The World in Words
Eine neue globale Architektur
George Soros
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NEW YORK – Fünfundzwanzig Jahre nach dem Fall der Berliner Mauer und dem Zusammenbruch des Kommunismus steht die Welt erneut vor einer überaus bedeutsamen Entscheidung zwischen zwei grundlegend verschiedenen Organisationsformen: internationaler Kapitalismus oder Staatskapitalismus. Ersterer wird von den USA verkörpert und ist zusammengebrochen. Letzterer, repräsentiert durch China, ist auf dem Vormarsch. Folgt man dem Weg des geringsten Widerstandes, wird dies zu einem schrittweisen Zerfall es internationalen Finanzsystems führen. Es muss ein neues multilaterales System auf Grundlage von vernünftigeren Prinzipien geschaffen werden.
Während eine internationale Zusammenarbeit bei Reformen im Regulierungsbereich schrittweise schwierig zu erreichen ist, könnte dies im Rahmen einer großen Lösung, mit der man die gesamte Finanzordnung neu organisiert, sehr wohl gelingen. Um neue internationale Regeln aufzustellen, bedarf es einer neuen Bretton-Woods-Konferenz im Stile der ursprünglichen, auf der die internationale Finanzarchitektur nach dem Zweiten Weltkrieg etabliert wurde. Diese neuen Regeln müssen die Behandlung von Finanzinstitutionen, die zu groß sind, um zu scheitern ebenso umfassen wie eine Definition der Rolle von Kapitalkontrollen. Überdies müsste man sich der Reorganisation des Internationalen Währungsfonds widmen, um die aktuelle Rangordnung der Staaten besser wiederzugeben und die vom Fonds angewandten Methoden zu überarbeiten.
Außerdem müsste ein neues Bretton Woods auch zu einer Reform des Währungssystems führen. Die Nachkriegsordnung, aufgrund derer die USA gleicher waren als andere, führte zu gefährlichen Ungleichgewichten. Der Dollar genießt nicht mehr das Vertrauen früherer Tage und dennoch kann keine andere Währung an seine Stelle treten.
Die USA sollten nicht vor einer verstärkten Nutzung der Sonderziehungsrechte (SZR) des IWF zurückscheuen. Da Sonderziehungsrechte in mehreren verschiedenen Währungen bestehen, gäbe es keine unfairen Vorteile für eine bestimmte Währung.
Die Zahl der Währungen für SZR müsste erweitert werden und einige der neu hinzugekommenen Währungen, einschließlich des Renminbi, wären nicht vollständig konvertibel. Das würde es der internationalen Gemeinschaft allerdings ermöglichen, auf China Druck auszuüben, die Wechselkursanbindung seiner Währung an den Dollar aufzugeben. Außerdem wäre es der beste Weg, die internationalen Ungleichgewichte zu verringern. Und der Dollar könnte die bevorzugte Reservewährung bleiben, vorausgesetzt er wird umsichtig gemanagt.
Ein großer Vorteil der SZR ist, dass sie internationale Schaffung von Geld ermöglichen. Das ist besonders in Zeiten wie diesen überaus vorteilhaft. Im Gegensatz zu den bisherigen Verhältnissen könnte das Geld dorthin gelenkt werden, wo es am dringendsten benötigt wird. Mit der Nutzung der Goldreserven des IWF steht ein Mechanismus zur Verfügung, der es reichen Ländern, die keine zusätzlichen Reserven brauchen, ermöglichen würde ihre Zuweisungen an jene zu transferieren, die diese Reserven sehr wohl benötigen.
Die Restrukturierung der Weltordnung hat allerdings über das Finanzsystem hinauszugehen und die Vereinten Nationen, vor allem die Mitglieder des Sicherheitsrates, einzuschließen. Dieser Prozess muss von den USA in die Wege geleitet werden, aber China und andere Entwicklungsländer sollten als gleichberechtigte Partner teilnehmen. Sie sind unwillige Mitglieder der Bretton-Woods-Institutionen, wo Länder das Sagen haben, die keine beherrschende Rolle mehr spielen. Die aufstrebenden Mächte müssen bei der Schaffung eines neuen Systems dabei sein, um sie als aktive Unterstützer zu gewinnen.
