USA – Dollar Currency Zone

By
Corney Vanhelden

As a lifelong entrepreneur and astute student of global economy, currency, and market, I have experienced first-hand the effects of taxes, exchange rates, and currency conversion.
There are tariffs, income taxes, sales taxes, and a myriad other costs required to simply deal with currency.
Crazy, don’t you think?

I think so, and therefore, several weeks ago I wrote an article about some of the world’s key currencies and their associated zones.
My exploration of currency zones is part of my quest to introduce a tax-less, cash-less model to be implemented in an appropriate part of the world.

The concept is this:
Set up an economic system that requires no cash, and in which people pay no tax. (Sound good? Find out more).

But to do this right, it needs to be set up in a single currency zone, one that is geographically widespread and with a currency that is strong and stable from a financial perspective.

The currencies I’ve been exploring as possible candidates for a currency zone include Europe’s relatively new euro, China’s yuan, America’s dollar and Russia’s ruble.

So far, here are my findings.

Euro
The euro is a strong candidate as the base of a currency zone.
It is growing, and several countries are already using it as the peg for their own currency. And it’s also well computerized.
It also covers an expanding geographical area.

YUAN
The value of the yuan is still in question.
Some experts say it is over-valued, others say it is just right, and still others say it is under-valued. (Sounds like a fairy tale I once hear).

I don’t know what the true answer is on this one, but until there is consensus, as the basis of a currency zone, the yuan would not be a good choice.
Also the computerized infrastructure has a long way to go.

Ruble
The ruble?
No way, my friends.

The issue is that the ruble has never been a particularly stable currency.
Even today, the Russian banking system is a veritable mess and is at least 30 years away from being the base of a solid, stable economy.

Dollar
Now let’s examine the dollar, the currency that has long held the position of pegging many world currencies.
From its beginning in 1792, the dollar has been pegged to the value of gold at standard rates that have changed over the years.

Indeed, the dollar has already achieved worldwide currency status.

It surpasses any other currency in the global currency reserve by 63.9%, and many countries use it to measure and support their own currencies.
There are even a few countries that discarded their currencies and now use the dollar, including Ecuador, Panama, and El Salvador.

However, today there are growing concerns about the long term viability of the dollar as a solid, stable currency.

Some experts believe the ongoing cuts of the prime interest rate is damaging in an unrecoverable way.
One example is that for the first time ever, Saudi Arabia did not follow suit with the U.S. in cutting its prime rate.
The significance of this is that it is an indication that the Saudis may withdraw their use of the dollar to peg their currency, a move which would then most likely be followed by other Middle Eastern nations.

Of course, from an internal standpoint, the U.S. feds hope that continued rate cuts will stimulate spending and investment.
But then some economists feel the rate cuts will just spur inflation.

Bottom line, once the bulwark of world currency and economic stability, the dollar is, to say the least, going through a rough time.

Is it then a viable candidate for a currency zone? The verdict is not yet in.

Corney Vanhelden is a successful entrepreneur and international businessman with many years of experience. This article is a short note on one of the chapters of his new book `How to Survive without Taxes`, see his site for www.Done-with-IRS.com specifics.

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