Lindens, the New World Reserve Currency????

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A reserve currency, in its purest definition, is a currency held in large sums by major central banks in many countries. It must be a currency they can sell or trade without limitation, and, for it to be recognized as reliable, it must be issued by a very large and historically stable economy. It then tends to become the pricing medium for products traded internationally, and for commodities such as oil, gold, etc.

While World War II was still raging, the Allied powers prepared to rebuild the international economic system. Hence the Bretton Woods Agreement, which established the International Monetary Fund, now part of the World Bank. In the agreement, 44 countries agreed to make the dollar the anchor currency for the new economy, effectively ending the long-standing hegemony of the British Pound Sterling. The agreement was that U.S. dollars could be exchanged at a fixed rate for gold. This left out input from a lot of countries, but they were in no position to bargain. (LOL, I'm such a Jingoist :=P)

After WW II, European countries and Japan deliberately devalued their currencies against the dollar in order to boost exports to the only customer left standing and to encourage development.

Foreign aid money flowed out of the U.S. through the Marshall Plan. We ramped up defense-spending for the Cold War, and we bought lots and lots of foreign goods. By 1960, the number of U.S. dollars in circulation began to exceed the amount of gold backing them up. On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, Bretton Woods officially ended and the dollar became a "fiat currency," i.e., a currency backed by nothing but the promise of the issuing government.


That did not change the dominance of the dollar. The top reserve currency is selected by the banking community for the strength and stability of the economy that backs it. A currency might be abandoned for a currency issued by a larger or more stable economy, but this can take a relatively long time. And there must be a viable and widely recognized alternative.

The United States dollar is the most widely held reserve currency in the world. Throughout the last decade, an average of two thirds of the total allocated foreign exchange reserves of countries have been in U.S. dollars. The euro is the second most widely held, and the euro share has risen slightly, but the trend is not pronounced.

Foreign held dollars represent interest free debt for the U.S. Asian nations have assumed more and more U.S. debt, buying up bonds and holding dollars. This is specifically to prevent their currencies rising against the dollar and undercutting their booming exports to the U.S. This debt is huge. Trillions and trillions. And it's scary. Speculators could wage war on the dollar. Arab states are planning – along with China, Russia, Japan and France – to end dollar dealings for oil. And lots of investors in gold and silver want you to buy gold and silver :=)

But let's face it... Most ppl predicting the demise of the dollar are really just trying to sell you other things at inflated prices or sell you things in quantities that WILL inflate their prices. (And all of them are happy to accept dollars in payment.) Other currencies are still pegged to the dollar. Banks achieve security by investing in multiple currencies. One devalues, another increases. The probable scenario is a gradual process of diversification into other currencies such as the euro, not a precipitous sell-off of dollars in a switch to something else.

But what if there WERE TO BE a new world reserve currency?? What COULD replace the dollar as the world reserve currency? I, for one, advocate the Linden. I have several reasons:

1 - It has recently shown serious gains against the dollar. It is now worth $.00406 - WOW.

2 - The Linden is backed by the precious commodity, vaporware. You've heard of the rare earths used in everything from computers to car mufflers?? Well vaporware is like that. It is essential to Linden technology. Trust me, SL is full of big ideas that will revolutionize the way you play. Look at V2.

3 - Vaporware II? Where else can you sell land the doesn't REALLY exist? (Well, of course you can. But where else is it legal?)

4 - Vaporware III? You can even sell thin air - air not even having the added value of being pumped at a gas station. You can buy air to live in or do business in up in the sky.

5 - In 2009 the total size of the Second Life economy grew to US$567 million, about 25% of the entire U.S. virtual goods ("vaporware") market.

6 - Vaporware is rapidly becoming indispensable as well as precious. No one in the world can live without it. It's central to much entertainment.

7 - The Linden has a unique status in the world economy. After all, there are some words you never hear in SL - bunko, con, flim flam, gaffle, grift, hustle, scam, scheme, swindle, bamboozle. Hmmm.

8 - The Linden is a terrific tax shelter. (At least so long as no one is looking, and no one has.)

9 - You will never see a sign in SL that says "We do not accept Lindens." And I don't care WHAT country you THINK you're in.

10 - Lindens are far more widely recognized than Monopoly money. Or chocolate doubloons.

Hmmm... If you're smart, you'll help keep the dollar from falling!!!

BE A TIGHT ASS!!!
(No, that's not mine... sigh...)