Saturday 19 September 2009

Currency should be chosen by the market, not the UN

The UN's plans to create a new global supercurrency to replace the dollar are back in the news, this time with the reason given being anti-Americanism. From Fox:
According to Flassbeck demand for the US dollar is “irrational.”
Is it really? Are humans not naturally irrational? Isn't it more likely that one human (Flassbeck) is likely to be irrational than many who demand the dollar?

If I'm willing to pay you in dollars, and you're willing to sell me something in exchange for dollars, so be it. If we are both willing to use pounds, euros, yen, blue tack or livestock in exchange for a product, why should government, or indeed a supranational body like the UN tell us we cannot use it? It's a means of exchange, not something that government needs to get involved in.

And perhaps if there was a bit of competition in currency, they wouldn't swing about so much, or lose their value so quickly. Hayek was probably right.

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