The UN is now confirming the growing realization around the world that the dollar’s role as the reserve currency is a major problem for economic stability. In its World Economic and Social Survey 2010, the UN explains what is wrong with the status quo: it causes economic adjustment pains, it weakens the dollar over time, and it encourages central banking practices that cause volatility in the U.S. and abroad.
CNN’s Jack Cafferty, who picked up on this story, notes that “There’s been increased debate about using the dollar for international trade ever since the U.S. economy slumped into a recession.” In fact, Russia and China have also called for reforming the international monetary order. They’re joined by the UN in calling for a basket of currencies to replace the dollar. But such an arrangement would only redistribute the economic burden that the U.S. is beset with. The world needs a reserve asset that is no particular country’s liability, and gold is best-suited for this role. Now that it is coming to grips with the problem of global monetary policy, the international community should look to gold as the optimal solution.