Das System kann in seiner gegenwärtigen Form nicht überleben und die USA haben mehr zu verlieren, wenn sie bei seiner Reformierung nicht an vorderster Front mitwirken. Die USA sind nach wie vor in der Lage, eine Führungsrolle einzunehmen, aber ohne weitblickende Führerschaft wird ihre Position wahrscheinlich noch weiter untergraben. Man kann seinen Willen den anderen nicht mehr aufzwingen, wie dies die Regierung George W. Bush versuchte. Sehr wohl jedoch kann man die Führung bei gemeinsamen Bestrebungen übernehmen, sowohl die Industrieländer als auch die Entwicklungsländer ins Boot zu holen und dabei die amerikanische Führungsrolle in akzeptabler Form wiederherzustellen.
Die Alternative ist nämlich beängstigend, da eine verblassende Supermacht, die ihre politische und wirtschaftliche Vormachtstellung verliert, aber ihre militärische Dominanz beibehält eine gefährliche Mischung darstellt. In der Vergangenheit beruhigte man uns mit der Verallgemeinerung, wonach demokratische Länder nach Frieden streben. Nach der Präsidentschaft Bush gilt diese Regel nicht mehr, wenn dies überhaupt jemals der Fall war.
Tatsächlich befindet sich die Demokratie in Amerika in gröberen Schwierigkeiten. Die Finanzkrise hat wirtschaftliche Nöte über eine Bevölkerung gebracht, die es nicht schätzt, mit der rauen Wirklichkeit konfrontiert zu werden. Präsident Barack Obama setzt den „Vertrauensmultiplikator“ ein und behauptet, die Rezession eingedämmt zu haben. Wenn es allerdings zu einer „Double-dip“-Rezession kommt, werden die Amerikaner für alle Arten von Panikmache und populistischer Demagogie empfänglich werden. Falls Obama scheitert, wird die nächste Administration schwer in Versuchung geraten, irgendeine Form der Ablenkung von den Problemen daheim zu schaffen – sehr zur Gefahr für die Welt.
Obama hat die richtige Vision. Er glaubt an internationale Kooperation und nicht an die „Macht-ist-Recht-Philosophie der Bush-Cheney-Ära. Die Entwicklung der G-20 als zentrales Forum internationaler Kooperation und das in Pittsburgh vereinbarte Peer-Review-Verfahren sind Schritte in die richtige Richtung.
Was jedoch fehlt, ist eine allgemeine Anerkennung, dass das System kaputt ist und neu erfunden werden muss. Das Finanzsystem ist ja nicht vollständig zusammengebrochen und die Regierung Obama traf die bewusste Entscheidung, Banken eher mit versteckten Subventionen wiederzubeleben als sie auf verpflichtender Basis zu rekapitalisieren. Die überlebenden Institutionen werden eine stärkere Marktposition als je zuvor haben und eine systematische Erneuerung überstehen. Obama ist mit vielen drängenden Problemen beschäftigt, weswegen er der Neuerfindung des internationalen Finanzsystems wahrscheinlich nicht seine volle Aufmerksamkeit schenken wird.
Die Führungsrolle China muss noch weitblickender sein als die Obamas. China ersetzt gerade den amerikanischen Verbraucher als Motor der Weltwirtschaft. Da dies ein kleinerer Motor ist, wird die Weltwirtschaft langsamer wachsen, aber Chinas Einfluss wird sehr rasch zunehmen.
Vorerst ist die chinesische Öffentlichkeit bereit, ihre individuelle Freiheit der politischen Stabilität und dem ökonomischen Fortschritt unterzuordnen. Aber das könnte sich ändern – und der Rest der Welt wird seine Freiheit niemals der Prosperität des chinesischen Staates unterordnen.
Da China zu einer Führungsmacht wird, muss es sich in eine offenere Gesellschaft verwandeln, die der Rest der Welt auch bereit ist, als eine derartige Führungsmacht anzuerkennen. Militärmacht hin oder her – China hat keine Alternative zu einer friedlichen, harmonischen Entwicklung. Die Zukunft der Welt hängt davon ab.
George Soros ist Präsident von Soros Fund Management und des Open Society Institute. Jüngst von ihm erschienen ist Die Analyse der Finanzkrise und was sie bedeutet - weltweit.
Copyright: Project Syndicate, 2009.
www.project-syndicate.org
Aus dem Englischen von Helga Klinger-Groier
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AlanDR 11:24 10 Nov 09
America has considerable short term problems; however, what makes these problems linger is liberal organizations attempts to regulate. Let the weak crumble and the strong excel. If we just let capitalism work these problems will self-correct in painful BUT short order. The world is a very competitive environment at every level. The only time that an imbalance becomes acute is when attempts are made to regulate competition out of it. Every time socialism creeps in, prosperity runs out!
