by Joan M. Veon

The Women's International Media Group, Inc.


While most Americans are absorbed in the lives of their families and meeting the demands of the job, there are rumblings going on in the international level which are calling for the restructuring of the world's monetary system. Most people only think in terms of events and happenings on the local and national level and therefore are not paying attention to what is happening above and therefore are not paying attention to the global level.

This restructuring of the world's monetary system includes strengthening the United Nations system and empowering them through a global tax, adding an Economic Security Council and changing the IMF so that it functions as a World Central Bank. The rumblings grow louder and louder with each new monetary crisis as the impetus for this restructuring---the Mexican peso devaluation, Barings Bank and the dollar---and are being advocated by a number of independent commissions as well as the Group of Seven Finance Ministers. Is the United Nations pushing for a "Second Bretton Woods Monetary Conference in order to change the world's monetary structure to "meet the demands of the third millennium?"

Although no one will say there is a "plan" to all of these economic problems, all one has to do is consider the past and present history of the dollar, past and proposed decisions by the Group of Five [now Seven] finance ministers, the current plans of the United Nations and apparent support by world leaders and financial institutions for a global tax and lastly, the restructuring of the International Monetary Fund to a World Central Bank.

The Dollar - Past History

In 1913, the independent monetary system which the United States had known since its inception was replaced with the Federal Reserve System. Instead of the U.S. Treasury controlling the economy and economic needs, Americans were told that we would be "better off" if we allowed the Federal Reserve handle the economic needs of our country. Our dollars, issued by the United States Treasury, which said "Gold Certificate" or "Silver Certificate" were gradually replaced by ones that said "Federal Reserve Note." Instead of borrowing from the U.S. Treasury for any deficit shortfalls, we borrowed from this independent source, the Federal Reserve. Today, America is beholden to them to the tune of $4.7T. In addition, they control all of the monetary movements in America and the interest paid by taxpayers on the federal deficit is paid to the Federal Reserve, and not the U.S. Treasury.

The assault on the purity of the composition of the dollar came on April 20, 1933 when newly-elected President Roosevelt signed the Emergency Banking Act. This legislation made it illegal for "Joe Average American" to own gold and required private citizens to turn in their gold while allowing for the countries of the world holding our currency to convert to gold at any time. With the exception of coin collectors, all American citizens who owned gold or who had Gold Certificates were required to turn their gold in exchange for paper currency issued by the Federal Reserve.

In 1944, the United Nations sponsored the UN Monetary and Financial Conference, known as the "Bretton Woods" Monetary Conference as it was held in Bretton Woods, New Hampshire. There 700 delegates from 44 countries met to determine the value of money in the post-World War II era. At this conference, the United States dollar, which had the highest amount of gold reserves backing it, was named the international reserve currency of the world. What this meant was that all of world commerce would use the dollar to trade with and all other currencies would be linked to it at a fixed exchange rate, thus stabilizing the value of world currencies to the value of the dollar. In addition, participating countries could convert their dollars to gold at any time, if they chose to do so. (Currently there is discussion to restructure the agreements made at Bretton Woods by removing the dollar as the world's reserve currency.)

From that time, until 1968, when French President Charles deGaulle requested of President Lyndon Johnson that the paper dollars he held be converted to gold, the dollar was premier, as it had plenty of gold backing it, or so everyone thought. It was President deGaulle who very astutely realized that America was monetizing their debt to finance the Vietnam War and he wanted his dollars in gold before the gold window was closed. By the time he converted in June of that year, our gold reserves had dwindled from $30B in 1944 to less than $10.5B. It was, however, President Richard M. Nixon who closed the gold window on August 13, 1971, thus changing the nature of the world monetary system forever and perhaps signaling the "countdown to a world currency."

