China Yuan, currency, Currency Conversion, Currency volatility, Euro, G 8, G20, global trade, greenback, Japanese Yen, normalisation, Normalization, Renminbi, Reserve currency, Trade Currency, Trade imbalance, U S Dollar, world trade
I have been observing world currencies and trade for the past several decades and began to wonder what happens if the currency – in this case the US Dollar – loses its value and its place due to economic reasons. I don’t purport to be an economist, but I have come up with what I think is a workable , though complex solution (initially) to address this. It would be great to have a serious and lively discussion on this topic!
World over the greenback is losing its edge.
Most of the increase (both spot, futures) in commodity prices designated in US Dollar currency is attributable to speculation and the in-elastic demand-supply conditions driven more by politics, war-mongering and speculative interests than genuine economic reasons. Asset valuation have taken a beating worldwide. But the common thread running through all this is the Asset/Reserve and Trade Currency weakness of the US Dollar.
There is a solution to this asset/trade/reserve currency valuation crisis – start two new currencies based on the following. This will be perfectly neutral for trade and be beneficial
– G8 currencies basket – designated as “Global Principle Note (GPN)” which has a currency conversion factor -based-lined as of COB January 10 2011 – against all individual G8 country currencies exchange rates prevailing as of that date;
– G 20 currencies basket designated as “Global Subsidiary Note (GSN)” which has a currency conversion factor based on the currencies of the G 20 member nations currencies with the exchange rates prevailing on the COB January 10, 2011.
The ratio of GPN to GSN will be a constant for all currency/trade valuation purposes and will be determined on currency values at COB January 10, 2011.
Any currency conversions going forward will be based on this ratio when a G8 country does a deal with a non-G8 country.
All other nations currency conversion rates, other than the above G 8/G 20 countries, will be linked to the GSN base-lined on values determined at COB January 10, 2011.
This will hopefully achieve the normalization of the existing currency volatility and serve as a spring board for fresh thinking on the subject. It may also likely arrest inflation we see spreading around the world.