Now I know Mr Soros wants a new world order where he and his friends control all wealth and power. He is frantically trying to get President Obama on board which he probably will, but he will never get the true capitalist, whether it be China, India, Korea, or the billions of individuals who are not willing to turnover their future to a handful of mediocre bureaucrats. Sorry George - not interested!
acd 04:49 11 Nov 09
-the problems were created by the same people who would like to solve it... deceptive... who here trusts a liar?... its simple logic.
brodix 07:51 11 Nov 09
The simple fact is that capital is subject to the law of supply and demand. Since supply is potentially infinite, it is demand, prudent borrowers, who determine how much notational wealth the economy can hold. We avoid this natural limit on wealth by creating artificial demand, either by lowering loan standards, or creating extraneous circulation through increasingly complex "securities." Meanwhile those in control of this monetary illusion can only invest their enormous wealth by loaning it back to those whom they squeezed it out of in the first place, either directly, or as government debt.
Monarchs neglected their duties to society and lost their privileges as a result. Bankers will suffer the same fate. As responsibility for maintaining the value of the currency has been shifted to the taxpayer, so should the profits from its management. A public banking system would be incorporated at the local level and profits would fund services in the communities which create the wealth. These local banks would then be shareholders in regional and state banks, which would oversee a national bank that would be responsible for the currency.
Economic growth, like democracy, is bottom up, not top down.
A related problem is the system of public financing, where enormous bills, stuffed with enough goodies to gain sufficient support, are rammed through the system. That's not budgeting. The process of budgeting is to prioritize needs and desires, then decide where to draw the line between what can be afforded and what cannot. In the US, some years ago, there was a discussion about the "line item veto," where the president could delete any item he wished from spending bills. Obviously this would remove all power of the purse from the legislature and likely be unconstitutional. In the spirit of actual budgeting, a possible solution would be to break these bills down to their constituent lines and then have every legislator assign a percentage value to each line and then re-assemble them in order of preference. The president would then draw the line at what would be funded. This would divide responsibility, allowing the legislature to prioritize, while giving the president final authority over total spending. Since making the cut would be graded on a curve, there would be much less incentive to trade favors and the percentage system would allow legislators to fine tune their granting of favors to other legislators and lobbyists. Since local spending by the national government would be reduced, a local public banking system which recycled wealth back into local infrastructure would fill the hole.
spottery2k 09:18 11 Nov 09
George (may I call you George?) Everybody's got an idea for a new system of one form or another, but in the end it will still need people to run it. The problem with economics as a social science is that it only measures the transfer of wealth among individuals and groups under the misguided notion that it is measuring prosperity and despair, and economist look all the more foolish when they sing the praises of a booming index and indicators amidst a catastrophic job market.
Its pretty sad to think that in this day and age that people do not take seriously their responsibility to their communities as "movers and shakers" of those communities. Even the wealthy have a way of forgetting or revising the past. There was a time when the fact that government and wealth go hand in hand wasn't such a strange notion. For kings and emperors the word was also law and what passed for governing would be called corruption today. As the less privileged public became more literate with the advent of the printing press it would be within 3 centuries that a wave of revolutions would sweep through Europe and the new world, largely influenced by the new mechanistic view introduced by Newton in an attempt to create a unimpassioned and just "system" respectful of even the least privileged among us. The idea was sound, but only made it easier for the unscrupulous to gain wealth and direct the misery and disaffection of the public towards a system-scarecrow. The people would trade their belief in God for the belief in a system comprised only of people wearing hats. There was never any real separation between wealth and power so long as private wealth could concentrate in the hands of the few who would finance a firewall of disposable politicians in ritual effigy every few years to an ignorant public.
Phasor 09:58 12 Nov 09
30+ years of conservative values in US government policy with reliance of market principles and deregulation and what did we get...
The precipice of collapse of the entire economy, a de-industrialized America, soaring unemployment, increased homelessness and exacerbated income inequality.
And those commenting here want to keep going down this road? You conservatives are devoid of reality. At least, Soros wants to take a new road as do I.
