ESCAP ~ Euro Will Survive! Economist Mundell Expressed Confidence that 13-year Old Euro Currency Will Survive and Says Time for New a Global Currency

Snip ~ The Second Session of the biennial ESCAP forum held from 7 to 9 December has brought together central bankers, policy advisors and development experts from 29 Asia-Pacific countries to discuss a policy agenda to promote sustainable and inclusive development in the region which is home to the majority of the world’s most deprived individuals ...

Related articles ~ *** Economist Robert Mundell (layed groundwork for Euro) joins UAE's Central Bank and .. June 2011 ~ Tie the U.S. Dollar and Euro to Gold ~The Emerging New Monetarism: Gold Convertibility To Save The Euro, as well as the Dollar ... and .. IMF ~ SDRs and the U.S. Dollar ... Articles of Interest ... and .. SDRs ~ Nobel laureate slams IMF for not including China’s renminbi ...

December 8, 2011

High inflation levels threaten region’s recovery from crisis, ESCAP tells Asia-Pacific economic policymakers

Bangkok (UN ESCAP Strategic Communications and Advocacy Section) – High inflation levels, in particular food and fuel prices could reduce Asia-Pacific growth by as much as 1.5 per cent over this year and next, the United Nations told senior government economic policymakers from across the region meeting here this week.

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Combined with the deteriorating global economic environment, this is making it difficult for the region to meet international development goals and the time has come for developing Asia-Pacific countries to see poverty reduction and inclusive development as growth drivers rather than just social welfare programmes, the top United Nations official in the region said.

“With close to a billion people living in poverty and wide development and MDG (Millennium Development Goal) gaps, the region has substantial potential for generating new aggregate demand to sustain its growth,” Dr. Noeleen Heyzer, Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) told delegates to the ESCAP Committee on Macroeconomic Policy, Poverty Reduction and Inclusive Development.

The Second Session of the biennial ESCAP forum held from 7 to 9 December has brought together central bankers, policy advisors and development experts from 29 Asia-Pacific countries to discuss a policy agenda to promote sustainable and inclusive development in the region which is home to the majority of the world’s most deprived individuals.

Addressing the Committee, Deputy Prime Minister and Minister of Commerce of Thailand, H.E. Mr. Kittiratt Na-Ranong highlighted the central place of sustainable growth and inclusive development in Thailand’s national development agenda.

“Of all the eight MDGs set against the 2015 timeframe, I am proud to report that Thailand has achieved every goal except only one concerning maternal mortality. Our achievements result from people-centered policies, sustainable development agendas, eradication of extreme poverty, good governance, and close international cooperation,” Mr. Kittiratt said.

Although the Asia-Pacific region as a whole has already met the MDG relating to halving the incidence of extreme poverty, the performance across the region remains uneven, particularly in least developed countries and other countries with special needs, Dr. Heyzer pointed out.

Asia and the Pacific is still home to 870 million people living below $1.25 a day, accounting for almost 70 per cent of the world’s disadvantaged population. According to latest ESCAP estimates, poverty levels are highest in South and South-West Asia (36.1 per cent), followed by South-East Asia (21.2 per cent), East and North-East Asia (13.0 per cent), and North and Central Asia (8.3 per cent).

However, much could still be done despite the difficult economic environment. “For instance, all the off-track countries in the region could meet the target of reducing by half those suffering from hunger, if they can reduce the prevalence of underweight children by 2 per cent each year,” the ESCAP Executive Secretary said. “Most of the 20 countries currently off-track in providing safe drinking water can reach that target if they can increase their access rates by less than 2 per cent annually.”

The global economic crisis is an opportunity for the Asia-Pacific region to readjust its growth, Dr. Heyzer pointed out. “The Asia-Pacific region has to rebalance itself in favour of greater domestic and regional demand to sustain its dynamism. With close to a billion people living in poverty and wide development and MDG gaps, the region has substantial potential for generating new aggregate demand to sustain its growth.”

