Changing The World’s Monetary System? Fat Chance!

The current monetary system is not to the liking of France’s government. Accordingly, they call for a change to the system. The first problem in this venture is defining what the monetary system is (is as in reality vs. is represented as by free market fantasists). Even the name monetary system is worth a laugh; since the gold standard was abandoned, there is no system to speak of, only a hopscotch of stitch-ups.

China is often accused for keeping its exchange rates low to boost exports. The accusers are mainly the US and the EU, who both keep their exchange rates low to boost exports. Britain is a lone exception. The government tries to keep the exchange rate of the pound high, mainly because Britain is unable to export anything that anybody wanted to buy. The others do what they do best in all their political dealings by telling everybody to do as they say and not to do as they do.

One of the most famous interventions into the ‘free market’ of monetary exchange took place in the 1970s during the oil crisis. The US Dollar started first to crumble, then to slide, and was showing signs of going into melt down as billions of billions of Dollars were poured onto the market. Switzerland watched the first two acts of the drama (with the Swiss Franc first climbing, then soaring) to decide that they didn’t want to see the third act. The Swiss National Bank announced in an unprecedented move that they would buy any amount of Dollars for as long as it would take to stabilise it at a level considered adequate by the Swiss government.

The moment they announced this, the Dollar had slipped to a ratio of one Dollar to below 1,20 Swiss Franc. The adequate exchange rate aimed at was 1,50 Swiss Francs for one Dollar. Over the next few weeks, the Swiss National Bank bought any amount of Dollar coming onto the market offered at a price below the 1,50 mark. They continued to do this until the market stabilised. Free market? It makes you laugh, doesn’t it?

As the Swiss Franc was also flying high against all other currencies, the government installed a negative interest on all Swiss Franc accounts held by non residents irrespectively of them being private persons, companies, or governments. Paying for the privilege of having Swiss Francs in your portfolio after the announcement that the course will go down no matter what cost is not the dream of the rich and their bank pimps and the exchange rates all started to drop to pre-crisis levels.

Monetary system? When one tiny country alone is able to influence it so massively, the word system is hardly adequate. It’s a stitch-up, all right, and someone knowing how to use the stitches to their advantage can get any result they want. It has been done before grand style, it is going on all the time more quietly.

It will be interesting to watch the proposals France will put forward to fix the system. As there is not system to speak of, it will be a fix. And we will get the fix that is most advantageous to the majority of G-20 nations. The rest may go and flush their currencies down the toilet for all they care. The only countries not influencing their currencies are those that don’t have one; Liechtenstein uses the Swiss Franc in a monetary union of their own; Andorra, Monaco, San Marino, and the Vatican State all use the Euro by treaty with the EU. Montenegro also uses the Euro, without a treaty with the EU and ‘illegally’ as the EU points out. They do very well with their illegality and it should give other small nations ideas. I hope I don’t have to spell it out for them.

If you take all the factors together, you must arrive at the conclusion that changing the monetary system is impossible. First, a system has to be invented; then there are all the conflicting interests to consider; and last, there will always be ways to play system whatever it purports to be.

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