MorrisonBonpasse 02:02 16 Nov 09
Mr. Soros is correct that the world's monetary system must be reformed. In his book, "The Alchemy of Finance," he wrote correctly of the need for a Single Global Currency which would achieve far more than the increased use of SDR's (IMF Special Drawing Rights).
Expanding the use of SDR's, which is not a currency as commonly understood by the people of the world, would only prolong the life of the existing dysfunctional multicurrency system. One key to the value of money is that it be trusted, and the people of the world will not trust something they cannot see or hold.
The world AND the U.S. will be better off when the U.S. Dollar is replaced by, and incorporated into, a Single Global Currency, managed by a Global Central Bank within a Global Monetary Union. In Europe, 16 countries are using one currency. The Eastern Caribbean Currency Union supports 8 countries, and the West African franc is used in 13 countries. Why not a monetary union for the 192 U.N. members? A Single Global Currency will provide the people of the world what they want - stable money, and they will trust that money when they can see it and hold it in their hands.
We don't need to wait for the further decline, and perhaps rapid decline, of the dollar to start planning for the Single Global Currency.
The primary problem with the euro and currencies of other monetary unions is that they still must co-exist within the international multicurrency system itself where the value of those common currencies must still fluctuate in value against each other. With a Single Global Currency, there are no such fluctuations, by definition.
In addition to eliminating currency fluctuations, the use of a Single Global Currency would eliminate the current foreign exchange trading expense of $400 billion annually, eliminate currency risk, eliminate current account imbalances, and eliminate the need for foreign exchange reserves.
With a Global Central Bank with a primary goal of monetary stability, global inflation would likely be lower.
The world should begin researching and planning now for a Single Global Currency, which will save the world - literally: trillions.
The Single Global Currency Assn., which was founded in 2003, promotes the implementation of a Single Global Currency by 2024, now only 15 years away, and the 80th anniversary of the 1944 Bretton Woods conference. We will reach that point through the creation, expansion and merger of currencies of monetary unions. This process will be enhanced by holding international monetary conferences, as was held in 1944. At some point, the U.S. dollar, pound, yen, and/or yuan will join a monetary union. When a monetary union currency supports a currency area of 40-50% of the world's GDP, that currency will have achieved the "tipping point" and it will be anointed the Single Global Currency. After that, the other currencies of the world will seek to join that currency.
The Single Global Currency Association's website is www.singleglobalcurrency.org. See, also, the Assn.'s book, "The Single Global Currency - Common Cents for the World," and the ICFAI University Press book, "A Single Global Currency - Perspectives and Challenges."
NimrodsBane 04:55 17 Nov 09
This New Global Architecture...?
it wouldn't happen to be in the shape of a 'pyramid' would it?
Mountern 03:34 20 Apr 10
Dear George:
This is a well written piece until it came to the part about the rest of the world will never subordinate its freedom to the prosperity of the Chinese state. In one sweeping statement you demonised China like all typical Westerner fearful of the rise of China.
Yet, in the same breath you said a declining superpower losing both political and economic dominance but still preserving military supremacy is a dangerous mix. I assume that would be USA et al.
Exactly, how a prosperous China will affect other nation's freedom is unsaid. It is sad that a man of your intellectual capability should succumb to personal biases and prejudices.
imenevazno 01:47 27 Jan 11
"... a declining superpower losing both political and economic dominance but still preserving military supremacy is a dangerous mix. We used to be reassured by the generalization that democratic countries seek peace. After the Bush presidency, that rule no longer holds, if it ever did. In fact, democracy is in deep trouble in America."
Mr. Soros, I see it as a global problem. In the existing geopolitical and capitalist setting in which nations or blocs develop, compete, or cooperate under the clout of secrecy, the essence of democracy as the basis from which individual nations (or blocs) derive political authority is undermined. In my opinion, true democracy is intended for the benevolent, a non-Machiavellian geopolitical and economic setting -- with a level playing field in terms of political organization/ideology -- regardless of its scale and scope. True democracy can only function when governments operate uncorrupted by the dominance or influence of any particular group or special interest and with full transparency and accountability of elected officials and bureaucrats. I'd challenge any assertion that such a form of democracy ever existed in modern history. What's more, bureaucracy--serving special/vested interests--may have killed the true spirit of democracy.
There is another problem with democracy: it is accompanied by the "Wall Street: Greed Is Good" type of capitalism. The economic supply and demand can be "artifically" created and manipulated. And, indeed, a pursuit of war, instead of the pursuit of peace, can have a positive effect on the national or even global economies. The world needs to recognize and remedy the existng and emerging flows of capitalism.
