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 Subject: North-American Monetary Integration: Here Comes the Amero

 It's a rather dry article. It may be tedious for those not exactly turned
 on with such things like currency valuations, competitive exchange rates
 and the "Dutch Disease." But it may also interest those people to know how
 supposedly the amero will be an all around curative for their weaknesses,
 according to its backers. Regardless, you may not want to miss the last
 five paragraphs. ie:

 In discussing the issue of sovereignty related to a monetary union, Grubel
 stated that he thinks that, “sovereignty is not infinitely valuable. The
 merit of giving up some aspects of sovereignty should be determined by the
 gains brought by such a sacrifice. ....the North American Free Trade
 Agreement,” as well as the International Monetary Fund and World Bank.9
 Despite admitting to several agreements and organizations of which strip
 Canadian sovereignty, Grubel suggests that losing sovereignty in these
 areas is still worth the benefits.


 In summation, what the author is proposing is to fix the Canadian loonie to
 the US dollar at US$0.90, create a currency board, which would be an
 unelected, unaccountable, group of people to handle our monetary policy,
 creating a route around using the publicly owned Bank of Canada, to ensure
 the creation of a ‘New Canadian Dollar’, which would be a prelude to the
 Amero. The author then explains that, “Fluctuations in global demand for
 natural resources will always result in competition for labour and capital
 among Canadian manufacturers and producers of resources. But, at least, the
 firms in these sectors would no longer have to concern themselves with
 exchange-rate fluctuations and policies of the Bank of Canada.” The article
 finishes by stating, “There will also always be changes in the U.S. (and
 Canadian) dollar exchange rate against the euro and other major currencies.
 But these changes would have minor effects on the Canadian economy because
 80% of the country's trade is with the United States.”


 http://www.globalresearch.ca/index.php?context=va&aid=7854

 North-American Monetary Integration: Here Comes the Amero

 by Andrew G. Marshall

 Global Research, January 20, 2008

 Many have now heard rumblings of the “amero”, a proposed North American
 currency to replace the Canadian loonie, dollar and peso. However, most of
 the mentions of this concept, when discussed in the mainstream media tend
 to focus on suggesting that talk of an “amero”, and in effect, the
 accompanying North American Union, is nothing but a conspiracy theory
 created by deluded xenophobes afraid of immigration and globalization. The
 Boston Globe recently wrote such a story, titled, “The Amero Conspiracy”,
 which stated, “The SPP [Security and Prosperity Partnership] does exist,
 and its tri-national task forces continue to meet, but its members consider
 it a way for the United States, Canada, and Mexico to collaborate on issues
 such as customs, environmental and safety regulations, narcotics smuggling,
 and terrorism. The amero, on the other hand, appears to be purely
 theoretical.”1

 However, despite being conveyed as “purely theoretical”, a recent article
 in the national Canadian newspaper, the Financial Post, referred to the
 amero, not as a theoretical idea or conspiracy theory, but as a potential
 reality. The article entitled, Fix the Loonie, lays out the process to be
 undertaken before the adoption of a continental currency known as the Amero.

 The article was written as a response to a previous article written in
 defense of Canada’s flexible exchange rate system, to which it states,
 “David Laidler's recent defence of Canada's flexible exchange rate system
 misses completely the point made by Nobel Prize winning economist Robert
 Mundell in his famous article on optimum currency areas. Mundell's article
 has been widely credited with providing the intellectual base for the
 European Monetary Union and merits attention.”2 The article continued
 elaborating on the previous point made by Mundell, stating, “If flexible
 exchange rates are best for Canada on the grounds presented by Laidler, why
 would flexible rates not be best also for Alberta, Ontario or New
 Brunswick?” It continued, “Milton Friedman's response to Mundell was that
 he would not advocate flexible rates for every possible region.”

 The article contends that Canada is currently suffering from what the
 author refers to as the ‘Dutch Disease’, “which is named after the problems
 that developed in the 1960s when the Netherlands sold natural gas that had
 been discovered on its coast. The increases in Dutch exports of resources,
 like those of Canada in recent years, resulted in a strong appreciation of
 exchange rates, which was reinforced by interest rate policies of central
 banks and currency speculators.” The author then contends that, “The
 disease manifests itself through the loss of domestic manufacturers'
 ability to compete abroad and with imports,” and that, “The Bank of Canada
 can keep interest rates low to discourage capital inflows and thus exchange
 rate increases, but at the cost of fuelling inflationary pressures.”

 The author then states that there is only one true cure for Canada’s ‘Dutch
 Disease’, “inoculation of the system by fixing the exchange rate at a level
 that allows manufacturers to be competitive, perhaps at the rate the Bank
 of Canada research identifies as the long-run equilibrium, around US90¢.”
 The author goes on to explain the reasoning behind this by giving the
 example that, “The Netherlands and Austria in the years before the
 introduction of the euro successfully operated such a system and enjoyed
 near perfectly stable exchange rates against the German currency. The
 essential ingredient in this success was the official commitment of the
 central banks of these two countries to maintain the same interest rate as
 that of the German central bank.”

 So if Canada were to do the same in relation to the US dollar, then
 Canadian interest rates would be subject to the rates set by the US Federal
 Reserve, with our Bank of Canada lock in step. The author goes on to say,
 “An analogous commitment by the Bank of Canada with respect to U.S.
 interest rates may not be credible, tested by speculators and therefore
 ultimately doomed to failure.” Then the article continues, and makes a
 startling announcement:

 “However, there is a solution to this lack of credibility. In Europe, it
 came through the creation of the euro and formal end of the ability of
 national central banks to set interest rates. The analogous creation of the
 amero is not possible without the unlikely co-operation of the United States.

