commentary by Roger Erickson
In a truly odd post, Russian dictator Vlad the Pootie says: "If we want to get rid of unnecessary derivatives and raise the discipline and stability of the global financial system, we must go over to a multitude of global reserve currencies."
About what you'd expect from a midlevel KGB thug? Any nation is already free to adjust it's reserve currency holdings at will. As Warren Mosler has repeatedly noted, it doesn't matter what currency sales occur in, rather what currency people prefer to save liquid currency assets in.
Pootie goes on to say "If there was only one global reserve currency, the issuer of the currency would always be tempted to use it in its own interests." Ya think? Yet isn't the issuer of every currency free to act in the interests of the issuing country? Am I missing something here, except gang (i.e., class) warfare spilling across national borders?
Only rational thought that currently comes to my mind is that Pootie wants the Saudi's to stop denominating their oil contracts in $US. Given the volume of Saudi oil sales - and more importantly, the limits the Saudi prices establish in all oil pricing - that Saudi policy does tend to drive the currency of most oil-buyers a bit towards a peg with the US.
Still, every nation has many options, and there are always ways for agile group policy to explore all the options available to a given nation. Methinks Pootie doth complain too much?
When you really do have only cutthroats as friends, Disraeli's advice still rings true: "Never complain. Never explain." Or have I subjected that to backwardation? :)
ps: Can someone tell Pootie that we don't want a stable world economy? We absolutely need an insanely dynamic, agile world economy ... or we're toast.