I will also note that your observation echoes the words of a Republican president, Mr. Dweight Eisenhower in his Farewell Address on Jan 17 1961. I write this a day after Mr. Obama's "2011 State of the Union Address," so here is the link to the speech, with a plenty of food for thought:
markmotive 05:39 20 Feb 11
China holds all the cards.
It is America's banker and arms dealer (via rare earth minerals). According to Wikileaks, China can now influence American economic and foreign policy:
http://www.planbeconomics.com/2011/02/17/america-you-now-report-to-china/
HeleniSmith 05:28 10 Mar 11
Or maybe we will all grow out of our regional short sightedness and become world citizens.
plainview 10:31 27 Jun 11
So let me get this right: Obama maintains Gitmo prison and military tribunals, invades Libya and approve secret bombings in Yemen but his backer Mr. Soros states that, "Obama has the right vision."
I also think we must admire the following, "A mechanism that allows rich countries that don’t need additional reserves to transfer their allocations to those that do." I see, and let me venture a guess as to who would be the actual decision maker behind the veneer of the IMF as to who gets other people's money: could it be the Open Society's founding father who funds Project Syndicate's website?
GAECO 04:11 27 Jul 11
1970 Dr. Kissinger was trying to make connection for Pres. Nixon to reproach Chin http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB66/
1972 Pres. Nixon went to China on his historic trip
40 years later:
2011 Unemployment in America is 9.2% or 14 million people; actual employed is 24.7 million; public debt 14 trillion; total debts 55 trillion; unfunded liabilities of social security, drugs, medicare, is 115 trillion.
2011 The world is facing a much more powerful China in economics military social political influences.
With a current 1.33 billion population, China needs everything in large quantity from energy, foods, land, water to continue its current growth of 9-11% GDP. It exploits oil, gas, coal, biomass, solar, wind, geothermal, deep ocean minerals, rice from Vietnam, Thailand, mega-damps for hydropower and water reservoir. Because of oil rich reserves, lately China is wielding its dominant position to claim the Spratlys Island and Paracel Islands disputing other smaller Asian countries' claims. Some considers this dispute may spark into a military hot spot and war among China, Vietnam, the Philippines with the United States of America in supporting role against China.
With such a reality, in the context of a new world architecture, Mr. Soros concluded, "As China becomes a world leader, it must transform itself into a more open society that the rest of the world is willing to accept as a world leader. Military power relations being what they are, China has no alternative to peaceful, harmonious development. Indeed, the future of the world depends on it."
Is this a statement of demand or a wishful thinking?
Who will tell China that it "must" transform itself - to transform from what to what? China will argue that in forty years, China has built itself (with the help of the US and the world) to become a richer nation. China does not believe in a multi-party political system, but so what? China today has the best newly built superhighways and bridges, infrastructures, factories, and technologies. It even monopolizes deep ocean mineral exploration. So what if China does not transform or does not want to transform? Will the US come to China's shore via Taiwan or Japan or the neighboring south ocean to wield its military presence with the hope to force China to change its mind?
A trip to China will open the eyes of an "average" Jane or John Doe American. The people in China are very friendly. The culture of China is rich with four thousand years of history. People in China are working from dawn to dust from big cities to the tiny small villages. Skyscrapers and high-rises are mushrooming everywhere, not just in Beijing, Shanghai, but in sub-regional towns and communes. People are happy, enjoying their lives. Younger generation of Chinese are smart educated top leaders in businesses, high tech, sciences, global communications, in every way. Its society is based on family, work, and "savings." Can you find that picture in America?
China cannot change the world. It changed itself from being very poor to super rich in forty years.
