Economic Democracy - Reform Agendas - Regional Trading Currencies

Regional Trading Currencies

According to Thomas H. Greco, Jr., author of New Money for Healthy Communities "The pinnacle of power in today's world is the power to issue money. If that power can be democratized and focused in a direction which gives social and ecological concerns top priority, then there may yet be hope for saving the world". In this regard, he recommended the regionalization of currencies. Cook suggested that "under the Bretton Woods system, the Federal Reserve acted as the world's central bank. This gave America enormous leverage over economic policies of its principal trading partners". Cook claimed that developing nations were susceptible to exploitation mainly because they have no independent monetary system, using the U.S. dollar instead. This fed the fractional reserve banking system, operated by the U.S., Canada, Europe, and Japan. Developing nations paid heavily for this service through market interest rates and because banking profits and property ownership emigrate to financial centers elsewhere.

According to Smith, "Currency is only the representation of wealth produced by combining land (resources), labor, and industrial capital". He claimed that no country was free when another country has such leverage over its entire economy. But by combining their resources, Smith claimed that developing nations have all three of these foundations of wealth:

By peripheral nations using the currency of an imperial center as its trading currency, the imperial center can actually print money to own industry within those periphery countries. By forming regional trading blocs and printing their own trading currency, the developing world has all four requirements for production, resources, labor, industrial capital, and finance capital. The wealth produced provides the value to back the created and circulating money.

Smith further explained that developed countries need resources from the developing world as much as developing countries need finance capital and technology from the developed world. Aside from the superior military power of the imperial centers, the undeveloped world actually has superior bargaining leverage. With independent trading currencies, developing countries could barter their resources to the developed world for the latest industrial technologies. Barter avoids "hard money monopolization" and the unequal trade between weak and strong nations that result. Smith suggested that barter was how Germany resolved many financial difficulties "put in place to strangle her", and that "World Wars I and II settled that trade dispute". He claimed that their intentions of exclusive entitlement were clearly exposed when the imperial centers resorted to military force to prevent such barter and maintain monopoly control of others' resources.