Jump to content

North American monetary union

From Wikipedia, the free encyclopedia

This is an old revision of this page, as edited by 63.138.105.2 (talk) at 17:59, 7 May 2008 (→‎Basis and origin). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Map of the theoretical NAU, with Canada, Mexico and the United States
The Fraser Institute's proposed symbol/logo for the amero

The North American currency union is a theorized economic and monetary union of the three principal countries of North America, namely Canada, the United States, and Mexico.[1] Implementation would probably involve the three countries giving up their current currency units (Canadian dollar, U.S. dollar, and Mexican pesos) and adopting a new one, created specifically for this purpose. The hypothetical currency for the union is most often referred to as the amero.[2][1] The concept is modeled on the common European Union currency (the euro), and it is argued to be a natural extension of NAFTA and the SPP. Conspiracy theorists contend that the governments of the United States, Canada, and Mexico are already taking steps to implement such a currency.[1] No current members of any country's government have stated a desire to implement a "North American Union".[3][4]

Basis and origin

The idea for a North American currency union was first proposed in 1999 by Canadian economist Herbert G. Grubel.[1] A senior fellow of the conservative Fraser Institute think-tank, he published a book entitled The Case for the Amero in September 1999, This Will Never Happend ! [2] the year that the euro became a virtual currency. Another Canadian think-tank, the C.D. Howe Institute, advocates the creation of a shared currency between Canada and the United States.[5]

After the report came out, centre-left nationalist groups in Canada expressed their opposition to any currency union because they view it as an attempt by American businesses to gain access to Canada's extensive natural resources while dismantling the nation's social services.[1] The 100,000 member strong Council of Canadians, a progressive advocacy group, has declared one of its central issues to be the threat of "deep integration".[1]

The idea envisioned is a currency union of the US dollar, Canadian dollar, and the peso, or the dollarization of Canada and Mexico. [6]

Support

Canada

One argument is that it would save up to $3 billion in currency transactions.[7] The same authors also stated that Canada's GDP could rise by up to 33 percent in a 20-year period given the adoption of a single currency.[citation needed] However with the Canadian currency currently on par with the United States dollar this becomes less of an argument.

The idea of a common currency has historically received more support in Quebec than in the rest of Canada; in a 2001 poll over 50 percent of respondents favoured the idea.[8]

Mexico

The possibility of a monetary merger has also been discussed in Mexico as a natural step to take after the NAFTA.[9] Former Mexican president Vicente Fox echoed that view and expressed his hope for a greater integration of Canada, Mexico and the United States, including an eventual monetary union, while on a 2007 promotional tour for his book "Revolution of Hope."[10][11]

Support in other regions

Lower levels of currency cooperation have been practiced in the Americas before. A number of nations, such as Argentina, Brazil, Canada have at times tied their currency to the U.S. dollar. Quite a few, such as Aruba, Barbados, and Cuba, still do.

The U.S. dollar is officially accepted alongside local currencies in El Salvador (since 2001) and Panama (since independence in 1903), although in practice these countries are fully dollarized. In 2000, Ecuador officially adopted the U.S. dollar as its sole currency.

Unofficially, the U.S. dollar is treated as a de facto secondary currency in much of Central America and the Caribbean.

Criticisms and problems

Opposition to a North American currency union exists high up in the governments on both sides of the Canada–United States border. Herbert Grubel, the first proponent of the amero, admits that American officials show no interest in the topic.[1] He concedes that "there wouldn't be very much benefit for the United States" in an amero.[1] Likewise, the Canadian Department of Finance strongly opposes the creation of a common currency with the United States, citing the loss of economic sovereignity. In briefing documents to Minister of Finance Jim Flaherty, finance officials concluded:

"A North American common currency would undoubtedly mean for Canada the adoption of the U.S. dollar and U.S. monetary policy. Canada would have to give up its control of domestic inflation and interest rates."[12]

Trade-offs

From the point of view of the Canadian and Mexican governments, a major obstacle to the creation of a unified currency is the sheer dominance of the United States in any such union. Unlike any country in the EU, the USA has a larger economy than the rest of its respective continent/union combined.