Pres. Obama, US Congress, the American people are in this together. What Pres. Richard N. Nixon did forty years ago in China with Pres. Zhou EnLai was history. The deck of cards, the money instruments, the economic formulas, are on the table in Washington D.C., New York, Chicago, LA, San Fancisco, Dallas, Houston, Miami, and all the city halls and states governments. America needs to "transform" itself. What it must transform to become is the question that everyone in American must wrestle with. America cannot claim to be a world leader with this kind of reality: 2011 unemployment in America is 9.2% or 14 million people unemployed; actual employed people is 24.7 million; public debt 14 trillion; total debts 55 trillion; unfunded liabilities, social security, drugs, medicare, 115 trillion (See US National Debt Clock http://www.usdebtclock.org/ ). What is 115 trillion of unfunded liabilities? That's over 1 million dollars per taxpayer. This may a small amount to Mr. Soros, but to an average American, this is big money. Pres. Obama needs to follow Pres. Nixon to go to China. But this time, he needs to find out how China became so rich, with an excess of 3.7 trillion dollars in surplus reserves. Pres. Obama also needs to bring with him an entourage of 10,000 "average American" so they can see with their own eyes. These average American will come home to tell their families, their friends and neighbors that the world has changed. America must change. Hopefully, a new set of solutions will emerge. Not the arguments on what to spend or not to spend, or what to tax or not to tax, but a new set of ideas on what to build, what to produce, and how to "save" money.
Zsolt 04:07 22 Aug 11
Overall I agree with Mr. Soros on multiple accounts.
We are facing a landside change in how we need to relate to each other, and if we do not fully understand and embrace the deeply interconnected and interdependent nature of our reality today, and miss the opportunity to build a completely new financial, political and social system based on mutual responsibility and equality for all participants, the alternatives are frightening, and at the end we would still need to make the same changes but by the bitter experiences of blows, and negative events, instead of generally educating ourselves about the nature of the system we exist in today. Today everything is still in our hands, we just need to take a step back and examine where we are and how we can move forward together.
davidprosser 08:09 22 Aug 11
The problems in the world are global and Mr. Soros you did a fine job of addressing some of these problems. Change is indeed needed and the financial crisis affecting all the nations today are the proof. But economic changes must now take far more into account then they did in the past. The idea that "economies must grow" is ultimately unsustainable. Yes, it is an unfashionable viewpoint but one need only look at dwindling natural resources to see this inevitable conclusion.
Other factors: 2050 population predictions now suggest humanity will balloon to 9.6 billion. Oil is peaking. Global warming will only continue to escalate. So a new economic model which stresses equality amongst all nations, and minimum consumption, can be the only sustainable model to steer towards.
JohnGilmartin 07:09 08 Nov 11
Mr. Soros,
Thanks for your suggestion. A real innovation; everyone drop your dollars, pounds, euros, rupees, yen, and let's work for sdr's. Wait, what's that question? what about all my pennies in the jar? What about the Queens picture on notes? What about all those monumental buildings on the euro? We will ditch these for sdrs?
Imagine you must try to explain the sdr to the members of the US congress? Think of the inane questions Greenspan, and Bernanke must listen to with somber composure. Imagine convincing congressmen Boureagarde now is the time to drop the dollar for sdrs. The sdr is a good idea. How to change, without WWIII, seems the question. I do like your creativity, thank you.
kirkomrik 10:58 11 Jan 12
Mr. Soros, thank you for this great article. I was pleasantly surprised by many of your insights.
“Twenty years after the fall of the Berlin Wall and the collapse of communism, the world is facing another stark choice between two fundamentally different forms of organization: international capitalism and state capitalism. The former, represented by the United States, has broken down, and the latter, represented by China, is on the rise. Following the path of least resistance will lead to the gradual disintegration of the international financial system. A new multilateral system based on sounder principles must be invented.”
We have a winner.
"While international cooperation on regulatory reform is difficult to achieve on a piecemeal basis, it may be attainable in a grand bargain that rearranges the entire financial order. A new Bretton Woods conference, like the one that established the post-WWII international financial architecture, is needed to establish new international rules, including treatment of financial institutions that are too big to fail and the role of capital controls. It would also have to reconstitute the International Monetary Fund to reflect better the prevailing pecking order among states and to revise its methods of operation.
In addition, a new Bretton Woods would have to reform the currency system. The post-war order, which made the US more equal than others, produced dangerous imbalances. The dollar no longer enjoys the trust and confidence that it once did, yet no other currency can take its place.
The US ought not to shy away from wider use of IMF Special Drawing Rights. Because SDRs are denominated in several national currencies, no single currency would enjoy an unfair advantage."
The difficulty here seems to be that usg does not want to lose its reserve currency status; something that would have devastating consequences for the United States short term. I think some kind of apparatus in the SDRs or some additional agreement would be needed to moderate this adjustment. This might remove resistance to accepting broader use of SDRs and accelerate the acceptance of SDRs as a basis for a true currency in the near future.
