# Why not a one-world currency? **URL:** \ **Category:** Factual Questions\ **Created:** [February 20, 2003, 6:42am UTC](https://boards.straightdope.com/t/why-not-a-one-world-currency/156285 "2003-02-20T06:42:24Z")\ **Posts on this page:** 5\ **Page:** 3
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [February 24, 2003, 7:11pm UTC](https://boards.straightdope.com/t/why-not-a-one-world-currency/156285/41 "2003-02-24T19:11:42Z")
I don’t think a World Bank would work: On a national level, the central bank has to react to market forces and economic indicators to manipulate the interest level, fiddle with the money supply, and perform other economic arcana to keep the delicate economic balance on the good side. This is so politically charged, aside from being amazingly complex, the Fed in the US is not a political seat. It’s closer to a board of directors, more-or-less divorced from all three branches of government, so no President or Congressman can institute bad policy for immediate political gain. Controlling the economy of one large nation is one thing. Controlling the world’s economy is quite another: What do you do when Asian overfishing has lead to a massive economic downturn in most of the economies on the Pacific Rim, whereas an increased need for diamonds to use in advanced semiconductors has caused the South Africans to be fairly rolling in the loot. Do you decrease the prime rate to jumpstart Asia, or do you increase it to prevent Africa from becoming massively inflationary? How would a World Bank deal with war: Swiss- or American-style? (That is, would it allow both sides to keep doing business to preserve `neutrality’ or would it embargo one or both of the parties? What the hell happens when the _banks_ embargo you?) I can’t imagine it working. ---
**Author:** ![Fuel](https://avatars.discourse-cdn.com/v4/letter/f/df705f/32.png) [@Fuel](https://boards.straightdope.com/u/Fuel)\ **Post date:** [February 24, 2003, 8:23pm UTC](https://boards.straightdope.com/t/why-not-a-one-world-currency/156285/42 "2003-02-24T20:23:35Z")
I can’t imagine it working either, which supports my position about countries running out of currency, no? ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [February 25, 2003, 6:03am UTC](https://boards.straightdope.com/t/why-not-a-one-world-currency/156285/43 "2003-02-25T06:03:55Z")
**Fuel** , your arguments are intriguing, interesting, and absolutely nonsensical. It takes insight to be as interestingly wrong as you have been, and I only hope I can reduce, instead of compound, your errors. You basically have one hypothesis I’ve gathered from your posts in this thread: The wealthy nations would take advantage of the OUC (Official Universal Currency) by stockpiling it, leading to massive inflation at home and a return to barter economies in the rest of the world. Loans to the third world would be little more than yo-yos: Currency is only good for buying things from the Big Guys, and they don’t give it back. OK, right there we see some internal contradictions: How would the currency be worth _anything_ if the first world keeps it mostly among itself? You touch on this concept in your mentions of barter, but I don’t think you realize what you’ve really hit upon here. It’s important, so I’ll give it its own line. **Money is only worth something when it is used.** It is supremely stupid to stockpile pieces of paper. Or to create unread files in a bank’s database. Even gold is worthless, if it is pressed into coins and then locked away in a vault. (Hell, have _you_ ever tried swimming in metal? :D) If the rich nations decided to not spend their money in the outside world, they would only harm themselves. The hypothetical (and, really, unworkable) World Bank would do well to screw the prime rate and just collect all of those physical artifacts, the paper and coins, and _burn them_ in that scenario. But even that wouldn’t work: Money is not printed. Money is not minted. Money is created by the economy. Let me restate that: **Money is created by the economy.