THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

Professor Robert Guttman of the Economics Department of Hofstra
University describes the international monetary system as the
Achilles heel of the US and the global community as a whole. It is the
one way whereby a true Depression could repeat itself, with massive
unemployment and socio-political consequences.
Every national currency in the world even the new euro - is defined
in terms of the dollar, and therefore completely dependent on the
stability of this linchpin currency. In the Primer, the context for a
global meltdown in technical parlance, 'systemic risk’ is described.
The probability of such a meltdown is growing year by year as the
volume of speculative flows increases at the rate of about 15 to 25%
per year - while the safety net provided by the central banks becomes
increasingly inconsequential relative to the ever-growing speculative
volume.
Many people worry about 'hour it could really happen?' This is the
less important question. Did it really matter that the Kreditanstalt
bank in Vienna provided the trigger for the London market panic
that spread to become the 1929 crash in New York? What really
matters then as now- is the degree of stability or instability of the
system as a whole. In comparison, identifying the precise card that
will bring down the whole house of cards becomes anecdotal.
Whether the falling card turns out to be another crisis like the Asian
one, or a financial meltdown in Japan, or in the Eurodollar market,
the final result that precipitates the unraveling of our dollar-based
monetary system could be quite similar.
In Careful Communities, the financial trigger was an interplay
between two of the weakest links in today's global system: a failure of
the Japanese banking system that provokes a panic in the Eurodollar
market, and proceeds from there to challenge the US dollar market.
Such a chain reaction is definitely a technical possibility.