A University of California, Santa Barbara paper puts forward the idea that the United States simply has too many advantages from the status quo to move toward a single currency.[6] The United States dollar already acts as a global currency, meaning any transition to a 'new' currency would risk compromising this position and could cause a shift toward the euro or yen. The U.S. dollar is currently being used in over half of all the world's exports, double the total United States foreign trade. The adoption of the amero could threaten the seignorage that America currently gains from its American dollar. While seignorage would still be gained from the amero, this would be shared among the Bank of Canada, the Federal Reserve, and possibly the Banco de México. Therefore, even if the amero were used just as much as the U.S. dollar, the advantages would be shared among two or more countries, and not exclusively earned by the United States.

Differing economic policies & situations

Several problems could arise in regards to macroeconomic management. By submitting to a common currency, the countries would lose considerable autonomy in the management of the currency itself, including the setting of interest rates. Amongst the three potential participants, there is considerable difference in policy which would have to be reconciled.

Debt is a factor affecting currency prices. As of 2008, the debt of the United States continues to increase, while the debt of the Canadian federal government is being reduced. This is a clear advantage for Canadians, and it would not be reflected if the currencies were to merge. The importance of commodities also factors into this equation.

One possible problem with a North American currency union is the differing economic situations between each country, while the Eurozone is broadly similar being service-based economies based on high public spending (compared to the United States), high taxes and wealth being created by the sale of goods and services. North America on the other hand has three distinct economies, one based mainly on agriculture and manufacturing, with a demand for free trade (Mexico), one based on services such as retail, with low taxes and low public spending (United States), and an another based on services with higher taxes and higher public spending, with a large sector in primary goods such as oil, mining and lumber (Canada).

Political mandate

Lou Dobbs, a reporter and commentator for CNN, has posited that the formation of a "North American Union" is being approached without the knowledge and consent of the majority of the people who would be affected by this.[13]

Conservative Caucus Chairman Howard Phillips, WND columnist and author Jerome Corsi, activist Phyllis Schlafly, among others, have formed a coalition against the amero.[14] On January 22, 2007, Republican Representatives Virgil Goode of Virginia, Tom Tancredo of Colorado, Walter Jones of North Carolina, and Ron Paul of Texas were among the 43 federal lawmakers who introduced H. CON. RES. 40, a resolution that expressed:

"The sense of Congress that the United States should not engage in the construction of a North American Free Trade Agreement (NAFTA) Superhighway System or enter into a North American Union (NAU) with Mexico or Canada."

Constitutionality

Some assert that having a single North American currency would be unconstitutional under the current U.S. constitution under Article 1, Section 8; which states that the United States Congress has the right to: "coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;"[15][16]

This concern rests on the contention that the Federal Reserve, created in 1913, is unconstitutionally issuing and regulating American currency as it is a quasi-government entity and not part of the legislative branch of the United States government. While physical U.S. dollars are issued by the Department of the Treasury (in paper form by the Bureau of Engraving and Printing, in coin form by the U.S. Mint), most dollars in existence are not in physical form, and the value of the dollar is largely controlled by the actions of the Federal Reserve in lending and purchasing government securities.[citation needed]

In the arts and literature

Rumors of "amero coins"

In August 2007, rumors and conspiracy theories began circulating across the Internet regarding alleged United States Treasury issued "amero" coins.

The inspiration behind these rumors may have been the posting of images of medallions created by coin designer Daniel Carr.[1] Carr, who designed the New York and Rhode Island 2001 statehood quarters, sells medals and tokens of his own design on his commercial website, "Designs Computed" (also known as "DC Coin").[1] Among his designs are a series of gold, silver and copper fantasy issues of "amero coins" ranging in denomination from one to one thousand.[1] The coins have the legend "Union of North America" on the back with his company's logo, a stylized "DC",[17] in small type.[18] Concerning his "amero" designs, he mentions on his website:

My goal with these coins is not to endorse a Union of North America or a common "amero" currency. I fully support the United States Constitution, and I would not welcome (in any form) a diminishment of its provisions. I expect that these coins will help make more people aware of the issue and the possible ramifications. I leave it up to others to decide if they are in favor of, or against a North American Union. And I encourage citizens to voice their approval or disapproval of government plans that impact them.[19]

Unauthorized postings of images taken from his website have been reposted widely across the Internet, often being used as supposed "proof" of the amero coinage. Notably, Internet radio talk show host Hal Turner ran a full article on the "amero coin", claiming to have arranged for a United States Government minted "amero" to be smuggled out of the Treasury Department by an employee of that organization.[20]