** Banks create money: Whenever a bank loans out money, they are creating money based on certain rules they follow to avoid losing money. One of those rules is leverage: How much money does the person have access to? Another rule is credit rating: How much can we trust this person? The bank profits off of this money-creation by charging interest: How much more can we make this schmuck pay us than we have paid him? Interest is of primary importance here: Interest is a direct measure of how much money the economy is creating. The Prime Rate is the _ur_-interest, the willingness of the Federal Reserve to create money for banks to use. When the Prime Rate is low, banks are encouraged to take money to make money, and they lower their rates as well. That gives Joe Sixpack the incentive he needs to build that new garage with a cheap loan, so he spends money at Lowes, which spends money at the lumber mill, and so it goes, until the economy has too much money. When money is too cheap, inflation sets in. The Fed, if it’s doing its job, raisies the Prime Rate, giving banks less of an incentive to create money, giving Joe Sixpack less of an incentive to borrow and spend money. (Note, again, how I didn’t once mention physical artifacts. Everyone, from the Fed down to Joe Sixpack in Yonkers, could be using cryptographically signed e-cash and the system works the exact same way.) OK, fiddling with the Prime Rate is well and good, but what if we could find a _use_ for more money? What if we could make more money _and_ spend more money, thereby sidestepping inflation altogether? Aha, that’s where foreign trade comes in. That’s where an expansionary economy becomes immensely valuable. That’s when you send Magellan and Drake and Cristoforo Columbo off on crazy adventures to find spices and silks and crazy natives we can subjugate and force-feed manufactured goods from the Motherland as we rape their wilderness. (That, BTW, is Mercantilism.) Spending in the Third World is _great_! We can keep interest rates down, keep economic production up, and expand all of our markets into brave new worlds full of as-yet uncharted demographics! We’re sailing on the wide accountan-sea! (Help me. I’ve sarcasterized myself and I can’t stop.) So, where does that explanation leave your hypothesis? Sucking vacuum on Pluto, I’m afraid. Any country worth the few neurons tied up in the higher beuraucratic (I never could spell that bastard of a word.) functions would be more than eager to spread its money around far and wide, thereby increasing its markets and giving its economy new life. `Running out’ of money is absurd: Every economy is playing on the edge of having _too much_ money, because that’s where growth lies. A severely deflationary country would be running out of money, but that specific money would quickly become useless and would be replaced. ---
**Author:** ![Fuel](https://avatars.discourse-cdn.com/v4/letter/f/df705f/32.png) [@Fuel](https://boards.straightdope.com/u/Fuel)\ **Post date:** [February 25, 2003, 6:47am UTC](https://boards.straightdope.com/t/why-not-a-one-world-currency/156285/44 "2003-02-25T06:47:45Z")
> [@](#): > > \*Originally posted by Derleth \* > **Fuel** , your arguments are intriguing, interesting, and absolutely nonsensical. It takes insight to be as interestingly wrong as you have been, and I only hope I can reduce, instead of compound, your errors. > > \>_Listen, let’s start by saying one thing here: not one bloody thing you just said (ok maybe one) was something I did not know. Did you realize that my whole theory was trying to explain why this OUC would NOT work?_ > > You basically have one hypothesis I’ve gathered from your posts in this thread: The wealthy nations would take advantage of the OUC (Official Universal Currency) by stockpiling it, leading to massive inflation at home and a return to barter economies in the rest of the world. Loans to the third world would be little more than yo-yos: Currency is only good for buying things from the Big Guys, and they don’t give it back. > > \>_Well, now I understand why you think i’m a jackass… you’ve gotten my theory wrong (which i shouldn’t have called a theory, more like thinking out loud). Good job. I never said the U.S. would stockpile money exclusively and indefinately. Did you not see my mention of FDI and loaning back out the money in order to take it back again two-fold??? THat’s your Christopher Colombus righ there chief. And The reason i mentioned mass inflation is that it would be one reason why this intense stockpiling would NOT work. Then i was asking how maybe it could work if that situation arose where we got stuck with too much money. Here is the quote from my post where i actually said what you just said in your post: “Now, to shed a contrary light on this point: imagine how bad inflation will be domestically after the U.S. stockpiles all this money.” Notice how i said this was contrary to my previous ramblings??? Do you understand now that i was brainstorming?_ > > OK, right there we see some internal contradictions: How would the currency be worth _anything_ if the first world keeps it mostly among itself? You touch on this concept in your mentions of barter, but I don’t think you realize what you’ve really hit upon here. It’s important, so I’ll give it its own line. > > **Money is only worth something when it is used.