The world's monetary system was transformed from accountability, based on the amount of gold a given country had in its treasury and the amount of paper currency it was printing, to no accountability other than the good opinion of the other countries around the world. This set the stage for the eventual evolution (now currently taking place) of all the world currencies into one. When America went off gold, the rest of the world followed, so that by 1973, with the exception of Switzerland, all of the world was trading in paper.

Floating System leads to Currency Traders

Once the world currencies went off gold in 1971 and started to "float" against each other, there developed a situation whereby international currency traders started "playing" the currencies against each other based on good or bad economic or political news. A 1987 survey by the Group of 30, an economic research council, reported that the worldwide volume of currency transactions doubled between 1979 to 1984, so that by that time $150 billion a day (equals $l40T a year) was trading on the international currency market. This was twice as much as the U.S. government bond market and nearly 40 times the average daily volume on the New York Stock Exchange (US News/World Report, 2/16/87). Today, the amount of monies being transacted daily on international currency markets is $1T. According to the March 24, 1994 edition of USA Today, the reasons for "capital moving at the speed of light" are: (1) the increase in investments outside the United States, (2) the increase in hedge funds, (3) the boom in currency trading, and (4) the boom in futures, options, and other derivatives--financial instruments that track the prices of bonds, currencies, or other securities. Last year, $1.4T was traded on the world's future exchanges.

Contributing to the volume in the international currency markets is the fact that many countries have relaxed their foreign exchange controls [these were set in place back in 1971 to safeguard against the situation we have today], many corporations actively trade for greater, enhanced corporate profits, and even banks earn much of their foreign exchange profits by making small gains on huge volumes of trade. Money flows where it can get the highest returns. According to Guy Field, senior vice president of Morgan Guaranty in London, "Once you get some basic volatility in a market, you attract speculators who are not interested in the reason for the movement but in the movement itself" (US News/World Report, 2/16/87), Economist Christopher Johnson of Lloyds Bank said at the time, "We're still in for a world of uncertainty and shock."

Most interestingly, it is the derivative market which has brought down a number of corporations, caused havoc in a number of mutual funds, wiped out millions of dollars in Orange County and yet in May, 1994 when Federal Reserve Alan Greenspan testified before a congressional subcommittee he brushed off calls for new legislation to control derivatives saying "Remedial legislation relating to derivatives is neither necessary nor desirable at this time." (Financial Times, 5/26/94)

Effect of the Floating Dollar on America

For America, the results of divorcing gold from the dollar resulted in instant double-digit inflation. Although many would have liked to blame our hyperinflation on the oil shortages, which also occurred at that time, the fact is that America had devaluated its currency (which had been convertible to gold) and now our gold reserves had been depleted by more than sixty-five percent, with no conversion to gold. The only virtue people could see in the American dollar was their faith in those managing the country's finances. That faith, just like good bank credit, was based on prudent management of finances.

By October, 1981, ten years after severing any ties the dollar had to gold, the U.S. federal deficit hit $1T which meant that the government was spending more money than what was being collected in tax, a feat that took 205 years to accomplish. Again, in the 1980's, America was beset by a number of monetary difficulties which included Mexico defaulting on its payments of $75B in foreign debts, the results of the design of junk bonds which were created to finance corporate takeover deals, the farming crisis which closed 78 banks, the government bailout of Continental Illinois and the result of the deliberate devaluing of the U.S. dollar by the Group of Five Finance Ministers. By 1985, America had become the world's largest debtor nation (Trade Wars against America by William J. Gill).

In 1985 the Group of Five (now the Group of Seven) finance ministers agreed that the United States should deliberately weaken the dollar relative to other currencies (US News/World Report, 2/16/87). Their reason for doing so was the fact that the dollar was the strongest currency in the world, and they said they wanted to make American products more affordable to foreigners. By September 1986, Federal Reserve Chairman Paul Volcker said that the dollar had dropped sufficiently against major currencies for the United States to be competitive with goods from abroad. This deliberate devaluation of the dollar caused it to drop 44% against the Japanese yen and the German deutsche mark, from 2.60 yen to 1.45 and from 3.35 deutsche marks to 1.52, respectively. One wonders what the impetus was for Mr. Volcker to determine that it had sufficiently fallen? Was this the first in a series of economic changes to set the stage for a new currency system?

