July 12, 2004 – It was both a privilege and a pleasure to attend this past Friday the first meeting of the Single Global Currency Assn. (www.theunionleader.com). The meeting was the idea of Morrison Bonpasse, founder of the SGCA, which held their conference at the beautiful Mount Washington Hotel & Resort in Bretton Woods, New Hampshire.
That venue was purposefully chosen because this year marks the sixtieth anniversary of what is now called the Bretton Woods Agreement. Signed during World War II by the Allied powers, the agreement established the basic structure of the international monetary system for the post-war world. Though it did not envision a single global currency, the agreement made the US dollar as the world’s reserve currency, which has since become the dominant currency in international finance.
I agree with former Federal Reserve chairman Paul Volcker’s statement that “a global economy requires a global currency.” However, that broad statement of principle leaves open the question of how it is to be achieved, which is why I attended the SGCA conference. I have strong, clear views on the issue of money and currency and wanted to ensure that my point of view was represented. And what is my point of view?
Basically, I agree with the thinking of Ludwig von Mises who noted that currency is too important a component of society for it to be put into the hands of government for management. Instead, currency – like any other good or service – should be a product of the free-market.
For example, central bankers do not have any bottom line accountability. They don’t care whether or not they make a profit. Their actions are instead influenced by and subject to government intervention and manipulation, which undermines the usefulness of any currency. To be most effective in commerce, currency should be a neutral tool in commerce, but political decisions erode and can even completely destroy that neutrality and the unbiased nature that a currency should have.
Free-market currency on the other hand is fundamentally different. It is a product of the free-market, which itself is the result of voluntary interaction by individuals seeking to improve their position. Free-market currency is a product of the market process. If a company creates a currency that people find useful, they will use it and pay to use it. If the currency is sufficiently accepted, the company will make a profit and stay in business.
This bottom-line accountability is absent from central banking. Central bankers stay ‘in business’ regardless of how well or poorly they manage their currency. And experience shows central bankers more often than not manage the currency poorly. Consequently, I do not support the idea of a single global currency managed by a global central bank, nor any fiat currency that is forced to circulate – regardless of the quality of that currency – because of government mandate.
If currencies are allowed to compete on their own merits, a single (or not more than a few) global currency will emerge in time. It will be the reverse of Gresham’s Law, where bad currency drives out the good currency when the two are made to circulate as equivalent because of government mandate. Instead, without the government intervention, good currency will drive out bad, which will be a result regardless whether that currency intends to circulate just nationally or globally.
Readers will probably recognize that a lot of this thinking has gone into GoldMoney – http://goldmoney.com. With GoldMoney we are delivering a currency that competes on its own merits, and circulates because it is useful, not because of government mandate or legal tender laws. It was this message that I delivered to the SGCA conference, and I am hopeful that this thinking about free-market currency will help shape the basic principles upon which the SGCA is being founded.
I encourage you to learn more about the SGCA and to visit its website – www.singleglobalcurrency.org. Also, if you consider the objective of a single global currency to be worthwhile, the SGCA would welcome your support and donation. They accept most major national currencies as well as GoldMoney – their Holding name is Single Global Currency, and their Holding number is 51-41-17-A.