[lbo-talk] Why no world currency?

Sean Andrews cultstud76 at gmail.com
Wed Feb 21 07:26:43 PST 2007


In my class last night we started talking about currency speculation and capital controls and a student asked why all countries couldn't just use the same currency. I was obviously out of my element because I couldn't come up with a satisfactory answer. I could speculate on the political reasons on the domestic side--desire for sovereignty, inability to raise money for deficit spending, it being harder to index the currency value in a particular country to other fundamentals--but all of this seems like a lot of fairly imaginary stuff (like the general equivalent itself) so could likely be changed with some will and foresight. In short, I really didn't know what to say except that it would be hard to do.

I'm sure there are arguments about this and reasons given for and against this kind of proposal. I also assume there are far more practical and pragmatic difficulties based on a lot of other aspects of the global political economy that are connected to the current system of national currencies. On the other hand, the price of oil (like the price of gold before) seems to be fairly important as an index of the value of all other currencies and commodities and that is theoretically priced according to a market even if the supply is basically regulated by the cartel (though I can also see many problems with this analogy.)

Anyway, I was hoping someone on the list could shed some light on this question: why can we not have a world currency? Either through references to other conversations or your own formal or informal understanding.

thanks s



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