Zhou Xiaochuan, head of China’s central bank, suggested earlier this week that we might need to transition away from exclusive reliance on the US dollar as a global reserve currency through the creation of a “super-sovereign reserve currency.”
I couldn’t possibly speak in detail about the merits of that proposal. But in a broad sense, the creation of the Euro, the integration of Russia into the global economic system, and the rising economic significance of China, India, and Brazil all argue toward the long-term adjustment of global economic institutions to a less dollar-centric dynamic. When these things were put into place, a large swathe of the world was Communist and not participating in its mechanisms, Europe was a land of many currencies, and the poor world was much poorer. Over time, things change. Meanwhile, a phrase like “super-sovereign reserve currency” is going to be confusing to most people. One thing political media and political leaders could do is try to explain it to people. Instead, as Ali Frick observes, Matt Drudge teamed up with Rep Michelle Bachman (R-MN), Glenn Beck, and Major Garrett to generate a massive freak-out about a U.N. conspiracy to create a “global currency” and “tie the entire globe together into one big government.” Check out TP’s video montage:
For any given insane freak-out, a majority of conservatives don’t happen to participate. But the non-participants don’t do anything to disavow their confrères doing the freaking-out. Some fuel anxiety about a mythical mag-lev train to Las Vegas. Others are now scaring people about a global currency. The other day, I saw Judd Gregg (R-NH) saying the United States was going to go bankrupt*, a hugely irresponsible step that no doubt isn’t making the Chinese feel any better. And almost nobody in the conservative media seems to feel that actually calming and informing their audience is part of their job.
* It’s a bit hard to know what this would even mean since the government can’t, legally, declare bankruptcy. The implication seemed to be that we would default on our debt payments, which is impossible. At the very worst—and honestly, it’s beyond worth speculating about these kind of outlandish scenarios—we might print money to cover debts and lose the ability to issue dollar-denominated debt in the future.