RTFA: http://www.eurodad.org/whatsnew/articles.aspx?id=3…

German Chancellor Angela Merkel and French President Nicolas Sarkozy said “Bretton Woods II” should bring about “genuine, all-encompassing reform of the international financial system”. The Council of the European Union sees the meeting as “tak[ing] early decisions on transparency, global standards of regulation, cross-border supervision and crisis management, to avoid conflicts of interest and to create an early warning system, so as to engender confidence among savers and investors in every country.” In announcing the meeting, the spokesperson for US President George Bush said that “leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes, and, in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes for the world’s financial sector”. UK Prime Minister Gordon Brown, in a mid-October speech, set out several principles. These include transparency (internationally agreed accounting standards, credit insurance market standards), integrity (credit agencies, executive pay), responsibility (board member competency and expertise), sound banking practice (protecting against speculative bubbles).

For the new international architecture Brown and others are discussing an effective global early warning system for risk prevention, globally accepted standards to supervise cross-border capital flows and the activities of global firms, plus stronger institutions for cooperative action in crises. For CSOs it will be important that equity as well as stability is discussed at the conference and that fairer rules are developed for aid, debt, trade, investment, taxation and capital flight. The governance of the international financial institutions must be radically changed, fair debt workout mechanisms introduced, and much more.

Now that the election is behind us, on to new tasks… A very prominent, timely question: what will be the composition of the next global reserve currency? The US Dollar has enjoyed this position for some time, but the Dollar is in some trouble. What is the solution? That will be decided on November 15, 2008.

I’ve been calling this Bretton Woods III according to the following progression:

BW I was the agreement of world gold exchange
BW II was the agreement of the dollar reserve currency
BW III will be the establishment of a new model for global currency exchange

It seems this will be called Bretton Woods II for some reason, but no matter. The end result is a third round of negotiations for global reserve currency policy. What will this look like?

RTFA: http://money.cnn.com/2008/10/13/news/economy/centr…

NEW YORK (CNNMoney.com) — The Federal Reserve announced Monday it will offer an unlimited amount of dollars to three other central banks in an unprecedented move to provide liquidity to the global banking system.

The U.S. central bank will lend dollars at a fixed interest rate to the central banks of England, Switzerland and the European Union, according to a joint statement from the banks.

The other central banks will be able to borrow “any amount they wish” in exchange for collateral. The goal is to flood the financial system with much-needed dollars.

After they borrow dollars from the Fed, the Bank of England, the European Central Bank and the Swiss National Bank will provide private financial institutions with one-week, 28-day and 84-day U.S. dollar loans in the latest attempt to unfreeze credit.

Am I the only one who is nervous about the phrase, “flood the financial system with much-needed dollars?” See, the trick to “paper” money is that the supply is potentially infinite, so it only retains value when that supply is kept at a finite level. The Fed, especially under Bernanke, has used a policy of inflation targeting – gradually increasing the money supply year-over-year within certain limits – to enable speculators to calculate the value of their money in the future.

To me, these words spell disaster for anyone who has locked their dollars into long-term bonds or bills. With an interest rate of around 4% on the 10-year T-Bond, that’s a slim inflation target to hit when you’ve just promised unlimited dollars.

RTFA: http://finance.google.com/finance?cid=983582

…not to fan the flames or anything, but the DOW has returned to September 11, 2001 levels. Really, that’s not such a bad thing, given how overvalued everything became during the deregulation of the last 8 years. …but in 52 weeks, the volume of the DOW has been cut in half, and that level of shock is going to … reverberate.

Here’s the upside: there is still actual value in the US economy. Yes, we’re the collective victims of massive pump-and-dump fraud, but it’s hardy like “we” aren’t producing anything. In other words, the market needs to bottom out at some value above zero. That will happen when people start to believe that things are undervalued, so it will make sense to invest again. This very process can be hindered if there is no effective monetary system that functions as a medium for the transmission of value, and that just might happen if the dollar fails.

Why, dear reader, might the dollar fail? Get ready for Bretton Woods III.

RTFA: http://www.youtube.com/watch?v=YBVB1Uc0nko&NR=1

Dr. Ron Paul, on September 29 2008, speaks to the House for two minutes.

In case you didn’t know, Dr. Paul opposes almost ALL forms of government interference, but in this speech, he demands regulation of the Federal Reserve (the Fed) and other financial entities. This isn’t a reversal of his policy – he has always taken issue with the Federal Reserve – but he attributes the current financial crisis to the actions of the Fed, and points out that we can’t give more money to the very institutions that created this mess.

Ultimately, he predicts the collapse of the US Dollar. …and on that note, I’d like to reference the North American currency union.

RTFA: http://jtaplin.wordpress.com/the-cost-of-empire/

It is of course one of the defining articles of faith of the conservative movement that Reagan militarily spent the Soviets into bankruptcy. But it is a Big Lie. Of course the Soviet economy was a hollowed out shell in 1989, but it also held an extrordinary number of assets including one of the world’s largest oil reserves and an well educated work force. Freed from the need to compete in an arms race, the Russians were able to turn their talents to business. Today, the Russian central bank and the Central Bank of China, our other cold war foe, now control over 20% of the U.S. Treasury debt, and we control none of theirs. Exactly who spent who into bankruptcy?

Interesting point, but Taplin’s essay is LOADED with many such insights. This is well worth the read, although you won’t find some magic-bullet solution in the closing paragraphs. Consider these details, and arrive at your own conclusion.