At Davos in January of this year at a G20 meeting, President Sarkozy of France called for a new global reserve currency. At the 2009 meeting, Russian President Medvedev suggested a new reserve currency to replace the dollar. A Chinese central bank governor has supported a similar idea. The United Nations Conference on Trade and Development wants to replace the dollar. The G20 has moved in this direction using the International Monetary Fund (IMF). The Bank for International Settlements is a potential institutional vehicle for a global central bank and a global currency. On April 26 of this year, Jean-Claude Trichet, President of the European Central Bank, addressed the Council on Foreign Relations. He strongly emphasized the goal of uniformity and uniform global governance of banking.
Clearly, important political figures throughout the world are agitating for changes in the international financial system. These changes would (i) reduce the role of the dollar, (ii) increase the role of developing states, (iii) reduce the role of the United States, (iv) aim for a global currency, (v) increase the role of international financial institutions, (vi) increase the role of France, Germany, and the BRIC countries, and (vii) aim for global uniformity.
These changes would maintain the existing system of central banks and fiat currencies. They are designed to shore up the existing fiat money system, not replace it. They are designed to perpetuate the existing system of government-controlled currencies being used as money. They are clearly steps in the direction of a world central bank and world government.
Heads of State such as Sarkozy and Medvedev have seen their economies be adversely affected by the actions of American central bankers. They want an international system that insulates them from American monetary and fiscal policies. They want greater control over their currencies, even if this means a world currency that they jointly manage or control.
Moreover, such leaders are dedicated socialists who relish power and control. In his speech, Sarkozy managed to call for international labor, health, and environmental standards. He proposed a tax on financial transactions, which would have to be international to be effective. He called again for a “moral” capitalism, which is code for being anti-free market. He also called for world climate control. One must have the deepest suspicion of any monetary program proposed by this man.
France, Germany, the European Central Bank, Russia, India, and China are all much more favorable toward gold as a reserve asset than is the United States. They have shown this through their actions in holding or adding to their gold reserves. China has promoted gold as an investment. Although they have not spoken openly of gold, they are moving toward the increased importance of gold in the international monetary arrangements.
In other words, they are aiming at some version of a gold standard. The idea seems to be to go back to a pre-1971 system while bolstering the roles of the IMF and the BIS and reducing the dollar standard to a standard of a basket of currencies linked to gold.
The idea is to prolong the life of national central banks and fiat currencies by a gold linkage.
Reposted from LewRockwell.com