Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

[Rajiv]

Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

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There are several important lessons to be learned from the crisis. One is that there is a need for better regulation. But reforms cannot be just cosmetic, and they have to go beyond the financial sector. Inadequate enforcement of competition laws has allowed banks to grow to be too big to fail. Inadequate corporate governance resulted in incentive schemes that led to excessive risk taking and short sighted behavior, which did not even serve shareholders well.

The Commission recommends the establishment of a Global Economic Coordinating Council, not only to co-ordinate economic policy, but to assess the economic situation, identify gaps in the global institutional arrangement, and propose solutions. For instance, there is a need for a Global Financial Regulatory Authority – without which there is a risk of regulatory arbitrage, undermining regulation, and creating a race to the bottom. There is a need for a Global Competition Authority – markets are global in scale. There is a need for a better way of handling defaults of countries, of which there may be several in this crisis. And there is a need for better ways of managing the many risks that developing countries face, especially with debt and capital account management.

The other important commission recommendation concerns the creation of a new global reserve system. The existing system, with the US dollar as reserve currency, is fraying. The dollar has been volatile. There are increasing worries about future inflationary risks. At the same time, putting so much money aside every year to protect countries against the risks of global instability creates a downward bias in – aggregate demand – weakening the global economy. Moreover, the system has the peculiar property that poor countries are lending trillions of dollars to the US, at essentially zero interest rate, while within their country there are so many needs to which the money could be put. The Commission argues that a new Global Reserve System is "feasible, non-inflationary, and could be easily implemented".
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Read in conjunction with my Ben's Helicopter thread, the implication (to me at least) is a decoupling of dollars used domestically, and those used in international trade -- in other words, a new currency for international trade. In other words, in some ways going back to a status before 1971 -- but without the extreme US dominance that existed then.

[Supercilious]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

For instance, there is a need for a Global Financial Regulatory Authority – without which there is a risk of regulatory arbitrage, undermining regulation, and creating a race to the bottom. There is a need for a Global Competition Authority – markets are global in scale.
[...]
The other important commission recommendation concerns the creation of a new global reserve system.
[...]
The Commission argues that a new Global Reserve System is "feasible, non-inflationary, and could be easily implemented".

Am I the only one who smells something fishy here? Especially about the Global Central Bank. We don't know how to get rid of the Fed and Stiglitz is advocating for the creation of the Global Super-Fed? :eek:

WTF??!!! I thought Stiglitz was OK.... Can you spell NWO ???

If that is happening we will be all screwed big time and we will remember with a fuzzy warm nostalgia the golden times of TurboTimmy and Bernspankme...

[Rajiv]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

Read between the lines!

The Commission argues that a new Global Reserve System is "feasible, non-inflationary, and could be easily implemented".

The only non inflationary monetary systems that I know of are are either gold based, or self limiting in some other way (e.g. stamp scrips e.g. the Worgl experiment!)

Look at some of the alternative monetary systems that I have linked to from time to time.

However, somebody has to issue the money -- especially that used in International trade. Hence the need for a common central monetary authority.

Countries could still keep their local currencies. International trade only would have to be done in the new currency.

[GRG55]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

Am I the only one who smells something fishy here? Especially about the Global Central Bank. We don't know how to get rid of the Fed and Stiglitz is advocating for the creation of the Global Super-Fed? :eek:

WTF??!!! I thought Stiglitz was OK.... Can you spell NWO ???

If that is happening we will be all screwed big time and we will remember with a fuzzy warm nostalgia the golden times of TurboTimmy and Bernspankme...

You can't argue it both ways $#*.

On the one hand you make the case that the US relentlessly "hammer drills" the world using its reserve currency for its sole advantage. And now you imply that any suggestion to respond to that abuse by the ROW is some sort of NWO conspiracy?

It would seem if the first case is indeed correct, a response to that by the ROW should be expected. Given no single economy or country is capable of staring down the USA, it logically will take a coordinated reaction/response, won't it?

[jk]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

these arguments are consistent with ej's prediction of a remonetization of gold for international balance of payments purposes. if gold is remonetized on an international level, will it once again be outlawed for private possession? imo, the best argument against confiscation has been that gold currently has no relationship to money, so there's no need to confiscate.

[Supercilious]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

You can't argue it both ways $#*.

On the one hand you make the case that the US relentlessly "hammer drills" the world using its reserve currency for its sole advantage. And now you imply that any suggestion to respond to that abuse by the ROW is some sort of NWO conspiracy?

Yup, because the new currency ( actually Euro + two other new currencies) will be in fact proxies for the dollar. And the idea that we need a new currency is just another bait and switch. So we we'll have a new international currency system made out of the dollar and three proxies for the dollar.... and of course all controlled by a World Central Bank ... which will be a consortium of private banks.

It would seem if the first case is indeed correct, a response to that by the ROW should be expected. Given no single economy or country is capable of staring down the USA, it logically will take a coordinated reaction/response, won't it?

Given no single bank in USA was able of staring down a case of silver market cornering (in 1907), it logically took the coordinated response in 1913( the creation of the Third Central Bank of USA , aka the Fed) in order to avoid further crises and have a stable dollar with no inflation since then . And the solution was really feasible and inexpensive as we all know these days.