Following Turner's assertions of federal minting of ameros, a web site marketing the curio coins released a statement debunking Turner's claims of a government cover up regarding Daniel Carr's amero products.[21] The debunking website Snopes also ran a further debunking of Turner's claims, stating:

"Neither the U.S. Mint nor the U.S. Treasury has a hand in creating these 'ameros'. These coins are merely collectibles offered to the buying public by a private company in the business of manufacturing such curiosities."[22]

Turner, refusing to believe that he had been duped, claimed that Carr's website had been created in haste in a matter of days expressly to discredit his claim.[citation needed] Carr's designs have been available through his website since 2005,[23] and according to a WHOIS search at Network Solutions, the domain "dc-coin.com" was registered by Daniel Carr on 27 September 2005.[24]

See also

References

  1. ^ a b c d e f g h i j k Bennett, Drake (2007-11-25), "The amero conspiracy", International Herald Tribune, retrieved 2007-11-28
  2. ^ a b Herbert G. Grubel (1999). "The Case for the Amero: The Economics and Politics of a North American Monetary Union" (PDF). The Fraser Institute. Retrieved 2007-09-20.
  3. ^ "SPP Myths vs Facts". Security and Prosperity Partnership of North America. Retrieved 2007-12-31.
  4. ^ "President Bush Participates in Joint Press Availability with Prime Minister Harper of Canada, and President Calderón of Mexico". Office of the White House Press Secretary. Retrieved 2007-12-31.
  5. ^ "Canada Should Pursue North American Currency Union" (PDF). C. D. Howe Institute. June 22 1999. Retrieved 2007-09-25. {{cite web}}: Check date values in: |date= (help)
  6. ^ a b Benjamin J. Cohen (2004). "North American Monetary Union: A United States Perspective". Global & International Studies Program. Retrieved 2007-09-05.
  7. ^ W.B.P. Robson and D.E.W. Laidler (2002). "No Small Change: The Awkward Economics and Politics of North American Monetary Integration". C.D. Howe Institute Commentary: The Border Papers, Toronto, Ontario. 29. C.D. Howe Institute.
  8. ^ Leger Marketing Group (August 30 2001). "A Study of How Canadians Perceive Canada-US relations". {{cite journal}}: Check date values in: |date= (help); Cite journal requires |journal= (help)
  9. ^ Fabián Muñoz El Norte (April 10, 1999). "Unificarían moneda México, Canadá y EU". Retrieved 2007-09-05.
  10. ^ http://www.thedailyshow.com/video/index.jhtml?videoId=109239&title=vicente-fox
  11. ^ http://transcripts.cnn.com/TRANSCRIPTS/0710/08/lkl.01.html
  12. ^ Chase, Steven (2007-11-22), "Consider a continental currency: Jarislowsky", The Globe and Mail, retrieved 2007-11-28
  13. ^ on-line transcript, CNN (July 21, 2006). "Lou Dobbs on the North American Union". Retrieved 2007-09-13. {{cite web}}: |author= has generic name (help)
  14. ^ Judi McLeod (2006-12-14). "Debut of the Amero,". Canada Free Press.
  15. ^ Edwin Vieira, Jr. (December 16 2006). ""Porque El Amero, Amigos"". News With Views. Retrieved 2007-12-03. {{cite web}}: Check date values in: |date= (help); External link in |publisher= (help)
  16. ^ Patrick Henningsen. "The Amero: Should the US support a North American-wide currency like the Euro?". Helium. Retrieved 2007-12-03. {{cite web}}: External link in |publisher= (help)
  17. ^ http://www.designscomputed.com/coins/dc-coin_cover.htm
  18. ^ "Photos of notional amero coins". The 'Amero' Currency. Retrieved 2007-12-03. {{cite web}}: External link in |publisher= (help)
  19. ^ "UNA Amero Pattern Coins". DC Coins. Retrieved 2007-09-25.
  20. ^ "Amero Coin Arrives". Hal Turner Show. Retrieved 2007-09-10.
  21. ^ "Response to Turner claims of U.S. Government Amero Cover Up". AmeroCurrency.com. Retrieved 2007-09-11.
  22. ^ "Amero Uproar". Snopes.com. Retrieved 2007-09-08.
  23. ^ http://web.archive.org/web/*/http://www.dc-coin.com
  24. ^ http://www.networksolutions.com/whois/results.jsp?domain=dc-coin.com

External links

Retrieved from "https://en.wikipedia.org/w/index.php?title=North_American_monetary_union&oldid=210849758"