The U.S. dollar is the currency most used in international transactions and is one of the world's reserve currencies. (Wikipedia)
But the state of USA's economy and its currency is bewildering...
Tun Dr. Mahathir has suggested the use of gold dinar instead of USD in international trade.
The modern Islamic gold dinar (sometimes referred as Islamic dinar or Gold dinar) is a bullion gold coin made from 4.25 grams of 22-carat (k) gold that is a recent revival of the historical gold dinar which was a leading coin of early Islam. (Wikipedia)
But others are suggesting the use of Chinese Yuan...
More vibrant and cheerful, reflecting its economy, don't you think?
The gold Dinar combines the worst of the physical gold currency restrictions and the weaknesses of a fiat system. The Japanese are scared shitless of the Yen going up since their economy has stagnated for almost one generation of its people. The Chinese knows an escalating Yuan will put millions of its masses out of work in a supposedly communist worker's paradise. The Europeans do not want their Euro to go up anymore or they will lose market share for their 'welfare' state products. Even the mere idea of extending the retirement age so as to slow down the expansion of the French pension bill sends people into the streets burning cars and destroying property. We come back to the USD. Many claim the USD as the reserve and trading currency of the world allows the US an advantage in world trade. If that is the case, how come neither the Japs nor the Europeans or Chinese are rushing to replace the USD with their own currency since as many claim the USD is already at death's doorsteps?
ReplyDeleteIt is easy to suggest this or that currency to become the new currency of international trade but it will also mean making such a currency the new reserve currency. Thus far no one seems to be interested in becoming the new reserve currency 'Taiko'. You do not 'choose' a currency to become the reserve currency of the world. The rise of the USD as the reserve currency from the ashes of World War II was part of a series of events which no group of countries had control over. It is at best naive or simplistic to think that one can design a currency to take over the role of the USD. The confluence of events leading to the establishment of a reserve currency is too complicated for us to manipulate.