George Soros, Chairman of Soros Fund Management, has written a piece that examines the “stark choice” between “international capitalism,” which he sees as the flagging US model, and “state capitalism,” represented by a rising China. To him neither of these two options is ideal, and he looks instead towards the development a new multilateral system.
His editorial is strongly supportive of the expanded usage of IMF Special Drawing Rights (SDRs), and the vigor of his enthusiasm seems bearish for the dollar. He recommends international cooperation along the lines of a second Bretton Woods conference for the development of a new financial architecture built around modified SDRs. Three of his key suggestions are:
* No single currency should have unfair advantage
* The range of currencies should be expanded and should include the renminbi
* SDRs will allow for the international creation of money, especially during crises
The editorial in its entirety has a number of tough to swallow and, depending on your perspective, disagreeable concepts, all of which serve to make it a particularly interesting read. Most importantly, it does not provide a particularly bullish outlook for the dollar. Project Syndicate provides the full content, an insightful look at Soros’ new world architecture perspective. Read A New World Architecture by George Soros.
Rocky Vega is a regular contributor to The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.