Thursday, November 6, 2008

Sharad Joshi plea

Mr Sharad Joshi is Founder, Shetkari Sanghatana and Member of Parliament (Rajya Sabha). His article published in the Business Line is an important plea against the whole “the Keynesian ethos, an object of mirth and ridicule” and also the Dollar domination.

His article is somewhat interesting to note the below paragraphs at least to my mind.

“The former Russian President, Mr Vladimir Putin, has been saying for some time that the world should abandon the US dollar as a global reserve currency since its fluctuations tend to harm everyone who uses it for trade or as store of value. OPEC calls the US dollar a worthless piece of paper. Argentina, Cuba, Iran, Iraq and Venezuela have already said “no” to the dollar.

The essential functions of the central bank of any country are to raise money within the national boundaries and fix its price i.e. the rates of interest.

It is well-known that the Federal Reserve is not only the central bank of the US but also the de factocentral bank of all the national central banks in the free world whose reserves comprise predominantly dollars. Furthermore, the Fed, as the central bank of all the nations, decides at what rate it will lend dollars to national central banks.

After the first Gulf War, dollar printing became the most profitable business for the US. The dollars, as global tender, was in perpetual demand by other nations as the Bretton Woods system was based on US dollars and gold.

To overcome the present crisis, it would be necessary to introduce a global tender that would be managed more responsibly. The obvious solution is to make the euro the global tender. It has the advantage of representing some sort of a basket of currencies and is controlled by the entire European Economic Community.

Some of the developing countries that appear to be, for the time being, immune to the present crisis might start feeling the pinch when the global tender is more prudently managed. The governments will then face the problem of ensuring higher rates of growth that are based on hard work and thrift rather than growth based on stock market booms”.

Precisely he is asking to print more Euro currency instead the US Dollars.

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