The results of the devalued dollar had an immediate "sale" effect as the cost of American stocks, bonds, corporations, land, farms, and real estate had been reduced by 44%. In addition, as a result of President Reagan fulfilling his promise, tax brackets were reduced from 50% to 28% by 1985, making America doubly attractive as we had the lowest taxes in the world. The speed at which foreigners came rushing into America to buy and the amount they bought was unparalleled even by Elizabeth I, whose closet held close to three thousand jewel-encrusted dresses. In fact, America's "jewels" were sold to those who had the cash, creating a flow of money into our economy so strong that the Dow Jones Stock Average reached 25 new highs in the first ten trading days of 1987. This flow of money exacerbated the trade deficit as the amount of money flowing out of America could not match it.

The Dollar - Present

The dollar pretty much stabilized between 1987 and 1991 until the European Currency Crisis occurred in September, 1992. It is said that the collapse of the Berlin Wall and the unification of Germany caused the problems in the EMS. A number of countries pulled out of the exchange rate mechanism. As a result, Sweden raised its key interest rate from 20% to 75% and then to 500% in an attempt to stop a flight from the krona. (Mexico has recently taken similar actions in their interest rates and peso.) However, in a statement following their meeting, European Community finance officials said all EC states "stress their unanimous commitment to the European Monetary System as a key factor of economic stability and prosperity in Europe" (WT, 9/18/92). The dollar closed 1992 at 1.25 on the yen and 1.62 on the deutsche mark.

In 1991, Daniel Burstein wrote Euroquake, in which he claimed "a seismic shift is occurring in the composition of global wealth. It is convulsing the structure of international power relationships and changing the rules of international business competition." He made numerous observations about America's financial management and wrote that "A new global currency agreement will be hammered out between 1995 and 1997... It may even be the precursor of a single globe-spanning currency for the Triad [United States, Germany and Japan] as a whole. The new exchange rates will reflect the economic strength achieved by Europe and Japan, and the erosion of competitiveness in the United States. Although the system itself will be intricate, the bottom line will be a massive devaluation of American assets roughly analogous to fixing today's exchange rate at $1.00 = yen 1.05 and deutsche mark 1.2." This book was published the end of 1991 when the dollar was as 1.25 yen and 1.52 deutsche marks.

In the last two years, the dollar has dropped precipitously lower primarily against the Japanese yen and now most recently against the deutsche mark. The American economy appears to be buckling as a result of historically high federal and trade deficits, rising interest rates, large tax burdens and bad financial judgment. While all of this may be true, one cannot help but wonder if the dollar was to fall against the yen first and then the deutsche mark until it came into "parity" which is in preparation for the world's currencies to be interchangeable at some point as one. In order to understand how the above could be used to justify future international decisions to change the world monetary system, a review of America's finances is in order.

1992 and 1993

The federal deficit, was exacerbated when President Reagan cut taxes and did not cut spending, increasing the deficit by $2T. By mid-1992, four years later, the deficit had ballooned to $4T. In addition to the expanding deficit, President "Read my Lips" Bush passed the largest deficit-reduction package in U.S. history in 1992 which was followed by President Bill Clinton's in 1993. In 1992 the dollar fell to 1.25 yen and 162 deutsche marks and as a result of the second tax package, the dollar dropped 25% against the yen, closing 1993 at closing 1993 at 1.12 and 1.74deutsche marks.