A highlight of the ESCAP Committee session was a lecture by Nobel Economic Laureate Professor Robert Mundell of Columbia University, New York on the topic “Global Currency: Dollar, Euro, Renminbi”. The event was part of the ESCAP Distinguished Person Lecture Series moderated by the Executive Secretary.

In his presentation, Prof. Mundell, regarded as the intellectual father of the euro, fielded questions from Asia-Pacific central bank chiefs, senior government officials, and representatives of the private sector and academic community on policy options before the region as it braces for the likely adverse impact of the eurozone crisis. While acknowledging the seriousness of the sovereign debt troubles, Prof. Mundell expressed his confidence that the 13-year old currency will survive.

Moreover, Prof. Mundell said that times of crisis also present opportunities for reform and called for the creation of a world currency, anchored by the US dollar and euro with backing from the Chinese yuan.

He said this would help prevent huge exchange rate instabilities which prompted major debt and financial crises in recent decades.

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June 2011 ~ Tie the U.S. Dollar and Euro to Gold ~The Emerging New Monetarism: Gold Convertibility To Save The Euro, as well as the Dollar ...

Todays article ~ ESCAP ~ Euro Will Survive! Economist Mundell Expressed Confidence that 13-year Old Euro Currency Will Survive and Says Time for New a Global Currency



Bumped .. Four Months ago, Interesting article by Nobel Laureate, Robert Mundell.



Tuesday, June 14, 2011



The Emerging New Monetarism: Gold Convertibility To Save The Euro



It is time, and long past time, for the practical men of our era — such as our president and the Republican presidential aspirants — to throw off the shackles of various defunct economists,



Professor Robert Mundell urges gold convertibility for the euro, the currency which he fathered, as well as for the dollar. This is a major step forward. Thought leaders are abandoning “old monetarism,” which was vainly fixated on quantity. Even its chief proponent, Milton Friedman, acknowledged old monetarism as unsuccessful in a 2003 interview with the Financial Times. An emerging “new monetarism” is quickly taking its place — one that focuses on the quality, not quantity, of money.



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Empirical data suggest that the gold dollar represents the epitome of quality. As Forbes’ own Steve Forbes advised the presidential candidates last week, the “debate should be focused on what the best gold system is, not on whether we need to go back on one.”



Mundell recently endorsed the gold standard on Pimm Fox’s Bloomberg Television “Taking Stock.”



Pimm Fox: You’ve written about the role of gold in the world economy, Professor Mundell. Do you think that we’re going to see any kind of return to the gold standard?



Mundell: There could be a kind of Bretton Woods type of gold standard where the price of gold was fixed for central banks and they could use gold as an asset to trade central banks.



The great advantage of that was that gold is nobody’s liability and it can’t be printed. So it has a strength and confidence that people trust. So If you had not just the United States but the United States and the euro tied together to each other and to gold, gold might be the intermediary and then with the other important currencies like the yen and Chinese yuan and British pound all tied together as a kind of new SDR that could be one way the world could move forward on a better monetary system.



Mundell is the world’s most distinguished living economist. He is a Nobel Economics Laureate. He was the primary source of the original supply-side manifesto, “The Mundell-Laffer Hypothesis,” which led to the low-tax-rate, strong-dollar policy at the heart of Reaganomics. He has acted as a privy counselor to the Chinese government (which in appreciation has named a university for him). Mundell’s guidance, of course, is one of the reasons why mainland China has had 30+ years of uninterrupted double-digit economic growth. Mundell’s work also laid the foundation for the common European currency, the euro.



Although Mundell is less of a pop culture celebrity than Paul Krugman, another Nobel winner, the impact of Mundell’s life work is epochal, while Krugman caps his career as a New York Times blogger. I have argued elsewhere that Mundell’s work has helped create something like $100 trillion of new wealth. The world’s GDP in 1980 was around $11 trillion, reports the World Bank. Today it is around $60 trillion. Mundell had much to do with this.



