WEB-ресурс научно-практических конференций

PhD Sarbovan М. L.

Tibiscus University of Timisoara , Romania

THE NECESSITY OF A FUNCTIONAL GLOBAL CURRENCY

The forecasting of the market events can play a major role in orientating the macroeconomic policy, so that governors could optimally use the budget, the fiscal and the monetary tools in such a manner that it should meet the expectation of the citizens. As John Maynard Keynes said in his “The General Theory of Employment, Interest and Money”, 1936, “the State … is in the position to calculate the marginal efficiency of capital goods on long views and on the basis of the general social advantage” [1].

The classic thinking believed that the monetary economic factor owes a neutral and invariant character, in the context that market exchanges present a generalized equivalence, aiming to the fulfillment of the social solvent needs in the output allocation process.

The opinion that money goes between perfect balanced exchange mechanisms originates into a reality that accompanied the humanity along its’ entire history: there is always a master gold standard, available for measuring the economic or even non economic activities.

Because the gold standard remained unique, states used this to multiply the currencies, and because of the permanent ratio established by the market exchanges among gold and various goods, national currencies included, there is a largely spread believe that the amount of money currently used in circulation do not interfere with the real economic phenomena, such as investments, expenses, and so on, but on the contrary, the lack of cash could bring blockages and turbulences.

The idea that a perfect balance in international exchange is necessary and it could be safer solved by the gold standard monetary system is not new: taking only the modern times, Keynes, and many other specialists, supported the gold-anchored monetary system proposed at Bretton Woods, 1944. Keynes even proposed the world unit of currency, named “ bancor ”, administrated by a global central bank, to a better directing the international trade and payments, for cutting undue deficits and surpluses.

This vision, however, points to a global market model that would better remain inside the restrictions of stabile and non speculative environment, where transactions do not affect the economic processes and activities, but they could only temporary and by chance change the prices.

Assuming that the currency, anchored to the gold standard, cannot change anything only by themselves, they could be mostly used as any other merchandise, and balance the goods offer; in a static equilibrium, obtained step by step, given the money offer and demand, and the goods on the market, if an injection of money raises the monetary offer, the only thing that could happen would be a proportional all prices raising, leaving unchanged the relative prices, which equivalents with restoring the balance.

Even so, perfectionists have seen the necessity of controlling the gold injection into the world economy system: in his “Booms and Depressions. Some First Principles”, 1932, Irving Fisher reminds us about “ Lehfeldt Plan”, a syndicate of nations composed by US and British Empire, that would eventually control the gold production, according to the world monetary needs [ 2 ]. This observation is connected to the reality that gold plays a large role in the world monetary system, even though it functions as a reserve, and it is a small part in the circulating system.  

The world money control based on the restricted gold production went on with the supplementary silver control, world wide; even in the Romanian case, in order to stabilize the macroeconomic equilibrium during the transition of our country to the market economy, the famous professor Anghel N. Rugina , American of Romanian origin, proposed a silver “ leu ”, after the 1989 Revolution [ 3 ].

In 2011, Robert Mundell proposed to China a new reform of the global currency system, having in center the “INTOR” currency [ 4 ]. and we still wait for the result of this vision. His idea was to stabilize the international trade, in the perspective that USA , EU and China would owe almost a half of the international trade.

Conclusion

  There are countries that established prohibition upon its citizens to hold gold: USA in 1934, tried this post-crisis policy; in our country as well, during the socialist epoch there were a quasy -legal directive against wearing golden ornaments, accompanied by a contingent control of the gold commerce.

Such measures can only have a paradoxical effect, enhancing the population’s trust in the gold standard and gold as a top asset, and this works in the whole world.

Given this observation upon precaution and prudence in the human behavior, we appreciate that the global functional currency, that is a necessity, will remain linked to the gold standard, even if we like it or not.

The list of references:

1. Keynes J. M., 1936, «  The General Theory of Employment, Interest and Money » [Electronic resource] / J.M.   Keynes . – Mode access: http:// www.marxists.org/reference/subject/economics/keynes/general-theory

2. Fisher I., “ Booms and Depressions. Some First Principles ”, 1932, New York, ADELPHY COMPANY PUBLISHERS [Electronic resource] / I. Fisher . – Mode access: http:// www .fraser.stlouisfed.org/ docs/publications/books/booms-fisher. PDF  

3. Rugina A. N. “ The Economic Theory and Practice in the Transition Epoch and After ”, “Foundation Romania of Tomorrow” Printing House / A. N. Rugina . – Bucharest, 1994.

4. Mundell R. “International Monetary Reform” 2011 [Electronic resource] / R.   Mundell . – Mode access: http :// www.robertmundell.net