The Federal Reserve, after trying to "jump start" the economy for two years which resulted in the lowest interest rates in 30 years, started to increase interest rates for the first time to "head off inflation" on February 4, 1994. It was noted by USA Today in March that "inflation hasn't been a problem for 12 years and it's not likely to be in the foreseeable future." In response to rising interest rates, the dollar dropped to 1.03 on the yen (despite a bid by the Bank of Japan to prop up the currency) and to 1.6750 deutsche marks. The stock market dropped 352 points or 8.8%, and bonds rose to 7.10% from historic lows.

A number of times during 1994, America faced a "dollar crisis," as the world central banks had to come in to support the dollar. The first time was on April 29. The Baltimore Sun reported that rescue as follows: "The United States teamed up with the Central banks of 16 nations yesterday to buy billions of dollars in a global campaign designed to show investors that the Clinton administration is serious about maintaining the value of the ailing U.S. currency." Where is America going? Since when do we have to rely on 16 countries outside of our own economic strength to have our monetary system bailed out and why didn't the market signal its concern by dropping enough for the individual to understand our economic problems?


There is deep concern over the loss the dollar has experienced since the beginning of the year. Since January, the dollar has fallen more than 20% against the yen and 14% against the deutsche mark. Almost weekly, the dollar has hit new post-World War II lows against major world currencies amid signs that the world's central banks can do little to reverse the decline. The plunge in the dollar the week of April 7 came one day after the Federal Reserve, the Bundesbank and the Banks of Japan and France committed an estimated $1.2B to $2B in an effort to slow the dollar's fall (WT, 4/7/95). By April 11, the dollar had dropped to 80.15 yen, the lowest level since modern exchange rates were established in the late 1940s (WT, 4/11/95). Amid the drop in the dollar to the unthinkable, the Dow Jones broke the 4000, 4100, 4200 and then 4300 level. Is this a smoke screen to blind the eyes of "Joe Average American" to the real reasons behind the drop in the dollar?

On March 9, 1995, USA Today said this about our twin deficits: "Instead of closing those gaps...we're talking about tax cuts and going deeper into debt. That's how, as a nation, you go from being owed $400B by foreigners in 1980 to owing them nearly $800B today. You go from having currency that's a store of value for the rest of the world to one people are afraid to hold."

However, the economic reports don't really put the economic problems which America is facing in proper perspective. Take for example a report from Prodigy. While talking about the "resilient economy," early in the article it states "The Federal Reserve appears to have succeeded in engineering a soft landing for the economy, raising interest rates seven times since midwinter 1994 to rein in growth and suppress inflation." If one stopped reading there, they would conclude that the economy was in fine shape. However, if one reads to the end, it says, "While the near-term economic picture could hardly be brighter, some analysts are sounding a sobering alarm. They warn that mounting US trade and budget deficits could cripple the dollar in the future and eventually undermine foreign investment. 'Our dollar problem is like a cancer. It will eventually kill us, but not today,'" said David Orr of First Union Corporation in Charlotte, N.C.

Maybe what Mr. Orr is really referring to is the evolution of the dollar into a global currency that would support the permanent government the United Nations is looking to set up. The dollar is not the only player setting the stage--the Mexico peso crisis and Barings Bank have helped those who would push for a global tax to do just that. After all, any old excuse will do.

Speaking of Mexico, on December 20, 1994, the Mexican government devalued the peso. According to the Washington Times (1/30/95), "The decision to devalue the peso was an act of deliberate policy [very similar to the Group of Five devaluing the dollar in 1985]. It is commonly said Mexico's new president had no choice but to devalue the peso because of a rising trade deficit and dwindling reserves of dollars [have you heard this before?]. Not so. There was and is a readily available alternative to devaluation. Mr. Zedillo made the wrong choice...a much better choice would have been to tighten monetary policy." As a result, Mexican interest rates rose from 13.6% to 40% by mid-October. The peso has dropped over 50% in value and consumer goods have already jumped 10 to 30% while bank interest rates have risen so high that middle- class families with business loans, adjustable rate mortgages, credit card debts, and car payments say they can't pay their bills (WT, 1/22/95).

