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"default is a very real risk."

But is it not a very real risk with debt denominated in currency as well?
True, oil producing countries are not the most trusted of governments. But, let's say Germany creates units redeemable for its wind turbines production, would the fear of default be that strong?*

Although, of course, a central bank can always decide to print more money than it expected to, whereas Germany can't decide to produce more electricity -so the risk of default is probably greater with a redeemable unit.

"in which case, your "unit" will be called the "dollar""

Is that so necessarily? Is the point not to back the unit to something useful that cannot be devalued easily? Would USA directly price their goods in the unit if it existed?

Couldn't the guarantee be provided jointly by USA and the EU? Of course, the next question is would they want to (since that would stabilise the exchange rate somewhat, not necessarily what governments really want).

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Oct 27th, 2009 at 09:31:53 AM EST
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