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

developments in the currency markets in particular have a series of
implications that I divide under three headings:
- Power shift
- Increased volatility
- Stable or unstable, that is the question
Power shift
A major power shift in the world system has already occurred.
Every government in the world, including the most powerful ones,
such as the US, is actually being policed by the global foreign
exchange markets. If a government anywhere in the world dares to
challenge these financial diktats, capital flight will almost
instantaneously force it back into orthodoxy. President Mitterrand in
France in the 1980s;John Major in Britain and the Scandinavians in
1992; the Mexicans in 16~84; the Thai, Malay, Indonesian, or South
Korean governments in 1997; the Russian in 1998 - all paid the hefty
price that is extracted under such circumstances.
Even Business Week concludes: 'In this new market... billions can
flow in or out of an economy, in seconds. So powerful has this force
of money become that some observers now see the "hot-money"
(funds that move around quickly from one country to another)
becoming a sort of shadow world government - one that is
irretrievably eroding the concept of the sovereign powers of a nation
state.' The trickiest times occur when power shifts. They are by
definition times of uncertainty. The form of uncertainty that central
banks and other guardians of monetary order fear most is currency
volatility.
Increased currency volatility