Coming to Mexico's aid was the Clinton administration with a bailout package of $20 billion from the little- known U.S. Currency Stabilization Fund, leaving only $5 billion to protect U.S. currency from devaluation. In addition, the IMF made a loan of $17.8B and the Bank for International Settlements a $10B loan. With regard to the source of funds, President Clinton did not ask Congress to approve his actions but acted of his own accord. The question is "For whom?"

Who has the most to lose in Mexico? The big losers are commercial banks like Citicorp, Chemical Bank, and Chase Manhattan which have not only huge emerging market operations, but have lent $41B to Latin America. At the peak of 1993, security firms sold stocks and bonds valued at $27B issued by Latin American firms and governments. In 1993, Fidelity Asset Manager mutual fund put Take, for example, a report on April 22 20% of its assets into Latin American bonds. Maybe the bailout is really these businesses, for which means that you and I, Joe Average American, will replace the monies in the Stabilization Fund with tax dollars, thus making the Mexican bailout to Wall Street personalized. If this is so, then President Clinton does not work for you and I.

While the average American family is worried about meeting all the bills, making sure the kids have their homework done and ensuring that all is well on the home front, high above their understanding of what the world around them is comprised of is the United Nations who is setting the stage for their own agenda of world government.

The United Nations and a Global Tax

To many growing up in the 1950s and 60s, the United Nations was going to be the "salvation of the world" by being the "keepers of world peace." How the UN defines world peace may be completely different from how most Americans define world peace. It appears the UN is going for world government and "no opposition" to their agenda is how they may define "peace."

While Americans have been dozing off in front of their television sets after a hard days work, the United Nations has been amassing a political and economic agenda the likes of which would make Alexander the Great blush. The UN today employs a staff of over 51,000 and almost 10,000 consultants. It is organized into six principal organs and has five economic and social regional commissions and secretariats. The principal organs are the International Court of Justice, General Assembly, Economic and Social Council, Security Council and the Secretariat. The General Assembly has thirteen agencies, the Economic and Security Council has nineteen agencies which include the World Health, World Bank, International Monetary Fund and General Agreement on Trade and Tariffs. There are a number of functional and regional commissions and the Security Council oversees the peace-keeping operations. In 1992 the UN spent $10.5B worldwide.

The current and sixth Secretary-General of the United Nations, Boutros Boutros-Ghali, believes that the objectives of the UN in the post-Cold War Era should be that of peace, development, and democracy, which get their meaning from the UN. Boutros-Ghali has "a reinvigorated and expanded vision of development," which is why he has called for more conferences than any of his predecessors. What do these conferences really achieve? Each empowers the United Nations to act as a global watchdog and guardian over the world's resources and people.

By bringing the peoples of the world together to provide "consensus," which carries with it a very loose [UN] definition for "agreement," the UN gains power as it then appoints committees to carry out the Programme of Action for each conference. In addition, many countries who do not agree with the Programme of Action enter their reservations against those actions items they disagree with. However, the UN has a number of techniques to negate the reservations. Democracy, according to UN actions, appears to have only one meaning, theirs.

In Copenhagen, the Secretary-General commented that there are a number of levels to the word "change." They are: profound change, cosmetic change, and status quo. However, he offered another alternative, constant change. This can be seen in the transformation taking place in the world through the Programmes of Action offered at each conference. The United Nations is replacing society, the morals and mores as we know it with a godless, humanistic program. Unlike the American Constitution, which is based on religious values and personal freedom, the various UN Programmes of Action are not, as they are looking to transcend individual nation-states through their global emphasis of "equality for all."

By looking at the economic relationship between the Rio Earth Summit, the Cairo Population Conference and the Copenhagen Social Summit, we can see how these three have set the tone and are moving with a pulsating beat towards the final movement of a restructured society in particular a restructured monetary system.

