Posted by
David on Wednesday, October 10, 2007 7:33:25 PM
When conservatives openly wonder about the prospect of a
pan-American currency, many liberals deride them, calling them conspiracy
theorists. The irony is, the same liberals who actively defend dubious
constitutional rights, will most likely miss one of the most important
Constitutional challenges in United
States history.
The Constitution unequivocally gives Congress the authority
to print and regulate money in the United States. Long ago, Americans decided the ability to
“regulate the value thereof" empowered the government to establish a
national bank, and more recently the Federal Reserve System. However, the
concept of establishing a pan-American currency is another matter entirely.
In 1999, the Fraser Institute's Herbert Grubel used a
carefully reasoned paper to advance the idea of creating a pan-American
currency - the Amero. In it, he touted the economic benefits that would follow
a common currency. More recently, Ben Steil wrote in Foreign Affairs that
"globalization and monetary nationalism are a dangerous combination."
"Governments" Steil opined, "must let go of the fatal notion
that nationhood requires them to make and control the money used in their
territory." Accordingly, Steil argued that "dollars, euros, and
multinational currencies as yet unborn" would be the appropriate remedy.
Instead of replacing the dollar with the Amero, the Americas would “dollarize” - that
is, accept the dollar as their official currency. El Salvador did just that a few
years ago.
Steil suggested that the trade-off would be simple -
"independent monetary policy" would be jettisoned in favor of
healthier national economies.
Superficially, everyone would benefit. New markets would be stabilized,
poorer countries would gain foreign investment, and the US government
would retain monetary sovereignty. However, a deeper analysis suggests
widespread “dollarization” could actually jeopardize American sovereignty.
Historically the United States has been relatively
active in politics south of the US/Mexican border. During the 19th
century, our involvement led to significant military conflicts. The 20th
century was marked by less obvious, yet almost as odious, psydo-political
actions throughout Central and South America.
Consequently, many people residing in area of the world view the United States
suspiciously.
If a handful Central and South American countries dollarized,
their center-left political parties would most likely oppose US monetary
hegemony. At that juncture, either the countries would step back from their
decision to dollarize, or they would seek a voice in US monetary policy. Although the government would not be forced
to oblige, the pressure to do so would be great.
American politicians would face lobbying from all sides.
International business interests, for example, would lobby Congress to keep
dollarized Central and South American countries from abandoning the experiment.
Likewise, many Central and South American leaders would be loath to abandon the
economic advantages that dollarization would confer. Moreover, the
international community would probably favor, if not actually endorse, the idea
of giving dollarized countries a say in US monetary policy.
Unfortunately, there would be no guarantee that a catalyst
would not coerce American leaders to give dollarized countries some form of
decision making power. This possibility, however remote, is reason enough to be
highly skeptical of arguments in favor of pan-American dollarization. Indeed,
whether it is the Amero or dollarization, the end result would be much the same
– a critical loss of constitutional sovereignty. That prospect should make US citizens of
every political affiliation shudder.