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30 Jun, 2010 23:22

US Dollar unreliable global reserve currency – UN

The United Nations Department of Economic and Social Affairs slammed the US dollar in a new report, saying it is an unreliable international currency and should be replaced.

The UN body recommends the US currency be replaced with a new global reserve regime based on a new supranational currency comprised of a mix of currencies from developed nations.

People jumped out of the Euro and into the Dollar. That’s like leaving the Titanic to take a ride on Lusitania. They’re both going down. There’s a global financial crisis going on,” said Gerald Celente of the Trends Research Institute.

Celente argued that this is nothing new; it’s “just another scheme in trying to salvage a situation that’s ruin out of control.”

The US currency will soon be worth even less, argued Celente. The US is almost $14 trillion in debt and may take on more debt through bailouts. He said the Dollar and the Euro are both unreliable, but that gold has increased in value.

It’s not working. Today we’re looking at a Dow that closed at roughly at 9774 points; you know what levels that is? That’s 1999 March. Now let’s look at gold. Back then gold was trading at roughly $250 an ounce, so gold has gone up $1000 an ounce and look at the real numbers of the US economy via the Dow and it’s at 1999 levels, that’s what we’re looking at,” said Celente.

Celente said we are in a global financial crisis and that this is just another scheme that will not work. He argues that a universal currency will fail, that the Euro has failed, and that European countries will soon begin to go back to their original national currencies. 

Nick Parsons from the National Australia Bank, head of the markets strategy department in London, predicts “The dollar is going to start going down in the second half of this year”.

“For the last 25 years the dollar has been losing value. Not only has it been losing value but we also know that international investors and reserve managers in central banks around the world have actually been reducing the proportion of their reserves, which are held in dollars,” Parsons said, adding “If we go back around fifteen years, it’s estimated around 73 per cent of all the world’s central banks reserves were held in dollars. Today it’s something like 63 per cent.”

US dollar good for other countries

I think this is a politically driven thing,” said Chief Economist Mike Norman of John Thomas Financial.

The US Dollar has been very stable since the eruption of European monetary system. He argued that the UN report is likely politically motivated to upset US Dollar hegemony.

Norman explained that the proposal would allow the IMF to issue notes that are backed by a number of other combined currencies. This will fix the quantity of money and limit growth, argued Norman. With the Dollar as the reserve growth is not restrained for both the US and global economies. In fact, the Dollar as the reserve has been very good for smaller countries, Norman argued.