A global currency is needed to promote economic justice in the world

Article by #ebbfmember Gary Reusche

Why is a global currency is needed to promote economic justice in the world?

In an increasingly integrated world, international borders become more and more irrelevant. This is the case today with the covid-19 virus and the existential threat of climate change. There is one other issue where international borders are irrelevant, and that concerns finance, money, and debt.

Today there is a range of ongoing discourses concerned with various aspects of humanity’s wellbeing and progress: discourses on such subjects as the equality of women and men, peace, governance, and public health, to name but a few. The world’s financial systems should be another important topic of discourse.

After WWII, an international agreement established the Bretton Woods system of monetary management. According to the IMF, the U.S. dollar is de facto the global currency. Today, the US dollar accounts for more than 60% of all known central bank foreign exchange reserves. Bretton Woods established an interconnected global financial system.

For over a hundred years, governments have created 3–8 percent of money and make a profit by printing. Most don’t know that private banks create the vast majority of money — about 97% of it. They do so by creating loans which is debt, and debt is the same as money. Two excellent videos below describe how this takes place.

https://www.youtube.com/watch?v=mzoX7zEZ6h4
https://www.youtube.com/watch?v=mQUhJTxK5mA

After WWII, an international agreement established the Bretton Woods system of monetary management. According to the IMF, the U.S. dollar is de facto the global currency. Today, the US dollar accounts for more than 60% of all known central bank foreign exchange reserves. Bretton Woods established an interconnected global financial system

Up until 1971, the US dollar was convertible to gold. But, after 1971, it wasn’t linked to gold, and it became free-floating.

In 2021 nobody is really discussing macroeconomic questions of cross-border capital flows; the role of central bankers in overseeing and making global financial markets; or the dominance of the US Federal Reserve in global governance. The US dollar continues to play a role as the world’s reserve currency, which must be held by many countries to make payments to other countries.

“Just as we need a sustainable global ecosystem, so do we need a stable, sustainable international financial system”.

The world experienced the financial crisis of 2007–2008. Catalyzed by the crisis in subprime mortgage-backed securities, the crisis spread with widespread national and global impacts. Ten years after the onset of the crisis, the impacts on workers and economic inequality persist.

Dowjones crash 2008.svg — Wikimedia Commons

Specialists in international finance have warned repeatedly of a possible domino effect, through which a deepening economic collapse in one region could spread elsewhere, that is, worldwide.

In an age when international interdependence and integration are increasing on all fronts, a “uniform and universal system of currency” is one of a number of complementary measures that will help to “simplify and facilitate intercourse and understanding among the nations and races of mankind,” as Shoghi Effendi, who led the worldwide Baha’i community from 1921 to 1957, wrote in 1936.

A single currency would in some respects be like a world language, improving communications around the globe. It would eliminate the present problems of speculation, instability, and uncertainty and would provide a strong foundation for the growing world economy. It would reduce a significant cost and risk of doing business internationally.

The world was saved in 2007 by quantitative easing (QE). Quantitative Easing was implemented by central banks. The Federal Reserve in the US (a central bank) flooded the banking system with money to save a collapse. The money created by the Federal Bank is essentially like a promissory note signed collectively by all the citizens of the United States. It has to be paid back — by the taxpayers in the future. Then in March 2020 covid-19 arrives in the world. Two more times QE is implemented for a total of approximately 4 trillion USD.

Who is going to pay it back? The federal budget debt is funded by borrowing. The more the government pays out in interest on its debt, the less money it has available for other programs and priorities.

“The possibility of a transformation to ensure stability and sustainability is largely absent from academic and public discourse. The ‘rethinking’ after the global financial crisis of 2007–09 led simply to a consolidation of the existing, often corrupt, system. As the International Monetary Fund (IMF) explained in its April 2020 Global Financial Stability Report, after that crisis, the US Federal Reserve, far from limiting excessive credit creation, turned a blind eye as private credit markets expanded rapidly and reached US$9 trillion globally.” (Ann Pettifor)

“It would be difficult to exaggerate the psychological and social impact of the anticipated replacement of the jumble of existing monetary systems — for many, the ultimate fortress of nationalist pride — by a single world currency operating largely through electronic impulses.” (Bahá’í International Community, Who is Writing the Future)

A global currency would also be an important step in promoting economic justice in the world, removing the advantage of a few favored countries whose currency is seen as stronger or more secure and preventing the poor from being hurt by the impacts of currency fluctuations. In the long run, such a step would do much to counteract the local harm that is sometimes induced by economic globalization by putting everyone, everywhere, on a more “level” economic playing field. (https://www.onecountry.org/story/perspective-one-world-one-currencyNewsletter of the Bahá’í International Community)

Bahá’u’lláh, the Prophet-Founder of the Baha’i Faith, advocates “A world script, a world literature, a uniform and universal system of currency, of weights and measures…” in order to “simplify and facilitate intercourse and understanding among the nations and races of mankind.” (Shoghi Effendi: World Order of Bahá’u’lláh, Page: 203)