 This leaves the credibility issue to be solved by the unilateral adoption
 of a currency board, which would ensure that international payments
 imbalances automatically lead to changes in Canada's money supply and
 interest rates until the imbalances are ended, all without any actions by
 the Bank of Canada or influence by politicians.

 It would be desirable to create simultaneously the currency board and a New
 Canadian Dollar valued at par with the U.S. dollar. With longer-run
 competitiveness assured at US90¢ to the U.S. dollar. [Emphasis added].”

 In summation, what the author is proposing is to fix the Canadian loonie to
 the US dollar at US$0.90, create a currency board, which would be an
 unelected, unaccountable, group of people to handle our monetary policy,
 creating a route around using the publicly owned Bank of Canada, to ensure
 the creation of a ‘New Canadian Dollar’, which would be a prelude to the
 Amero. The author then explains that, “Fluctuations in global demand for
 natural resources will always result in competition for labour and capital
 among Canadian manufacturers and producers of resources. But, at least, the
 firms in these sectors would no longer have to concern themselves with
 exchange-rate fluctuations and policies of the Bank of Canada.” The article
 finishes by stating, “There will also always be changes in the U.S. (and
 Canadian) dollar exchange rate against the euro and other major currencies.
 But these changes would have minor effects on the Canadian economy because
 80% of the country's trade is with the United States.”

 The author of this article is Herbert Grubel, a professor of economics
 emeritus at Simon Fraser University, who also happens to be a Senior Fellow
 at the Fraser Institute, one of Canada’s largest and most prominent pro-big
 business think tanks.3 Other senior fellows at the Fraser Institute include
 Eugene Beaulieu, who sits on the Academic Advisory Council to the Deputy
 Minister of International Trade in the Department of Foreign Affairs and
 International Trade for the Government of Canada, Martin Collacott, former
 Canadian Ambassador, Tom Flanagan, ho is known as the “man behind Stephen
 Harper”, and is a member of what is known as the’Calgary School’, which is
 an unofficial group of like minded thinkers who espouse neo-conservative
 views, and hold significant influence in the current Conservative
 government, even referring to Flanagan as the “Godfather of Canada’s
 conservative movement.”4

 Flanagan also used to work for Preston Manning, who is also a senior fellow
 at the Fraser Institute, a former Member of Parliament, and former leader
 of the opposition, and other senior fellows include Gordon Gibson, a former
 Assistant to the Minister of Northern Affairs and later Special Assistant
 to the Prime Minister, Wilf Gobert, former Director and Vice Chairman of
 Peters & Co. Limited, “an independent, fully integrated investment firm
 which has specialized for 35 years in investments in the Canadian oil,
 natural gas, and oilfield services industries,” Michael Harris, former
 Conservative Premier of Ontario, Jerry Jordan, former President and CEO of
 the Federal Reserve Bank of Cleveland, Ralph Klein, former Premier of
 Alberta, Rainer Knopff, a professor and also a member of the’Calgary
 School‚’ and Brian Tobin, a former Industry Minister.5

 The author of the Financial Post article which mentioned the amero, Herbert
 Grubel, wrote a paper for the Fraser Institute in 1999, entitled, “The Case
 for the Amero: The Economic and Politics of a North American Monetary
 Union”, in which he laid out the case for the creation of a regional
 currency for North America.6 In this paper, Grubel wrote that, “The plan
 for a North American Monetary Union presented in this study is designed to
 include Canada, the United States, and Mexcio,” and that, “The North
 American Central Bank, like the European Central Bank, will have a
 constitution making it responsible only for the maintenance of price
 stability and not for full employment.”7

 In discussing the issue of sovereignty related to a monetary union, Grubel
 stated that he thinks that, “sovereignty is not infinitely valuable. The
 merit of giving up some aspects of sovereignty should be determined by the
 gains brought by such a sacrifice.”8 He continued in saying, “It is
 important to note that in practice Canada has given up its economic
 sovereignty in many areas, the most important of which involve the World
 Trade Organization (formerly the GATT),

 the North American Free Trade Agreement,” as well as the International
 Monetary Fund and World Bank.9 Despite admitting to several agreements and
 organizations of which strip Canadian sovereignty, Grubel suggests that
 losing sovereignty in these areas is still worth the benefits.

 The introduction of the Amero is an integral aspect of the process of
 creating a North American Union, much like the European Union. This process
 is being undertaken through the implementation of the Security and
 Prosperity Partnership of North America (SPP), which was signed by the
 leaders of the three North American governments in March of 2005. This
 agreement is orchestrating the bureaucratic “harmonization” among the three
 North American nations to pave the way for a North American Community, akin
 to the previous European Community, and ultimately, a North American Union.

 The push for this agenda is being driven by the US-based Council on Foreign
 Relations (CFR), the preeminent American think tank, and the Canadian
 Council of Chief Executives, as well as the Mexican equivalent, Consejo
 Mexicano de Asuntos Internacionales. In May of 2005, the three groups, as a
 result of their joining forces in a Task Force, released a report entitled,
 “Building a North American Community,” in which they state that, “The Task
 Force offers a detailed and ambitious set of proposals that build on the
 recommendations adopted by the three governments at the Texas summ! it of
 March 2005. The Task Force’s central recommendation is establishment by
 2010 of a North American economic and security community, the boundaries of
 which would be defined by a common external tariff, and an outer security
 perimeter.”10