Yesterday I wrote of China's suggestion to develop, as an alternative to the American dollar, a new international reserve currency. By definition, a reserve currency is a currency that's held in significant quantities by many governments and institutions as part of their foreign exchange reserves. In other words, nations would still have their individual currencies, but the establishment of a new reserve currency would alleviate some of the risk (and the inherent lack of control) that comes from using another nations (i.e., the U.S.) currency as the reserve currency.
As others have pointed out today, the story was altered. Rather than being reported as a proposal to transition the reserve currency, It became a Chinese and Russian proposal to establsh a new world currency, one that would replace individual country's currencies. It began with the Drudge Report:
Next thing you know, Rep. Michele Bachman was quizzing Treasury Secretary Geithman and Fed Chairman Bernanke on whether they supported the Chinese and Russian proposals to adopt a new "world currency". (They both answered no, by the way). Next up, FOX News' uber henny penny, Glenn Beck, who was hysterical we're straight on a path to some gigantic socialist state with one world government and one world currency. The question was even asked last night at Barack Obama's news conference. (He, too, answered he does not support any proposal to adopt a world currency).
Which, of course, is not what the Chinese proposed.
I suppose the question to ask is whether Drudge, Bachman, Beck et al. don't understand the difference between a reserve currency and a global currency or whether they do, in fact, understand and just want to confuse and alarm their listeners.
Comments