"The range of currencies included in the SDRs would have to be widened, and some of the newly added currencies, including the renminbi, may not be fully convertible. This would, however, allow the international community to press China to abandon its exchange-rate peg to the dollar and would be the best way to reduce international imbalances. And the dollar could still remain the preferred reserve currency, provided it is prudently managed."
There is much gnashing of teeth in the academic literature right now about how to internationalize the Renminbi. I like this pragmatic approach since, whatever the solution, this would advance it.
"One great advantage of SDRs is that they permit the international creation of money, which is particularly useful at times like the present. The money could be directed to where it is most needed, unlike what is happening currently. A mechanism that allows rich countries that don’t need additional reserves to transfer their allocations to those that do is readily available, using the IMF’s gold reserves.
Reorganizing the world order will need to extend beyond the financial system and involve the United Nations, especially membership of the Security Council. That process needs to be initiated by the US, but China and other developing countries ought to participate as equals. They are reluctant members of the Bretton Woods institutions, which are dominated by countries that are no longer dominant. The rising powers must be present at the creation of this new system in order to ensure that they will be active supporters."
This is another point that has needed emphasis and gotten little. However, I do not believe we have time to dabble with the UN. Something more comprehensive and ambitious needs to be put together right now, publicly and transparently, that invites all the world to participate. A real, serious, fundamental law, among other precepts, is desperately needed.
"The system cannot survive in its present form, and the US has more to lose by not being in the forefront of reforming it. "
It is the logical choice and it is the only country that could pull this off.
"The US is still in a position to lead the world, but, without far-sighted leadership, its relative position is likely to continue to erode. It can no longer impose its will on others, as George W. Bush’s administration sought to do, but it could lead a cooperative effort to involve both the developed and the developing world, thereby reestablishing American leadership in an acceptable form.
The alternative is frightening, because a declining superpower losing both political and economic dominance but still preserving military supremacy is a dangerous mix. We used to be reassured by the generalization that democratic countries seek peace. After the Bush presidency, that rule no longer holds, if it ever did.
In fact, democracy is in deep trouble in America. The financial crisis has inflicted hardship on a population that does not like to face harsh reality."
Fascinating.
"President Barack Obama has deployed the“confidence multiplier” and claims to have contained the recession. But if there is a “double dip” recession, Americans will become susceptible to all kinds of fear mongering and populist demagogy. If Obama fails, the next administration will be sorely tempted to create some diversion from troubles at home – at great peril to the world.
Obama has the right vision. He believes in international cooperation, rather than the might-is-right philosophy of the Bush-Cheney era. The emergence of the G-20 as the primary forum of international cooperation and the peer-review process agreed in Pittsburgh are steps in the right direction.
What is lacking, however, is a general recognition that the system is broken and needs to be reinvented. "
I am speechless … and encouraged. Someone realizes this. Yes, a completely new system is required now. And I do not think it resembles anything we’ve seen in history. I have blogged on various proposals at kirkomrik.wordpress.com; things such as Binary Economics, Zero-Zero Banking (a Fractional Reserve Alternative) and productivity-based remuneration. But regardless of what is decided, that discussion absolutely must begin now, publicly and globally. There is no time left.
"After all, the financial system did not collapse altogether, and the Obama administration made a conscious decision to revive banks with hidden subsidies rather than to recapitalize them on a compulsory basis. Those institutions that survived will hold a stronger market position than ever, and they will resist a systematic overhaul. "
Interesting.
"Obama is preoccupied by many pressing problems, and reinventing the international financial system is unlikely to receive his full attention.
China’s leadership needs to be even more far-sighted than Obama is. China is replacing the American consumer as the motor of the world economy. Since it is a smaller motor, the world economy will grow slower, but China’s influence will rise very fast.
For the time being, the Chinese public is willing to subordinate its individual freedom to political stability and economic advancement. But that may not continue indefinitely – and the rest of the world will never subordinate its freedom to the prosperity of the Chinese state.
As China becomes a world leader, it must transform itself into a more open society that the rest of the world is willing to accept as a world leader. Military power relations being what they are, China has no alternative to peaceful, harmonious development. Indeed, the future of the world depends on it."
I’m not as sold on the PRC experiencing a durable economic climb and am more concerned about how it might opposed global rule of law, or otherwise frustrate it.
- kk
hsgross 02:40 10 Nov 09
A great opportunity for promoting longterm geo-political stability!