The added $50 trillion-per-year capitalizes to over $100 trillion in new wealth — even when adjusted for inflation. Lower tax rates, free trade and more stable currencies moved something like 2 billion people out of dollar-a-day penury into prosperity. That achievement arguably makes Mundell the greatest living humanitarian. In becoming the first Nobel-class economist to advocate the gold standard it suggests that his greatest contribution to human flourishing may lie ahead.



Let us now take the next step from the 20th century’s “Mundell-Laffer Hypothesis” to a 21st century “Mundell-Tamny Hypothesis.” Tamny, editor of Forbes‘ Opinions page, proposed in his June 12 column that we:

… define the euro in terms of gold, and make euros redeemable in the yellow metal.



If so, the euro’s staying power and eventual rise to preeminence among currencies would almost be assured. Strong money that is stable in value is much demanded as a ticket used to exchange real wealth, and if the euro had a stable definition, it would quickly trump the dollar.



Of course the mythmakers predicting the euro’s demise would argue that a gold-defined euro would lead to certain debt default by Greece and Ireland (to name but two struggling countries), and that both would quickly exit the euro under such a scenario. The thinking here is wildly incorrect. ….



The governments of Greece and Ireland are having trouble with their debts to some degree because economic growth has withered alongside tax receipts. If so, far from a weight on growth, a strong, stable euro would attract the investment that would drive company formation and job creation that would bolster the ability of both governments to remain current on interest payments. For good or bad, economic growth is always the best fix for governments in arrears to creditors.



Many economists are already considering restoring the classical gold standard. From the rising economies known as the BRICS, S.S. Tarapore, former deputy governor of the Reserve Bank of India, has publicly articulated the virtues of the gold standard. Zhou Qiren, dean of Peking University’s National School of Development and a member of the People’s Bank of China Monetary Policy Committee recently, while not minimizing the political challenges of doing so, told a reporter Ye Weiqiang:



If the currency of each major country is bound to gold, financial headaches would of course be reduced. Taking QE2 as an example, if this were the 1880s, the currencies of the major western countries would be measured in gold. Unless the U.S.Treasury suddenly gained a large quantity of gold reserves, it would be impossible for (U.S. Federal Reserve Chairman Ben) Bernanke to print US$ 600 billion to purchase long-term debt. If there is a commitment to a gold standard system, such as the Bretton Woods system in place until 1971, the Fed could not easily ease its monetary policy, because not only could each country with dollar holdings hold them accountable, they could also redeem their dollars for gold to see how much Uncle Sam’s promise is worth.



A gold standard also would eliminate exchange rate wars. Since all major currencies could be exchanged for gold or other currencies pegged to a currency that follows the gold standard, exchange rates would remain stable without anyone doing anything. Where would exchange rate disputes come from? In short, the gold standard would effectively prevent each country’s government from recklessly levying ‘inflation taxes’ domestically and passing troubles to others by manipulating currency exchange internationally.



Of course, this is an excellent monetary system.



This, of course, is but the tip of an iceberg with commentators such as Larry Kudlow pushing gold as the “crown” of an economic growth strategy, with the gold standard’s eminence grise, Lewis E. Lehrman, with whose eponymous institute this writer is professionally associated, emerging as a leading presence in the economic discourse, with American Principles in Action, with which this writer is professionally associated, teaming up with the Iowa Tea Party to raise public, and the presidential candidates’, awareness of the gold standard. And far more.



Keynes wrote, in The General Theory of Employment, Interest and Money:



The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.



It is time, and long past time, for the practical men of our era — such as our president and the Republican presidential aspirants — to throw off the shackles of various defunct economists, cease to distill frenzy from some academic scribblers, embrace the Mundell-Tamny hypothesis, and move forward, immediately, to multilateral convertibility of currencies to gold.



The gold standard is the key to human flourishing. If we grasp the opportunity of gold convertibility this still-dawning millennium beckons with the possibility of becoming a new golden age.





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