IMHO it is the same bait-and switch, but on a much larger scale. How can a smart guy like Stiglitz not see the obvious? ... I don't know ...:rolleyes:

[Diarmuid]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

Sounds like a wonderful idea - further consolidation of power into a unacountable body

You can dice and slice this any way and name call "conspiracy" NWO et al but show me one instance in history where centralisation of power on anything approaching this scale has been good for Joe six pack. Who will this global goverance body and currency issuing agency be accountable to, where will the oversight and checks and balances be. Our politicians because they have proved their integrity and community spirit so often in the past?

This is utter insanity
BTW in response to an earlier post - reading between the lines as earlier posted if you are going towards a non inflationary currency i.e gold or silver why would you need a global agency to issue it or regulate is not the whole point of gold or silver it regulates itself in realation to quantaties available?


Go directly to jail, do not pass go, do not collect 200 dollars.

[raja]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

these arguments are consistent with ej's prediction of a remonetization of gold for international balance of payments purposes. if gold is remonetized on an international level, will it once again be outlawed for private possession? imo, the best argument against confiscation has been that gold currently has no relationship to money, so there's no need to confiscate.

jk,

What would the government's rationale be for confiscation of gold . . . .
"We're going to use gold as a standard for international currency regulation . . . therefore we want yours!"
What does confiscation accomplish?

FDR confiscated gold because he wanted to convert to fiat. Seems like the opposite situation here . . . .

Any ideas?

[sishya]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

I would rather prefer that there is no such World Currency because a person would not care about the rest of the world. Nor do I want my transactions to be dictated in any world currency or even indirectly affected by it. If I am an exporter of meat, I want a certain local currency for my product. I don't think our daily lives should be affected(even indirectly) by any World body or currency. We are ready to tolerate a FED/or any CENTRAL BANK only because we have a certain kinship with our countrymen and transact in that currency, but never any International brotherhood.

[jk]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

jk,

What would the government's rationale be for confiscation of gold . . . .
"We're going to use gold as a standard for international currency regulation . . . therefore we want yours!"
What does confiscation accomplish?

FDR confiscated gold because he wanted to convert to fiat. Seems like the opposite situation here . . . .

Any ideas?

gold would be required for the settlement of international imbalances. yes, basically, "therefore we want yours!" no need for it in private hands, to be restricted to serious governmental holders. rather like uranium- owned officially or by those officially licensed like utilities.

[raja]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

gold would be required for the settlement of international imbalances. yes, basically, "therefore we want yours!" no need for it in private hands, to be restricted to serious governmental holders. rather like uranium- owned officially or by those officially licensed like utilities.

It seems to me that things would have to have become really bad for the world's governments to resort to a gold-based international standard.
Switching to a gold-based standard may then have a stabilizing effect on currencies and the world economy.

Perhaps if gold is confiscated in the process of creating this standard, it will be exchanged for currency at whatever the inflated value is at the time, and that currency would hold its value due to the stabilizing effect of the gold standard. Hence, confiscation of gold wouldn't be a bad thing.

Does that scenario seem plausible?

Just trying to look on the bright side

[Rajiv]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

This problem springs from the contradictory nature of money. On the one hand, money serves as a medium for facilitating an exchange of goods and services, as well as allowing for the valuation of those goods and services. On the other hand, money also serves as a store of value. So on the one side, money to be useful needs to be circulated, and on the other side people want to hoard it. These are two contradictory uses.

So we need to be able to have two different forms of money -- one for saving and one for circulating. This was the advantage of the Worgl stamp scrip. It could only be used for circulation, and would need to come back to the bank in order to be saved either to be saved in the bank, or to be exchanged for something else of value that can be saved.

[ThePythonicCow]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

It seems to me that things would have to have become really bad for the world's governments to resort to a gold-based international standard.
Switching to a gold-based standard may then have a stabilizing effect on currencies and the world economy.

I expect more smoke and mirrors. Gold will mostly either remain a side show, or seemingly be incorporated into a basis for the new global currency in some fashion that mostly has an opposite affect from that publically presented. I hold a little of this, that and the other alternative store of value (food, gold, cash, home, health, ...) in hopes that I can successfully navigate the stormy seas in at least one of these ships of value.

No store of value, other than perhaps immense power (which I decidely lack), is likely to provide a straight line path to wealth preservation.

The enemy is strong, wiley and pervasive. We peasants are but the cockroaches of history. Our descendents will prevail, but only long after we personally have deceased.

[c1ue]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

The enemy is strong, wiley and pervasive. We peasants are but the cockroaches of history. Our descendents will prevail, but only long after we personally have deceased.

http://www.itulip.com/forums/showthread.php?t=1740

Generation after generation, the rich had more surviving children than the poor, his research showed. That meant there must have been constant downward social mobility as the poor failed to reproduce themselves and the progeny of the rich took over their occupations. “The modern population of the English is largely descended from the economic upper classes of the Middle Ages,” he concluded.

Unfortunately according to Dr. Gregory Clark - the peasants pretty much all died out and were replaced by downshifted rich people.

Moral of story? Anna Nicole Smith is the ultimate Survivor.

[Rajiv]

Re: Joseph Stiglitz: Reform is needed. Reform is in the air. We can't afford to fail

Gregory Clark

The Referred paper is - “Survival of the Richest. The Malthusian Mechanism in Pre-Industrial England” (with Gillian Hamilton) Journal of Economic History, 66(3) (September, 2006): 707-36.