"The Earth Summit" otherwise known as the United Nations Conference on Environment and Development was held in June, 1992, in Rio. It had a single focus, the environment. The emphasis was how to protect Mother Earth from depletion of resources. A number of their concerns, such as the depletion of the ozone layer, have been proven to be myth. A popular phrase coined at the Earth Summit was "sustainable development." Sustainable development basically means that you have to keep growth on the planet within UN determined guidelines in order to protect the resources from being depleted. This new economic term has carried through to Cairo and Copenhagen.

The follow-up to Rio was the UN International Conference on Population and Development held in September, 1994, in Cairo. This conference married the environment with population, stating that the world has to reduce its population in order to protect the earth's resources from being depleted--another myth. Sustainable development was recycled in Cairo to support the argument that the earth is overpopulated and therefore with too many people the earth's resources will be depleted, thus not leaving any food, water or land for future generations. Therefore, the world has to reduce its population in order to bring it into balance with the resources. The third world countries were told the reason why they were poor is because they have too many people, and if they reduce their population, they will become wealthy--another myth. No one drew any connections or mentioned the fact that the third world countries are deeply indebted to the World Bank and IMF for developmental loans that have not worked out, thus leaving them strapped for cash and unable to develop their own infrastructure.

At the Social Summit in Copenhagen, the United Nations embraced a new dimension to what they say is their 50-year-old charter to the people of the world---development. In the forward to the Human Development Report 1994, it says: "It follows that the role of the UN must be strengthened significantly in the development field. The peace agenda and the development agenda must finally be integrated. Without peace, there may be no development. But without development, peace is threatened."

What the UN did in Copenhagen was to set a new mandate as caretaker of the world's "human and social development," which includes everything in daily life. This could be picked up in the opening speeches. Poul Nielson, Minister of Development Cooperation for Denmark, " A new type of political process has brought us were we are"; Nitsin Desai, "This is a transition from peacekeeping to an economic social force-- look at the world in terms of a new compact, new dialogue, where everyone gains"; Juan Somavia, Chilean Ambassador to the UN, "You must link and network your global presence on gender issues, environment, worker's rights, population, peace, trade and social questions into a powerful and united force that can spearhead a worldwide civil society movement" and Boutros Boutros-Ghali called for a "new social contract." By adopting a new mandate, the UN now has a reason to request a global tax to finance this endeavor and gather greater political power to carry out their new responsibility to the world.

This new mandate was the real reason for the Copenhagen Summit. However the real purpose was for a world tax . You cannot ask for a world tax unless you can validate your reasons for the need. In order to help validate the need, the Ford Foundation underwrote the cost for several other groups to study ways in which the UN should "change in order to meet the needs of the third millennium." In support of the UN, a group of private citizens came together to start The Commission to Fund the United Nations. Most interesting is the fact that many of the people involved in the above studies such as Bella Abzug, Ella Cisneros, Harlan Cleveland, Jacques Yves Cousteau and Robert Muller are on the Commission to Fund the United Nations and they too have come up with basically the same ideas as these other reports. It appears there is nothing "independent" about these studies.

What is the UN, as well as these "independent reports" advocating? From a structural and financial standpoint, they have said that the United Nations must change its charter so it can meet on a full-time basis year round, expand UN representation, empower the Security Council, create an Economic Security Council, change the International Monetary Fund so that it becomes a World Central Bank, allow the UN to have its own permanent volunteer army, float UN bonds through a new agency at the World Bank called the International Investment Trust, and create the World Anti-Monopoly Authority to keep transnational corporations in line.

Joe Average, who is trying to take care of the house and job may not have time to look at what is happening on the international level, however, it is most interesting to see the parallels between what is going on in the currency markets with what the United Nations is proposing, i.e. various taxes to empower itself economically as well as turning the IMF into a World Central Bank.

