Very impressive.

Her response on that Kos Diary in respect of a query re the Reserve Currency of the future...

is very difficult to envision today.  One thing I'm keeping my eye on is the nascent Khaleeji - the currency which will be created sometime after 2010 from Gulf Cooperation Council currency union.

Although the politics are making it really complex, the Khaleeji will effectively be oil-backed with huge cash reserves of over $25 trillion by then.

In our war against Islam, we may have to concede defeat when they own us and we work for them as our corporate masters.

prompted my (first) Kos response

You are presuming of course that either Central Banks or clearing banks are necessary as credit intermediaries.

They are not.

The requirement is for a Clearing Union, as envisaged by Keynes, and also a "Value Unit" with global validity for which the obvious candidate is a fixed unit of energy - a "Carbon Dollar" consisting of one dollar's worth of energy at the launch date.

The function of Banks as credit intermediaries is to guarantee the credit of the borrower, and the bank backs this guarantee with an amount of capital set by the BIS.

The actual cost of credit is simply the operating costs of the bank, and the default costs. This cost has nothing whatever to do with the actual "price" of credit indicated by central bank interest rates,

As we are now seeing, the price at which they may deal with the Central Bank is secondary to banks' judgement as to the likelihood of default of their new loans.

Central Banks - as opposed to monetary authorities -have never been necessary, and are now obsolete. The requirement is for a mutual guarantee of (interest free) bilateral trade credit, backed by a mutually owned default fund. In this model, banks are service providers, not credit intermediaries.

The necessary "Value Units" of energy - fungible internationally - and "land rental units" fungible nationally could come about from simple new investment mechanisms (REIT's and ETF's are embryonic examples), whereby return on investment is not in fiat money, but in fungible units of use value or "production".

Fiat "deficit-based" money=credit is neither sustainable nor - in a dis-intermediated "Napsterised" world - necessary.

While you correctly state that the Gulf nations have it in their power to create the necessary currency - a "deficit-based" and energy backed Euro clone is not it.