Fifth currency- How about the iTulip Universal Currency Unit?

[GRG55]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

Good point about Barack - suppose the US is the country to have most recently defaulted on a gold backed currency - it could happen again.

If 1 Oz Ag = 1 ICU isn't an ICU nothing more than a name?

I don't think so.

One oz of silver or gold in a lump is one thing. Fine as a store of value [provided you are certain it actually contains one oz], but useless as a medium for transactions...the other purpose of a currency. A coin containing an oz of silver or gold, struck by an entity in which there is broad based confidence, can facilitate its use for transactions since counterparties [merchants] do not need to be concerned about the value/metal content. Folding currency, issued by an entity in which there is broad based confidence that it will exchange the paper for the metal on demand, is again more useful for transactions than a lump of silver.

There is real value in the "brand".

It's when the brand is compromised that things head downhill. The bonar being exhibit one. Ford's "Quality is Job One", another example. Hollow promises, living off past reputation, rarely lasts very long before the customer figures out they are being had...

[renewable]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

I don't think so.

One oz of silver or gold in a lump is one thing. Fine as a store of value [provided you are certain it actually contains one oz], but useless as a medium for transactions...the other purpose of a currency. A coin containing an oz of silver or gold, struck by an entity in which there is broad based confidence, can facilitate its use for transactions since counterparties [merchants] do not need to be concerned about the value/metal content. Folding currency, issued by an entity in which there is broad based confidence that it will exchange the paper for the metal on demand, is again more useful for transactions than a lump of silver.

There is real value in the "brand".

It's when the brand is compromised that things head downhill. The bonar being exhibit one. Ford's "Quality is Job One", another example. Hollow promises, living off past reputation, rarely lasts very long before the customer figures out they are being had...

You're quite correct. I'm just struggling with how the practicalities would work. If everybody started using silver coins, everybody would start getting educated about the existing refiners very quickly. Wouldn't only governments be able to strike something with similar 'band power'? I'm failing to understand how a currency from a website discussion forum would fit in.

[Sapiens]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

I'm failing to understand how a currency from a website discussion forum would fit in.

Knowledge... and branding... Would you trust a coin minted by iTulip?

[Rajiv]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

Currency and banking is ultimately a matter of trust.

[renewable]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

Knowledge... and branding... Would you trust a coin minted by iTulip?

No more than from an established refiner. Would the vast majority of people who have never visited this website trust a coin minted by itulip?

[audrey_girl]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

gulf states/arabs are way ahead of itulip - gold backed and coming in 2010:


http://www.marketoracle.co.uk/Article8947.html

[GRG55]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

gulf states/arabs are way ahead of itulip - gold backed and coming in 2010:


http://www.marketoracle.co.uk/Article8947.html

...and exactly where is the gold to be stored?

This is one of the most politically volatile regions on earth. When I lived there I refused to own anything I couldn't stuff in a box and haul out of there on short notice . I'm not sure I would have that much interest in a currency backed by metal stored in a region with both a track record and high potential for revolution and war.

[Rajiv]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

The US was and still remains the best bet to resolve the Financial Crisis -- but before that can happen, the political will to bring about the necessary changes has to be there -- today I just do not see that political will -- the vested interests are dragging their feet -- and they are the ones with the political power.

[LargoWinch]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

Currency and banking is ultimately a matter of trust.

That is why I vote for grapejelly to select the ideal basket of commodities (part platinum, uranium, crude oil and those weird cats with no fur) to back up the currency.

[renewable]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

...and exactly where is the gold to be stored?

This is one of the most politically volatile regions on earth. When I lived there I refused to own anything I couldn't stuff in a box and haul out of there on short notice . I'm not sure I would have that much interest in a currency backed by metal stored in a region with both a track record and high potential for revolution and war.

If it's the only way to buy oil, there may not be much choice. If the article is correct and the gulf currency will be - theoretically - gold based, isn't this one of the possible ways everyone could be forced into using a gold standard?

