Fred-Rick
2 min readApr 7, 2020

--

Thanks, Eric, for writing well and in a way that entices me, the reader. I know that Europe is not opposed to the Chinese proposition of creating a currency basket made up of dollars, pounds, euros, yens and renminbis. But no action by the Europeans so far.

The real economic issue is not about leadership in currencies, but about stability. As such, it would be a good thing for the world to have this basket of strong currencies.

In Europe, there is a very old saying (old as in it gets old quickly), “When the US sneezes, Europe catches a cold” (yes, appropriate saying these days). It’s used in light of money only.

The Euro has always been a stable currency, even during the crises. When the US desires, the Euro ends up being worth a lot. When the US desires, the Euro loses much of its value. The mechanism is in the hands of the US and Europe goes about its way, taking the aftermaths of the swings in stride. Modern Europe is effected, but tends to not have the enormous swings the US economy has.

When Iran was pushed out of the deal by the US, Europe actually worked with Iran to circumvent the oil payments in dollars, almost making it so (but it did not become so). The Middle East can throw the US in a turmoil if it were to switch currencies to either Euro or the basket (but they need Europe and China’s blessing for that). China can throw the US in a turmoil if they pick the Euro (they could do so today, but they would lose a lot of money with a super deflated dollar deflating particularly their loans to the US).

The US knows it has a great deal with being the currency in global affairs. The US knows it has this position because the others are fine with that position. And that is fine, right?

— -

If all nations printed up more money, no benefit would be had by any nation. Money isn’t real; it is a fake commodity. It’s just that it is so handy.

I like you article, Eric. Well done.

--

--

Fred-Rick
Fred-Rick

Responses (1)