Go Lean…Caribbean

Go Lean Commentary

How did the world measure money and wealth in the past? Simple: Gold.

Then in 1971, the US changed from the Gold Standard … to a Non-Gold Standard or Fiat money. (The Gold Standard refers to the monetary system in which the standard economic unit of account is based on a fixed quantity of gold. Most nations abandoned the gold standard as the basis of their monetary systems at some point in the 20th century). Now the value of American money is measured by “American money” (declared value). But wait, wait: the rest of the world’s money is also now measured by American money – the world measures money and wealth by US Dollars! (See the Appendix VIDEO below).

Even in Europe; when the Euro currency was launched in 1999, it was pegged close to the US dollar 1-to-1.17. Today, the world’s economy is measured by US Dollars (USD) and the Euro, which continue to be the primary reserve currency of most commercial and central banks^[54]. The Dollar is first and the Euro is the second most widely held international reserve currency. As of August 2018, with more than €1.2 trillion in circulation, the Euro has one of the highest combined values of banknotes and coins in circulation in the world, having surpassed the U.S. dollar.^[13]

Now the rest of the world – China most definitely – wants to de-Americanize the world’s economy. The world’s population is nearly 7 billion people, while the combined populations of the US and the EU is a little less than 1 billion; (340 million + 508 million respectively). There are some Big countries and Big economies at stake: think China with their 1.3 Billion people or India with their 1.2 Billion.  It is therefore logical to contemplate de-Americanizing the world’s economy – it makes so much sense. In addition, at the time of this writing, the US is in the midst of a federal government shutdown … again.

It is therefore plausible, viable and prudent for non-American stakeholders to want to be shielded from American chaos. See this reasoning in this White Paper here; published by the Government of Canada:

Title: Chimerica – The Beginnings of a New Regional Reserve

What is it?
Chinese concerns over the ability of the U.S. to manage its debt have led to recent calls by China to “de-Americanize” the world economy and seek an alternative to the U.S. dollar as the international reserve currency.¹ As far back as 2008, China proposed the need for a new international currency reserve which would limit the importance of any one national currency.²

In recent times, the U.S. economy has avoided a debt crisis by raising the debt ceiling level. Any adjustment has the potential to impact the Chinese economy, given the level of exposure to U.S. securities. The People’s Bank of China (PBOC) has amassed US$3.5 trillion in foreign reserves – largely U.S. Treasury securities. The fact that a single institution wields so much influence over global macroeconomic stability has caused considerable anxiety, with doomsayers predicting that doubts about U.S. debt sustainability will force China to sell off its holdings of U.S. debt. This would drive up interest rates in the U.S. and ultimately could trigger the dollar’s downfall.

However, selling off U.S. Treasury securities may not be in China’s interest, as it would drive up the renminbi’s (RMB) exchange rate against the U.S. dollar, diminishing the domestic value of China’s reserves and undermining the export sector’s competitiveness. Indeed, a U.S. Defense Department report last year on the national security implications of China’s holdings of U.S. debt concluded that “attempting to use U.S. Treasury securities as a coercive tool would have limited effect and likely would do more harm to China than to the [U.S.].”³

U.S. debt is only one side of the coin. Economist Robert Shiller believes that the real estate bubble is a serious problem in China.⁴ According to Shiller, people are buying apartments in the expectation that house prices will continue to rise. This gambling mentality is leading them to make completely irrational buying decisions. Slowing economic growth and exports has the potential to expose a serious financial bubble in the Chinese housing sector. The banking sector in China would need to be recapitalized should the Chinese housing bubble burst.

Why is it important?
The symbiotic relationship between Chinese export-led growth and U.S. consumption is such that should one economy falter the other will follow. Both of these disruptors exist against a backdrop of rising bilateral trade using national currencies and a call by the International Monetary Fund for a new global currency to replace the U.S. dollar.⁵

Research by AMRO-Asia, the chief economists of ASEAN+3, finds that while the U.S. remains the anchor currency in the Asian region, the U.S. dollar has “seemingly lost its dominating status.”⁶ At the same time, the weight of the RMB in regional currency baskets has been increasing since 2005.^7  8 The rise of the RMB as the Asian regional reserve has implications for regional trade and global growth. In the long run, the success of the U.S. economic pivot to Asia is likely to be slowed by the rise of the RMB and the corresponding decline in U.S. economic power. Over the last decade, U.S. growth has been facilitated by Chinese holdings of U.S. securities. Questions remain as to whether a decoupling in the long run will have a positive outcome for China and the U.S. as well as global growth.

