We need a global currency
GENE JALESKI
Guest Columnist
opinion@lbknews.com
They say that in the financial markets everything is a zero-sum-game. If one understands that the money supply is finite, then every time someone profits from a currency trade, somebody loses. Few people understand the significance of currency trading compared to the puny DOW average we are all fed on the evening news and in The Wall Street Journal.
Here is just one example how global currency trading impacts your wallet on a daily basis:
In 1987, Andy Krieger, a 32-year-old currency trader at Bankers Trust, was carefully watching the currencies that were rallying against the dollar following the Black Monday crash. As investors and companies rushed out of the American dollar and into other currencies that had suffered less damage in the market crash, there were bound to be some currencies that would become fundamentally overvalued, creating a good opportunity for arbitrage. The currency Krieger targeted was the New Zealand dollar, also known as the kiwi.
Using the relatively new techniques afforded by options, Krieger took up a short position against the kiwi worth hundreds of millions of dollars. In fact, his sell orders were said to exceed the money supply of New Zealand. The selling pressure combined with the lack of currency in circulation caused the kiwi to drop sharply. It yo-yoed between a 3 and 5 percent loss while Krieger made millions for his employers.
Perhaps the increasingly global economy has reached a juncture where a single currency may be more stabilizing and efficient that the world’s current system of local currencies and the daily transfer of vast amounts of value from everyman to the enrichment of a few banks and billionaires. Yes, your friendly bank bets against your good fortune every day. The ensuing LIBOR scandal will only illuminate a fraction of the financial shenanigans perpetrated on the general global population by the banking industry, while they, at the same time, snivel about the need to gouge depositors for every escalating fees and charges, and always in small print.
Besides all the complicated reasons why a global currency might help to stabilize the global economy, there is the daily drain of common resource into the hands of a few speculators, that far exceeds the sum of all stock trading, that would be eliminated with a single currency.
The same TVM metrics apply to your pocketbook and currency trading, as apply to the onerous fees and charges imposed on your 401K or mutual funds. Little by little these costs mount up. Over decades currency trading really matters to the average world citizen. When one takes out a 30-year mortgage, the interest paid over the duration of the mortgage exceeds the amount borrowed. Likewise, currency trading most likely decreases your net worth to a significant degree just as inflation and deflation have a negative effect over time.
There is a saying that “misfortune” is the type of fortune that never misses. It seems that when it comes to the global financial zero-sum-game, the financial misfortunes of the little-man are never passed over.
The media recently pointed out that if a food stamp recipient (49 million Americans now receive SNAP) is found to have lied on any form, they are denied assistance forever. Meanwhile the banking industry is now experiencing its sixth or seventh major criminal disclosure (LIBOR manipulation) in so many years and still no one is punished.
Woody Guthrie once wrote that some people rob you with a gun, and some people rob you with a fountain pen. He also said an outlaw never drove anyone from their home. His words ring too true 70 years later. It seems the bankers are still the ones driving people from their homes.
A global currency would eliminate the needless and enormous profits of the currency trading industry that directly affect everyone. Likewise a global currency will stabilize commerce between areas of the globe. A single currency would greatly simplify financial and commercial planning and transactions. Allowing a few banks and trading groups to manipulate national currencies in a totally unregulated market only adds to our current global financial instability.
Currency trading is another form of the Chinese water torture. Drip by drip, value is transferred from everyman to the rich man over lifetimes. If no one has the money to buy things, how do we create jobs? For those who celebrate the rich and famous, who now use our money to purchase national and local elections, are you better off than your parents?
Perhaps it is time to put nationalism aside and get down to the business of improving global financial conditions. It seems we are now all on the same globe financially.
