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North American monetary union

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The Fraser Institute's proposed symbol/logo for the amero

The North American currency union is a proposal in which the three principal countries of North America, namely Canada, the United States and Mexico, would share a common currency. This idea is based on the common European Union currency, the euro. There are also related proposals for a single currency for all of the Americas. The hypothetical currency for both of these ideas is sometimes referred to as the Amero.

Basis and origin

The idea for a North American currency union came preliminarily from Canadian conservative Herbert G. Grubel, a senior fellow of the think-tank, the Fraser Institute, who came out with a book entitled The Case for the Amero [1] in September 1999, the year that the euro became a virtual currency. Another Canadian think-tank, the conservative C.D. Howe Institute, advocates the creation of a shared currency between Canada and the United States.[2]

After the report came out, a few Canadian centre-left nationalist groups such as the Council of Canadians strongly oppose any move towards currency union, arguing that it would be harmful for the Canadian economy and for Canadian sovereignty.

The idea envisaged a currency union of the amero would mix the two dollars, and the peso, or it could also simply be dollarization of the American currency. [3]

Support

Canada

One argument is that it would save up to 3 billion dollars in currency transactions.[4] The same authors also stated that Canada's GDP could rise by up to 33% in a twenty year period given the adoption of a single currency. This implies, however, an annual growth rate of only 1.4%, which is below Canada's long-term trend.

The idea of a common currency receives more support in Quebec than in the rest of Canada, with over half of the population being in favour of it.[5]

United States

Given the Euro's new prominence, a dollarization policy adopted by either Canada or Mexico, or even a change to the proposed Amero, could help reassert the dollar's dominance world-wide. However, it is unlikely that this would be sufficient to counter the "threat" of another global currency if only two nations (the United States and Canada) were to adopt it.[citation needed]

Mexico

The possibility of a monetary merger has also been discussed in Mexico as a natural step to take after the NAFTA.[6]

Former Mexican President Vicente Fox confirmed the existence of a plan conceived with President Bush to create a new regional currency in the Americas, in an interview on CNN's "Larry King Live."[7] "Long term, very long term," he said. "What we proposed together, President Bush and myself, it's ALCA, which is a trade union for all the Americas. And everything was running fluently until Hugo Chavez came. He decided to isolate himself. He decided to combat the idea and destroy the idea... "

Support in other regions

There are many lower levels of currency cooperation that have occurred in the Americas. A number of nations – such as Argentina, Brazil and Canada – have at times tied their currency to the United States Dollar, and in 2000, Ecuador adopted the U.S. Dollar as its sole currency. In much of Central America and the Caribbean the U.S. Dollar is already a de facto secondary currency.

It serves as parallel legal tender in both Panama (since independence in 1903) and El Salvador (since 2001), and unofficially in Cuba where the Convertible Peso is currently pegged at 1 Peso equal to US$1.08 (previously, it was until 24 March 2005, 1 Peso = US$1). Some pundits thus argue that currency union is all but inevitable, whether it is desired or not.

Criticisms

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. Differing cultural and social/economic objectives amongst the other western nations would be another point of contention [citation needed].

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 towards a single currency.[3] 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 towards 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 between the Bank of Canada, the Federal Reserve and possibly the Banco de México. Therefore, even if the amero was 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.

Secondly, several problems could arise in regards to macroeconomic management. By submitting to a common currency, both countries would lose considerable autonomy in the setting of interest rates among other issues.

In addition, some have 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.[8] One concern raised by the public is that the value of both United States and Canadian currency would fall in order to absorb the historically troubled peso.

Another concern, mostly observed by Alex Jones[9] is that the Amero could give more control to a small collection of supposed bankers, or, Illuminati.

Constitutionality

Some Americans state 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;”. This concern, however, is slightly obsolete[citation needed] because the control of coining and regulating U.S. Currency has been put into the hands of the Federal Reserve which is not an elected entity, nor is it even part of the executive branch of the United States government. Basically, since the constitution has already been stepped on in similar matters, it is OK to continue to do so in this one.[citation needed]

In the arts and literature

  • Infinite Jest by David Foster Wallace takes place in the near future with a common North American Currency, and a strong US-led North American confederation.
  • North American Union and Amero was also mentioned in the controversial document, Zeitgeist, The Movie, as a stepping stone towards a world government.

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 the posting of images of medallions created by coin designer Daniel Carr.[1] Carr, who designed the Maine, New York and Rhode Island statehood quarters of 2001, sells medals and tokens of his own design on his commercial website, "Designs Computed" (also known as "DC Coin"). Among his designs were three fantasy issues of an "Amero" coin, with the legend "Union of North America" on the back, with his company's logo, a stylized "DC", in small type.[2] 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."[10]

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.[11]

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.[12] 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."[13]

References

  1. ^ Herbert G. Grubel (1999). "The Case for the Amero: The Economics and Politics of a North American Monetary Union" (PDF). The Fraser Insutitue. Retrieved 2007-09-20.
  2. ^ "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)
  3. ^ a b Benjamin J. Cohen (2004). "North American Monetary Union: A United States Perspective". Global & International Studies Programn. Retrieved 2007-09-05.
  4. ^ 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.
  5. ^ 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)
  6. ^ Fabián Muñoz El Norte (April 10, 1999). "Unificarían moneda México, Canadá y EU". Retrieved 2007-09-05.
  7. ^ "Ex-Mexican prez: 'Amero' on the way". WorldNetDaily.com. Retrieved 2007-10-09.
  8. ^ 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)
  9. ^ "Endgame". Jones Productions. October, 2007. Retrieved 2007-10-27. {{cite web}}: Check date values in: |date= (help)
  10. ^ "UNA Amero Pattern Coins". DC Coins. Retrieved 2007-09-25.
  11. ^ "Amero Coin Arrives". Hal Turner Show. Retrieved 2007-09-10.
  12. ^ "Response to Turner claims of U.S. Government Amero Cover Up". AmeroCurrency.com. Retrieved 2007-09-11.
  13. ^ "Amero Uproar". Snopes.com. Retrieved 2007-09-08.

See also

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