References

1. Puzzanghera, J. “Upset over U.S. Fiscal Crisis, China Urges a ‘de-Americanized World’.” Los Angeles Times. October 2013. http://www.latimes.com/business/money/la-fi-mo-china-debt-limit-shutdown-de-americanized-economy-20131014,0,1990632.story#ixzz2mwhEb6II(link is external)
2. Landler, M. “Seeing its Own Money at Risk, China Rails at U.S.” The New York Times. October 2013. http://www.nytimes.com/2013/10/16/us/politics/china-rails-over-us-fiscal-crisis-seeing-its-own-money-at-risk.html?_r=0(link is external)
3. Morrison, W. and M. Labonte. “China’s Holdings of U.S. Securities: Implications for the U.S. Economy.” (CRS Report for Congress.) Congressional Research Service. August 2013. http://www.fas.org/sgp/crs/row/RL34314.pdf(link is external)
4. “2013 Nobel Prize winner: China’s real estate bubble is serious.” People’s Daily Online. October 2013. http://english.people.com.cn/business/8427784.html(link is external)
5. Snyder, M. “Shift From U.S. Dollar As World Reserve Currency Underway – What Will This Mean For America?” munKnee. http://www.munknee.com/shift-from-u-s-dollar-as-world-reserve-currency-underway-what-will-this-mean-for-america/(link is external)
6. Chen, C., R. Siregar and M Yiu. “RMB as an Anchor Currency in ASEAN, China, Japan and Korea Region.” ASEAN+3 Macroeconomic Research Office. April 2013. https://www.cb.cityu.edu.hk/ef/doc/Conference%20on%20Renminbi%20and%20the%20Global%20Economy/papers/Chuling%20Chen.pdf(link is external)
7. Chong, F. “Is RMB Approaching Safe Haven Status?” Asia Today International. June 2013. http://asiatoday.com.au/content/rmb-approaching-safe-haven-status(link is external)
8. Irwin, N. “This one number explains how China is taking over the world.” Washington Post. December 2013. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/03/this-one-number-explains-how-china-is-taking-over-the-world/

Source: Government of Canada – Posted September 28, 2018; retrieved January 17, 2019 from: http://www.horizons.gc.ca/en/content/chimerica-%E2%80%93-beginnings-new-regional-reserve

This commentary continues a 5-part series on European Reckoning. This entry is 2 of 5 in this series from the movement behind the book Go Lean … Caribbean in consideration of the past, present and future of European interactions. While the Caribbean were all settled and organized by European powers, the lack of organizational efficiency for our benefit is a glaring concern. We have 30 member-states in the Caribbean region and yet, there is no coordinated regional stewardship of the economic, fiscal and monetary affairs of our communities. The other commentaries in the series are cataloged as follows:

1. European Reckoning: IMF Apologies
2. European Reckoning: China seeks to de-Americanize the world’s economy
3. European Reckoning: Settlers -vs- Immigrants
4. European Reckoning: Christianity’s Indictment
5. European Reckoning: Black “Greco-Roman” Wrestler victimized for his hair

In the first submission of this series, the European Great Powers were also identified as the Western Alliance. It’s comprised of only White/Christian European nations and North America (US & Canada). It is understandable therefore if Asian, African or Latin American people do not feel adequately represented in the governance of the world’s economy. Yes this status quo is flawed. The US, being the dominant currency in global trade has proven fraught with deficiencies. The aft-mentioned “shutdown” – when Congress fails to pass sufficient appropriation bills or continuing resolutions to fund federal government operations and agencies, or when the President refuses to sign such bills or resolutions into law – is not the first one. In fact, there have been these previous shutdowns in the last 40+ years:

Since 1976, when the current budget and appropriations process was enacted, there have been 22 gaps in budget funding, 10 of which led to federal employees being furloughed. – Source: Wikipedia

The world must not wait for the US to get their political house in order before we can do business. China is a strong advocate for this de-Americanizing effort. Does this mean they want to supplant the US Dollar for their own Renminbi? (This is the currency of the People’s Republic of China, the basic unit of which is the yuan). If the answer to this question is Yes, then that would be China’s prerogative to address the needs of their economy.

