Friday, March 27, 2009

There is No Push For a "Global Currency"

Michelle Bachman is so embarrassingly stupid that if I lived in Minnesota I'd lie and say I was from Wisconsin.

Here's a lesson for the stupidest person in Congress:

The remarks you refer to when you talk about a "global currency" are about the international reserve currency. It has nothing - absolutely nothing - to do with the existence or non-existence of the dollar.

Matthew Yglesias:

This falsehoods here are coming so fast and loose that it’s hard to know where to start here. But to get to the main point, most countries hold “reserves” of various kinds—foreign currency and gold. Most countries, right now, primarily hold dollars. Euros are also popular, and Yen and British Pounds somewhat less so. The United States of America does not, obviously, hold any dollars in our reserves. We actually have quite a lot of gold. And different countries vary their practices in this regard. But most countries mostly hold their reserves in dollars. So the dollar is, in effect, the “global reserve currency.” The IMF also issues something called Special Drawing Rights that countries can use as a reserve asset. SDRs work as a kind of meta-currency, with their value based on a basket of major world currencies. A Chinese official suggested that it might be good for the world to tilt away from such a heavy reliance on dollars as the reserve currency of choice, since this leaves countries exposed to policy decisions in the United States, and toward something more SDR-like that would be balanced between dollars and euros and yen and pounds and so forth.

A good rule to live by: if Michelle Bachman and Glenn Beck are talking, they're either lying or wrong, or a lot of both.


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