By Ranjan X. Roy
Michele Bachmann (R-MN), best known for her views on “re-education camps” and McCarthyism, recently introduced a “resolution that would bar the dollar from being replaced by any foreign currency,” in response to Chinese comments regarding the potential use of SDR’s as a global reserve currency. When I paused to evaluate the resolution, visions of Freedom Fries danced through my head.
Rather than addressing the vital impact currency reserves and related policy have had on the current crisis and our future prosperity, Bachmann’s “legislation” was an absurd digression rooted in paranoia. Bachmann articulated her fears on the Glenn Beck show:
What that means is that all of the countries of the world would have a single currency. We would give up the dollar as our currency and we would just go with a one world currency. And now for the first time, we’re seeing major countries like China, India, Russia, countries like that, calling for a one world currency and they want this discussion to occur at the G20… Once you lose your economic freedom, you lose your political freedom. And then we are no more, as an exceptional nation, as we always have been. So this is imperative.
Central banks and monetary authorities globally have accumulated more than $6 trillion of currency reserves as of 2007, with 63.9% being held in USD. While the mechanics and history of reserve currencies are complicated, what is certain is the massive increase in USD reserves held by nations like China is a vital issue of economic policy that must be addressed to bring longer-term global prosperity into balance.
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