Congresswoman Michelle Bachman has been on a warpath recently telling anyone who will listen, and ignorantly questioning the Chairman of the Federal Reserve and Sectretary of the Treasury about the grave danger that China, Russia and other ‘evil’ nations are putting America in by plotting to dump the dollar and create some new currency between them that they will then coerce the rest of the world into adopting as the new, “one world currency”. Using the therm “one world”, repeatedly, is designed to conjure up Stalinist-era rhetoric of Communist world domination.
Matthew Yglesias gives the best explanation I’ve read of what sparked her rampage and why she’s so wrong:
“[M]ost countries hold “reserves” of various kinds—foreign currency and gold. Most countries, right now, primarily hold dollars. Euros are also popular, and Yen and British Pounds somewhat less so. The United States of America does not, obviously, hold any dollars in our reserves. We actually have quite a lot of gold. And different countries vary their practices in this regard. But most countries mostly hold their reserves in dollars. So the dollar is, in effect, the “global reserve currency.” The IMF also issues something called Special Drawing Rights that countries can use as a reserve asset. SDRs work as a kind of meta-currency, with their value based on a basket of major world currencies. A Chinese official suggested that it might be good for the world to tilt away from such a heavy reliance on dollars as the reserve currency of choice, since this leaves countries exposed to policy decisions in the United States, and toward something more SDR-like that would be balanced between dollars and euros and yen and pounds and so forth.