Dude, Ditch The Dollar

Here's another gentle reminder that the fate of the US economy really doesn't rest in the hands of America anymore.

A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

No matter what we do about AIG's bonuses or Timmy The Invisible Boy's continued employment or Plan N, if the world dumps the dollar as reserve currency, our standard of living will evaporate overnight.

The fact that the UN is even considering honestly making this recommendation should frighten the hell out of you. Should the value of the dollar completely crash causing hyper-inflation, America will never recover. And the easiest way to get to hyper-inflation is for the rest of the world to give up on the greenback.

Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.

The fact is, having the dollar as the world's reserve currency is basically killing all the other economies on Earth. They're tired of it. They're thinking for themselves. They want to get out of dollars because they see Helicopter Ben Ginormous Printing Press churning out trillions, and it's making their dollars (and their economies) worth less and less every single day.

Up until now nobody wanted to be the first out of the dollar store because it would pretty much have been A) a declaration of economic war on the the rest of the world and B) oil producers insist on using dollars for oil.

If however the world decided to say, coordinate a global effort to switch to a new reserve currency at once like, say, through the UN or a G20 meeting, that would be very, very, very bad for all of us.

Like "Weimar Republic where it's cheaper to burn the money in the stove than buy firewood with it" bad, y'dig?

Pay attention to this one. If world financial leaders are seriously considering doing this, the dollar will crumble just on the threat of this happening...facilitating it happening even faster. When the "Full Faith And Credit" of the USA doesn't amount to a hill of beans...you'll be wanting the hill of beans instead.