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Why Supplanting the Dollar Would Be Good for America
By Justin Fox Thursday, Apr. 09, 2009
For years we've been hearing that the U.S. dollar's days as the world's dominant currency are numbered. Remember when the yen was going to supplant it? Then came the euro. Next up: the yuan.
Or maybe not. In the past few weeks, another rival to the dollar--created in 1969 but dormant for most of the time since--has made a spectacular re-entry onto the world scene. It goes by the ungainly name of special drawing right (SDR), and it is the currency not of some foreign rival but of the Washington-based and traditionally U.S.-dominated International Monetary Fund (IMF). It isn't even really its own currency, since it derives its value from a "basket" that contains dollars, euros, yen and pounds.
But it sure has become popular. In late March, the head of China's central bank made headlines by arguing that the time had come for the SDR to supplant the dollar as the world's "supersovereign reserve currency." A few days later, a U.N. task force recommended the same thing. Then U.S. Treasury Secretary Tim Geithner endorsed giving SDRs a bigger role. After the dollar fell in currency markets in reaction, Geithner backpedaled. But at the G-20 meeting in London, President Barack Obama joined the assembled heads of state in agreeing to a nearly tenfold, $250 billion increase in the amount of SDRs available to be lent out.
SDRs were created to supplement the Bretton Woods currency regime, which was built around a dollar linked to gold. After President Richard Nixon decoupled the dollar from gold in 1971 and allowed it to float freely in currency markets, the subsequent dollar crash led to talk of establishing the SDR as global reserve currency. That faded when the high interest rates set by Federal Reserve Chairman Paul Volcker to throttle inflation lured foreigners back to the dollar in the early 1980s.
Since then, we've had an international monetary system in which the dollar is the main store of value. When countries want to protect themselves from the vagaries of global financial markets, they stockpile dollars the way nations in previous eras hoarded gold. This stockpiling has enabled the U.S. government to borrow almost without limit in global markets and until recently allowed American consumers to do the same.
Over the short term, this can seem like a positive; we can get away with running a federal deficit that could hit $2 trillion this year only because of the dollar's status as global reserve currency. But borrowing trillions isn't really a ticket to long-run prosperity. In fact, the current economic crisis may have been spawned by huge imbalances in global trade and capital flows that are in part the product of the dollar's special status. Global demand for dollars supplanted demand for U.S. products and services, argues Columbia University economist and longtime SDR fan Joseph Stiglitz, resulting in trade deficits, the decline of U.S. manufacturing--and years of supereasy mortgage credit.
The Peso Abbreviation and Piece of Eight Theories
However, a more widely accepted theory nowadays is that the sign owes its origins to the Spanish peso.
One version of this theory is that the standard abbreviation of "peso" was simply "P", but the plural form was a large "P" with a small "s" above it and to its right. This was simplified by retaining only the upward stroke of the "P" and superimposing the "S" upon it. Hence the symbol of the dollar.
That the dollar sign may have also originated from Hermes, the Greek god of bankers, thieves, messengers, and tricksters: Besides the crane, one of his symbols was the caduceus, a staff from which ribbons or snakes dangled in a sinuous curve.
The Staff of Asclepius (Æsclepius, Asklepios)
[Personification of Medical or healing Art and its ideals]
Professional and patient centred organisations (such as the NZMA, in fact most medical Associations around the world including the World Health Organization) use the "correct" and traditional symbol of medicine, the staff of Asclepius with a single serpent encircling a staff, classically a rough-hewn knotty tree limb. Asclepius (an ancient greek physician deified as the god of medicine) is traditionally depicted as a bearded man wearing a robe that leaves his chest uncovered and holding a staff with his sacred single serpent coiled around it, (example right) symbolizing renewal of youth as the serpent casts off its skin. The single serpent staff also appears on a Sumerian vase of c. 2000 B.C. representing the healing god Ningi#a, the prototype of the Greek Asklepios. However, there is a more practical origin postulated which makes sense
The staff as a Medical symbol: From the early 16th century onwards, the staff of Asclepius and the caduceus of Hermes were widely used as printers’ marks especially as frontispieces to pharmacopoeias in the 17th and 18th centuries. Over time the rod and serpent (the Asclepian staff) emerged as an independent symbol of medicine.
Despite the unequivocal claim of the staff of Asclepius to represent medicine (and healing), the caduceus, a rod with two entwined serpents topped by a pair of wings appears to be the more popular symbol of medicine in the United States, probably due to simple confusion between the caduceus and the staff of Asclepius, the true symbol of medicine. Many people use the word caduceus to mean both of these emblems.
Carry it in your left hand and
•deliver message from the gods
•guide the dead to the underworld (if the above message was that bad)
•protect merchants (e.g., from thieves)
•protect thieves from the above merchants
•protect lying gamblers and gambling liars
•make peace between all the above disturbed individuals
•try to use it in everyday life as much as possible and it will work because it is "the wondrous staff of abundance and wealth which is not subject to death and will protect thee" (as described by Apollo, the original owner of the staff)