Let us consider the UN's proposal to "take the fluctuation out of the currency markets by passing a global tax. From an economic point of view, the studies recommend a number of the same types of global taxes. However, it is the "Tobin Tax," named after Yale Economics professor James Tobin, that would glean the most monies for the UN. Dr. Tobin recommended that the UN tax one-half of 1% of the $1T traded on the international currency markets. This would generate $1.5T a year for the UN. However, the UN is rather shy in what it wants and has reduced Tobin's suggested tax to 5/100 of 1%, which would only reap $150B a year, or 15 times the UN budget worldwide for 1992. The Tobin tax was first presented at the International Development Conference by The Commission to Fund the United Nations in January as a way for the UN to help reduce the fluctuation in the currency markets (as well as empower itself with 15 times its 1992 budget!).

An international currency trader for a Fortune 500 Corporation who commented on the idea that a global tax could reduce or eliminate the fluctuation in the international currency markets remarked that the tax, whether 5/100 of one percent or one half of one percent, would NOT reduce the fluctuation in the currency markets as it was too small. This could leave one to believe that the UN will start out with 5/100 of 1% and then say that since it is not reducing the fluctuation in the currency markets, it would just have to raise the tax to a level where it would be effective. If you start out with $150B in income, then the "sky is the limit!"

Although the financial and structural changes proposed in the Human Development Report 1994 were not in the Programme of Action, they were presented verbally over and over again by all the speakers at the Social Summit. What the UN representatives and originators of these suggestions did was to present their ideas, lobby very hard among the world press, world delegates and non-governmental organizations, and start a "conditioning" process whereby they can continue to gain greater support and acceptance each time they discuss their ideas. The Summit ended with Canada, France and Denmark endorsing the Tobin tax, which they will present to the finance ministers at the next G-7 meeting in June.

In addition to the world leaders' meeting in Copenhagen, world financial leaders held a conference outside of Copenhagen during the week of the Social Summit. Officials from two of the largest companies in the investment services industry met and openly debated a challenge put to them by principals of the United Nations to participate directly in the social development of countries around the world. The two day meeting, entitled "Money Matters: Financing Social Development in the 21st Century," was sponsored by State Street Bank of Boston, who manages $1.8T in pension funds, and Fidelity Investments, the world's largest mutual fund company, in association with the United Nations Development Programme.

Many of the same players from the Human Development Report and the Commission to Fund the United Nations participated, along with some other government officials like Boris Federov, former Finance Minister of Russia, Chanthol Sun, Secretary of State, Ministry of Economy and Finance of Cambodia, Jose Luis Mendina, Mexican parliament member, as well as Marshall Carter, chief executive officer of State Street Bank and Joan Trapnell, senior vice president of Fidelity Investments. In the search for concrete solutions, the meeting debated such steps as a new tax on speculative cross-border money flows [the Tobin Tax] and the creation of a global securities and exchange commission. Commenting on the global tax, State Street's Marshall Carter said, "A cross-border transaction tax would only be passed on to our investors as a further cost of doing business." At the end of this meeting, a steering committee was drawn up from the participants to further analyze the proposals and plan a follow-up. Crocker Snow, president of World Times said, "Copenhagen II will take place early next year in Boston, a city with more money under management than any in the world, as a way to go the next step and turn some of these first ideas into reality." It appears that the call for a global tax to fund the UN and perhaps reduce the fluctuation in the currency markets is gaining fast momentum.

Reality and the Future

Since the conclusion of the Social Summit a month ago, top financial officials from the United States and Japan have been discussing the effect of the precipitous drop in the dollar against the yen and deutsche mark, thus combining the national economic activity with the international repercussions.

There are two levels of activity going on. On one side of the dollar crisis is the G-7 saying they cannot reach a conclusion as to what should be done with the dollar and on the other, the United Nations wants to help eliminate the currency fluctuation by taxing the profits from international currency trading which would reap billions of dollars for them and (2) restructure the International Monetary Fund to better control the world economies and flow of monies.

