It worked for the USA. It may also work for the entire planet. What ideas
do you have? Is there a way to bring some stability to global and
local economies through a concerted global effort?
"A Proposal to stabilize Our Global Economy" by Tim Williamson,
10 Oct 2010
In the 1790's and in the mid 1800's there were numerous
banks in the US offering their own currencies. Each of the
various states also had their own central bank with
their own currency. The states did not want to relinquish some of
their state sovereignty for the national good, and the banks were driven by self-interests.
There were huge economic disparities in the new USA? Each state had it's own economic
engine so to speak, and many banks even had their own currencies pushing their
own policies. No state or bank believed in a future where the nation as a whole was
strong and successful. Each of these entities saw the national government as more of an
association of individual states, not as an entity having a strong national identity. Chaos,
economic disaster, and possibly even real national collapse were forecast by some.
The agrarian southern and the metropolitan northern states wanted, no demanded, the independence of their
economic decisions from that of the other states. The economic, financial and monetary chaos
that ensued was a major cause of the economic variability and chaos throughout the nation in
the early days of the USA. This situation caused chaos in the national economy of that time
because each state and bank promoted only those things that were in
their individual interests and not that of the nation as a whole.
The world is in a much similar position today with our intertwined and
inter-connected economies, currencies and ultimately our global
stability, growth and prosperity. Maybe we can learn from US history.
The chaotic and myopic banking, currency and credit environment in
the newly formed US was a situation that caused dramatic swings in
the national economy since each state and bank wanted to control the
exchange rate between states for their particular currency to their own
individual insular advantage. Some of these banks and states imposed
various measures to protect their products, industries, services and
even their currencies. Those states, banks and leaders opposed to a
centralized bank and a single currency did not realize that their
methodology of individual states and banks controlling their own currencies
and money policies, at the exclusion of a national plan of growth and prosperity,
may have granted some immediate and transient benefit for their people but
overall and over time it was detrimental to the nation as a whole. It was
chaotic. Our national creditworthiness was also negatively affected.
The economy fluctuated wildly. The nation suffered through one economic
crisis after another because the states and banks did not want to relinquish
some of their 'control' in order to gain a more stable national economy.
In US history, when there were a multitude of state banks with their own
monetary policies and currencies, and where there were struggling agricultural
economies in the south and fledgling manufacturing economies in the north,
where huge inequities abounded, the solution that brought the country improved
stability and soundness of credit and money was the central bank and a single
national currency. So it can work. It has worked wildly successfully in the past.
It can work again.
To be fair, there were attempts to address the problem. In 1790,
Alexander Hamilton foresaw the need to reign in the numerous states
and banks that wanted to maintain and control their own currencies.
He recognized that the country could not and would not grow and prosper
as long as there were unregulated and unrestrained states and banks
with their own myopic interests motivating monetary policy. So Hamilton
proposed a plan in his "First Report on Public Credit" in 1790 (which
was one of five such reports Hamilton produced between 1790 and 1795).
After a compromise with Jefferson and Madison to move the national
capitol to present day D.C.,called the 'Dinner Table Compromise',
congress, with the backing of President Washington, passed Hamilton's
plan and created a national central bank with a twenty year charter.
Though Jefferson did not renew the charter at expiration, the plan
worked so well that it gave Jefferson the money he needed to purchase
the Louisiana territory, and the plan had also greatly improved the
creditworthiness of the US throughout the world. But Jefferson,
Jackson and many others objected to the national central bank on
constitutional grounds claiming it violated state sovereignty even
when the 'Necessary and Proper Clause' had been shown by the US Supreme
Court to imply certain powers to the federal government. Jefferson,
and Jackson later, did not want the federal government to have a central
bank with a national currency since it was not spelled out explicitly
in the constitution even though when they were elected as president
each man used the 'implied powers' clause to do things in the best
interest of the nation - Jefferson bought the Louisiana Territory
even though no such action was authorized by the constitution, and
Jackson refused to follow a decision of the US Supreme court
concerning the displacement of native Americans. Each man and
their successors even began to recognize, toward the end of their
terms of course, that it was actually very beneficial for the nation
to implement Hamilton's plans. Hamilton had it right. Jefferson and
others didn't like admitting that Hamilton was right, but never the less,
Hamilton's economic plan made the USA very successful.
So what was the solution that offered a long term remedy to chaotic
currency fluctuations in the fledgeling new nation? Hamilton's plans
called for the creation of a central bank with a single national
currency. His plan made the USA the world's premier economy. Even
Abraham Lincoln recognized the need to implement Hamilton's plan when
he re-organized the nations banks and currency in 1863.
Is it not possible that Hamilton's solution, minus the protectionism, could
work equally well for our modern super-connected world? Should we not
be working to implement a global central bank with a single global currency
that would replace all the various currencies around the world? Could
this be the best path to a global solution that would offer at least a path
toward global economic, currency, financial stability? It seems rational to me.
What do you think?
Yes! There would be opposition. Especially from those who make money
by betting against currencies, and from those who wish to maintain and
profit from the current chaos in the global economies. But, when
something is right and good for all of us in our local and state economies such as
imposing a global central bank and a single global currency for the entire
planet then it should be done.
How can it work? Who controls the 'world currency'? A central bank
whose responsibility is stability and growth of the global economy independent
of all nations, under the authority of a board of economists within the UN
should control the global central bank and thus the world currency. The central
world bank, and thus it's world currency would be owned on an equal basis by
the various states around the world up to a pre-determined limit through bonds
in the global central bank. Individuals could also buy bonds in the central bank.
The governing body of the UN would also be required to own a percentage of the
central bank's bonds. Therefore everyone and every nation/state on earth
would then have a vested interest in securing and insuring the future of this new
global central bank and by fiat would have a vested interest in the stability of
global currency and all of our various local economies as well.
What rational and reasonable solutions do you have?
--
Timothy Williamson
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