Our focus in the Caribbean, must be first and foremost the Caribbean.

The advocacy of the movement behind the Go Lean book is to implement the institutional solutions to do the heavy-lifting ourselves to manage our own economic, fiscal and monetary affairs.

• Not to be a parasite of the United States of America or Europe.
• Not to be a parasite of China.

The proposed solution is the Caribbean Central Bank (CCB); this is structured as a formal “cooperative” among the region’s existing Central Banks. The CCB is modeled upon the European Central Bank (ECB), the same as the Caribbean Union is modeled upon the European Union. This CCB institutional strategy also calls for the introduction of a regional currency, the Caribbean Dollar (C$). The CCB will therefore be the sole controlling agent of the monetary policies of this regional C$ currency.

Introducing and implementing a new currency is a Big Deal. But yes, we can succeed! We have a proven track record – the Euro – to model and learn from. This theme of technocratic monetary and currency stewardship has been detailed in many previous Go Lean commentaries; see a sample list here:

Having the American Dollar regulate the world economy has not been good … for anyone but America, when “they” are operating in a Situation Normal. But today, and 22 times in the last 43 years that they have had government shutdowns, it is Situation Normal All Foul Up (SNAFU). Moving that currency functionality to the Euro may be more of the same: there is also discord in the Euro lands – think Brexit and the Greece Sovereign Debt crisis.

What about moving the “world currency” functionality to China, or India, or Japan? Again, while these moves may be good for those countries, they may not necessarily be as good for the rest of the world, or our world in the Caribbean. This is what independence should mean to us: taking care of our own economic, fiscal and monetary needs. Even better than independence would be a regional interdependence among just our Caribbean neighbors.

Now is the time for the Caribbean region to lean-in for this roadmap for the Caribbean Union Trade Federation and the Caribbean Central Bank, as described in the book Go Lean … Caribbean. The benefits of this roadmap are vast and varied, but first we stop being a parasite of these European-North American (White) World Powers; not parasites, we become protégés instead.

Yes, we can … make the Caribbean, our homeland, a better place to live, work and play. 🙂

About the Book
The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU), for the elevation of Caribbean society – for all member-states. This CU/Go Lean roadmap has these 3 prime directives:

• Optimization of the economic engines in order to grow the regional economy to $800 Billion and create 2.2 million new jobs.
• Establishment of a security apparatus to ensure public safety and protect the resultant economic engines.
• Improve Caribbean governance to support these engines, including a separation-of-powers between the member-states and CU federal agencies.

The Go Lean book provides 370-pages of turn-by-turn instructions on “how” to adopt new community ethos, plus the strategies, tactics, implementations and advocacies to execute so as to reboot, reform and transform the societal engines of Caribbean society.

Download the free e-Book of Go Lean … Caribbean – now!

Who We Are
The movement behind the Go Lean book – a non-partisan, apolitical, religiously-neutral Community Development Foundation chartered for the purpose of empowering and re-booting economic engines – stresses that reforming and transforming the Caribbean societal engines must be a regional pursuit. This was an early motivation for the roadmap, as pronounced in the opening Declaration of Interdependence (Pages 12 – 13):

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xii. Whereas the legacy in recent times in individual states may be that of ineffectual governance with no redress to higher authority, the accedence of this Federation will ensure accountability and escalation … for good governance, justice assurances, due process and the rule of law. As such, any threats of a “failed state” status for any member state must enact emergency measures on behalf of the Federation to protect the … member states and the Federation as a whole.

xxiii. Whereas many countries in our region are dependent Overseas Territory of imperial powers, the systems of governance can be instituted on a regional and local basis, rather than requiring oversight or accountability from distant masters far removed from their subjects of administration. The Federation must facilitate success in autonomous rule …

xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and member-states.

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

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Appendix VIDEO – How The U.S. Dollar Shaped The World Economy – https://youtu.be/EbJk1za74kE

NBC News
Published on Dec 21, 2014 – The official currency of the United States, the Federal Reserve Note, marks 100 years since it was first printed. Matt Rivera tracks the rise of the world’s reserve currency.

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How The U.S. Dollar Shaped The World Economy | Long Story Short | NBC News

• Category: News & Politics

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See an alternative yet relevant VIDEO here: https://youtu.be/CQMiNu6FI4M