The Group of Seven finance ministers met on April 25 at the Blair House in Washington, D. C. to discuss the weak dollar and the problems it is causing on world markets and the exchange rate volatility. They offered, however, no cure for the weak dollar. This is most interesting when they recommended that the U.S. devalue its currency in 1985 as a cure for our large trade surplus and yet they cannot come up with any recommendations at this time to strengthen it. Since the Plaza Accord in 1985 where the Group of Five [now Seven] finance ministers decided to devalue the dollar, it has dropped 70% against the yen, from 2.60 to .81 and 60% against the deutsche mark from 3.35 to 1.35.

With regard to the restructuring of the IMF so that the world can regain control over international currency fluctuations, major ideas under discussion by international bankers and financial experts include: beefing up the IMF's capacity to know what is happening in markets and blow the whistle when problems emerge, setting up a world bankruptcy court of some sort, and establishing a new international rescue fund to provide emergency credit to prevent the bankruptcy of a government whose default might threaten the financial system (WP, 4/17/95). These recommendations, however, fall in line with those suggested in the Human Development Report whereby the International Monetary Fund would be turned into a world central bank. Recently, the IMF went on record saying they "must adopt broad changes to better anticipate and respond to future financial crises such as the collapse of the Mexican peso. The Clinton administration and the Federal Reserve is pushing for the fund to take a more assertive role as the world's economic watchdog" (WP, 4/19/95).

At the next G-7 meeting in June, the world's finance ministers will have a number of issues to discuss. In addition to the recommendations from the Social Summit by Canada, France, and Denmark to support the Tobin tax, the whole structure of the world's international financial institutions, i.e. the IMF, World Bank,

United Nations, and other multilateral institutions created at the Bretton Woods Monetary Conference will be on the agenda. Again, it appears that any restructuring of these institutions falls in line with the suggestions in the Human Development Report 1994 and with those of another independent study called the Bretton Woods Commission, headed by former Federal Reserve Chairman Paul Volcker "to overhaul the world monetary system" (WP, 4/17/95). Note this study was performed before the Barings Bank failure and the Mexican peso crisis. What were they anticipating or orchestrating?

Commenting on the global tax idea, E. Gerald Corrigan of Goldman Sachs, former president of the New York Federal Reserve Bank, has the same sort of reservation about a tax on financial transactions as one way to reduce volatility in markets. "Maybe a tax would be a good idea, but it literally would have to be universal. Besides, for a lot of these transactions you would have to have a really stiff price to change behavior" (WP, 4/17/95).

With regard to the globalization in the markets, Jeff Faux, president of the Economic Policy Institute in Washington, D. C., said in order to "fully participate in the global economy and not have institutions regulate that economy, sovereignty has got to be sacrificed." He went on to say that if we are in a global economy, we need to ask ourselves, Where is the Security and Exchange Commission and the Occupational Safety and Health Administration for the global economy?

The United Nations, along with various studies sponsored by The Ford Foundation, have "set the stage" for the overhaul of the world's monetary system. Just as the dollar has been arbitrarily devalued by the Group of Five [now Seven] and the Mexican peso as well, these same actors will use Mexico as a reason to call for a global tax to reduce currency fluctuation. At the same time, they will say that the world needs an overseer in the world financial markets, which is the empowerment of the IMF as a world central bank.

Will the next Group of Seven meeting in June (1996) set the stage for a "Second Bretton Woods" monetary conference where the next phase of a global currency system will be worked out? The fact that the Group of Seven could come to no conclusion with regard to the dollar is most interesting. Is the next rumbling which we will hear the world calling for the replacement of the dollar as the world's reserve currency? Will it be for a new monetary system in which the deutsche mark and yen will have economic seniority over the dollar? Is the financial system as we know it about to be changed to conform to a one world currency? While the exact answers are not forthcoming, the financial and economic stage is being set, the rumblings are getting louder and more pronounced.