** > > It is supremely stupid to stockpile pieces of paper. Or to create unread files in a bank’s database. Even gold is worthless, if it is pressed into coins and then locked away in a vault. (Hell, have _you_ ever tried swimming in metal? :D) If the rich nations decided to not spend their money in the outside world, they would only harm themselves. The hypothetical (and, really, unworkable) World Bank would do well to screw the prime rate and just collect all of those physical artifacts, the paper and coins, and _burn them_ in that scenario. > > But even that wouldn’t work: Money is not printed. Money is not minted. Money is created by the economy. Let me restate that: > > **Money is created by the economy.** > > \>\* oh geez, then you go into a painful, but no doubt informative grunt on interest rates…\* > > Banks create money: Whenever a bank loans out money, they are creating money based on certain rules they follow to avoid losing money. One of those rules is leverage: How much money does the person have access to? Another rule is credit rating: How much can we trust this person? The bank profits off of this money-creation by charging interest: How much more can we make this schmuck pay us than we have paid him? > > Interest is of primary importance here: Interest is a direct measure of how much money the economy is creating. The Prime Rate is the _ur_-interest, the willingness of the Federal Reserve to create money for banks to use. When the Prime Rate is low, banks are encouraged to take money to make money, and they lower their rates as well. That gives Joe Sixpack the incentive he needs to build that new garage with a cheap loan, so he spends money at Lowes, which spends money at the lumber mill, and so it goes, until the economy has too much money. When money is too cheap, inflation sets in. The Fed, if it’s doing its job, raisies the Prime Rate, giving banks less of an incentive to create money, giving Joe Sixpack less of an incentive to borrow and spend money. > > (Note, again, how I didn’t once mention physical artifacts. Everyone, from the Fed down to Joe Sixpack in Yonkers, could be using cryptographically signed e-cash and the system works the exact same way.) > > OK, fiddling with the Prime Rate is well and good, but what if we could find a _use_ for more money? What if we could make more money _and_ spend more money, thereby sidestepping inflation altogether? Aha, that’s where foreign trade comes in. That’s where an expansionary economy becomes immensely valuable. That’s when you send Magellan and Drake and Cristoforo Columbo off on crazy adventures to find spices and silks and crazy natives we can subjugate and force-feed manufactured goods from the Motherland as we rape their wilderness. (That, BTW, is Mercantilism.) Spending in the Third World is _great_! We can keep interest rates down, keep economic production up, and expand all of our markets into brave new worlds full of as-yet uncharted demographics! We’re sailing on the wide accountan-sea! > > (Help me. I’ve sarcasterized myself and I can’t stop.) > > So, where does that explanation leave your hypothesis? Sucking vacuum on Pluto, I’m afraid. Any country worth the few neurons tied up in the higher beuraucratic (I never could spell that bastard of a word.) functions would be more than eager to spread its money around far and wide, thereby increasing its markets and giving its economy new life. `Running out’ of money is absurd: Every economy is playing on the edge of having _too much_ money, because that’s where growth lies. A severely deflationary country would be running out of money, but that specific money would quickly become useless and would be replaced. > > \*Lesson for you to learn, **Derleth** , is to make sure you got the other guys’ facts straight before you say anything along the lines that you did. But i do appreciate the time you took and your answer was informative nonetheless. Here’s a quote from my last post you probably missed: “They would be dead in the water and then we would give them loans/investments to keep them alive and supplying, and then rob them again.” I will try to be more organized in my writings in the future to make sure this doesn’t happen again. \* ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [February 25, 2003, 6:56am UTC](https://boards.straightdope.com/t/why-not-a-one-world-currency/156285/45 "2003-02-25T06:56:06Z")
Eh, sorry. I guess I won’t make that mistake again. [Previous page](https://boards.straightdope.com/t/why-not-a-one-world-currency/156285.md?page=2)