Sunday, 4 December 2011
Money May Not Make The World Go Round
Managing a currency is not easy, even if a state has considerable control over its affairs and has a high level of self sufficiency. Managing a currency that serves many other countries one way or another, has an international role in trade and banking but is critical to the health of your own economy is exceptionally difficult.
Looking down the centuries of history the lesson is that it is impossible to do without periods of severe stress, endless difficult “no right answer” decisions and the certainty of eventual collapse due to the internal contradictions, war or unforeseen disaster.
In other words, the game is up for the period when we have had three major currency systems operating on this basis. The Euro issues are well enough known in our media as we see what is happening at present.
The Dollar, once under the control of the US Government but which has come to have a life of its own has just been used to save the Euro. The price will have to be paid by additional strains on that currency which is already vulnerable and in trouble.
The UK pound, that once ruled the waves, is in a kind of Mexican Standoff with both the Euro and the Dollar. Were the UK to be remotely independent and in control of its own affairs then it might find its own solution.
But it has handed so many powers to the EU, for so long has been Airstrip One for the USA and has allowed The City to become so embroiled with Wall Street activities that it now in a deep deep hole.
The USA wants us to help to sort out and buttress the Euro. The Euro wants us to give financial support but otherwise stay out of the way because we will only mess up. The City wants us to use the opportunities offered by the Euro’s troubles to bash the Euro. Wall Street also wants to bash the Euro but nobody to know.
At one time London was central to the financial and money systems of the Empire. We know how that ended after we ran out of money in the 1940’s. Then we had thirty years of trying to run an economy that kept the Sterling Area afloat. That ended badly with a wreck of an economy saved by North Sea Oil and Gas.
On that basis we moved on to a “service” economy expansion with financial services being a major feature, tied in to a network of tax havens and global systems. That is now at an end but we cannot accept that it has gone for good.
Also gone is the Euro as it was intended to be and whose future is clouded at least. Then there is the dollar and how long it can continue in its present form. The one certainty is that its past role is finished as well.
So what are we left with?