[Chris Coles]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

gulf states/arabs are way ahead of itulip - gold backed and coming in 2010:


http://www.marketoracle.co.uk/Article8947.html

This has absolutely profound consequences for the US$. I quote:

Adoption

The currency, when adopted as planned in 2010, will be sole legal tender in Saudi Arabia, Kuwait, Bahrain, Qatar, and the United Arab Emirates. Oman has stated it will not be able to adopt the new currency at the onset. In addition, Yemen is slated to join the Gulf Cooperation Council by 2016, although it will not adopt anytime soon.

The three words "Sole Legal Tender" will destroy the US$ as from the moment the 'Khaleeji' becomes sole legal tender they will insist that all payments are made in Khaleeji and not any other currency, which means all export payments will have to be converted into Khaleeji.

Those Arab nations are taking a leaf out of the US book of making war using money as the ammunition and playing the game to their complete advantage. The US$ is doomed.

[c1ue]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

Excerpt from "History of the Early 21st century" by Z. Guo, A. Krishnan, and A. Abdullah, Enlightenment Press, Johannesberg, 2052.

The establishment of a series of regional commodity backed currencies marked the end of the period known as Pax Americana (1984-2008)

These currencies, some backed by gold, were ultimately sustainable due to the regional economies that sprang up following the collapse of the American economic empire. Examples include the Khaleeji (United Kingdom of Allah based out of Istanbul), the tael (Asian Cooperative Organization based out of Lhasa), and the New Euro based out of Konigsberg.

The real reason that these competitive currencies were able to flourish, however, was due to the preoccupation of the United States military in Iraq, Afghanistan/Pakistan, and Mexico.

Despite the American fall from economic hegemony power, a military successor to the American economic empire would almost certainly have evolved had military distractions not been committed to starting with the Presidency of George W. Bush.

The continuation of the Bush policies of foreign entanglement, entirely in opposition to American habits of a century before, was carried out by Barack H. Obama, the 45th and first minority president.

Barack Obama's presidency was ended with only one term as the ongoing economic collapse - despite historic economic stimulus packages - prompted the American people to vote into power an obscure Texas senator...

[GRG55]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

If it's the only way to buy oil, there may not be much choice. If the article is correct and the gulf currency will be - theoretically - gold based, isn't this one of the possible ways everyone could be forced into using a gold standard?

Not so. Consider what is the value of oil if there is no buyer?

This is OPEC's enduring dilemma. In late 1973, when OAPEC and OPEC jointly imposed an oil embargo during the Yom Kippur war, OPEC's share of the global oil market was slightly above 50%. Today OPEC barely supplies one-third of a much expanded market [roughly 85 million barrels of hydrocarbon liquids are consumed each day]. All the cuts are coming from OPEC to try to balance the market [non-OPEC cuts are coming only from involuntary declines in production in Russia, Mexico, North Sea, USA, etc.]. If OPEC really had any power, do you think this would be the case?

Repeating a point I have posted a number of times before...the power over oil market pricing attributed to OPEC is illusory. Ever since that first oil embargo, OPEC's ability to control prices, either up or down, has steadily declined. The price behaviour of the past 12 months should be ample proof to any observer that OPEC has yet to successfully regain any semblance of "control" over oil markets and pricing.

However, if we remain on the present path, it seems increasingly probable that OPEC will, in due course, regain it's former, historically fleeting, level of influence.

There are good economic reasons the GCC currencies are linked to the US Dollar [their economies are essentially synchronized with that of their largest customer]. As Asia increasingly becomes the dominant buyer of GCC output it is possible their currency link may in future shift to an Asian currency block relationship. But I would expect that also require China to displace the US as the dominant military power in the Gulf region [in the same way as the USA displaced Great Britain's Royal Navy in the region, concurrent with the process of the US Dollar replacing the Pound as the global reserve currency] Difficult to say if or when that may actually happen.

