The Associated Pest

Venezuela

Seven Latin American countries have agreed to create a new central development bank for the continent. Argentina, Brazil, Bolivia, Ecuador, Paraguay, and Uruguay will join Venezuela and commence operations of The Bank of the South next year. The bank will be based in Venezuela, a country that has had strained relations with the US since Hugo Chavez has come into power.

According to a BBC report, the stated goal of the bank is to undermine the economic influence of the US and bring unity to the region. It will also make way for creating organizations that can challenge the IMF and the World Bank, who have been publicly criticized for the better part of a decade for their lending practices.

It is early speculation, but it is very possible this may lead to a unified South American currency, much like the Euro. If the goal of the organization is to “undermine the US influence”, I don’t think it’s much of a stretch.

We have seen the “Euro-effect” over the last few years. Central banks around the world have begun to adopt the Euro as a reserve currency and released their Dollar reserves. This has contributed to the dollar’s weakening, and subsequent devaluing. (Remember that trip of yours to Europe 5 years ago? It was so much cheaper than this year’s wasn’t it?) The Euro will gain more traction in 2008 when Cyprus and Malta join the 13 countries already using the Euro.

Could more unions like this bring about a one world currency? A lot of FOREX investors cringe at the thought, but I don’t believe it’s out of the realm of possibility.

Economic war may be the 21st Century’s legacy. If you can’t bring a superpower to it’s knees physically, the best option is economically. If the world has no superpowers, I think a one world currency is a likely option.

We have been drawing closer and closer to a one world economy as evidenced by the world’s currency, stock, and commodities markets affecting the other. We have seen oil prices cause big swings in the Dow and Nasdaq over the last few years. China’s mini-crash back on February 26th caused shock waves in the US markets and around the world. As the global economy extends its reach, currency will most likely follow.

More talks will take place in Caracas in November. Keep your ears tuned to The Associated Pest….

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