[renewable]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

Not so. Consider what is the value of oil if there is no buyer?

This is OPEC's enduring dilemma. In late 1973, when OAPEC and OPEC jointly imposed an oil embargo during the Yom Kippur war, OPEC's share of the global oil market was slightly above 50%. Today OPEC barely supplies one-third of a much expanded market [roughly 85 million barrels of hydrocarbon liquids are consumed each day]. All the cuts are coming from OPEC to try to balance the market [non-OPEC cuts are coming only from involuntary declines in production in Russia, Mexico, North Sea, USA, etc.]. If OPEC really had any power, do you think this would be the case?

Repeating a point I have posted a number of times before...the power over oil market pricing attributed to OPEC is illusory. Ever since that first oil embargo, OPEC's ability to control prices, either up or down, has steadily declined. The price behaviour of the past 12 months should be ample proof to any observer that OPEC has yet to successfully regain any semblance of "control" over oil markets and pricing.

However, if we remain on the present path, it seems increasingly probable that OPEC will, in due course, regain it's former, historically fleeting, level of influence.

There are good economic reasons the GCC currencies are linked to the US Dollar [their economies are essentially synchronized with that of their largest customer]. As Asia increasingly becomes the dominant buyer of GCC output it is possible their currency link may in future shift to an Asian currency block relationship. But I would expect that also require China to displace the US as the dominant military power in the Gulf region [in the same way as the USA displaced Great Britain's Royal Navy in the region, concurrent with the process of the US Dollar replacing the Pound as the global reserve currency]

If the gulf region is just a price taker, why does the US feel the need to be the dominant military power in the region? Why would China need to become the dominant military power?

I don't know if the situation today is the same as the 70s. Maybe the peak cheap oil theory shifts the relative balance of power to who has the oil reserves - and also increases the incentive to hoard existing reserves:

[GRG55]

Re: Fifth currency- How about the iTulip Universal Currency Unit?

This has absolutely profound consequences for the US$. I quote:

Adoption

The currency, when adopted as planned in 2010, will be sole legal tender in Saudi Arabia, Kuwait, Bahrain, Qatar, and the United Arab Emirates. Oman has stated it will not be able to adopt the new currency at the onset. In addition, Yemen is slated to join the Gulf Cooperation Council by 2016, although it will not adopt anytime soon.

The three words "Sole Legal Tender" will destroy the US$ as from the moment the 'Khaleeji' becomes sole legal tender they will insist that all payments are made in Khaleeji and not any other currency, which means all export payments will have to be converted into Khaleeji.

Those Arab nations are taking a leaf out of the US book of making war using money as the ammunition and playing the game to their complete advantage. The US$ is doomed.

A wee bit melodramatic, me thinks...

At present the sole, legal tender in each of these states is their local currency. Doesn't seem to have had any effect on the US$ that I can detect. In the Kingdom of Bahrain shopkeepers willingly accept Saudi Riyals [10 Riyals is roughly one Bahraini Dinar] because the island is connected to the Eastern Province of Saudi Arabia by a causeway bridge, and a considerable amount of the retail traffic is from the KSA. But if you travel from Abu Dhabi to Doha, better convert some Dhirams to Qatari currency or you won't be buying lunch. Same goes for the other States there.

I travelled extensively throughout the region when I lived there, and used to keep some of each local currency in ziploc bags in my briefcase at all times. It's just a headache for a traveller dealing with all these different currencies, just as it used to be a headache to travel across continental Europe in pre-Euro days.

A GCC common currency will facilitate trade and travel between these nations, but I seriously doubt it will have any effect on global matters. The world is not about to adopt the currency of a group of perpetually squabbling kleptocratic kingdoms, with micro-sized economies, disfunctional legal systems, and no political clout on the world stage, "gold-backed" or not. I would bet on Mad Max in Minneapolis before I would bet on this...