But being the only reserve currency makes it easier, because there is enormous inertia in a system with only one reserve currency.

If the country with the only global reserve currency decides to strip-mine its industry, it can do so with greater ease because it has an inflated exchange rate on account of being a reserve currency. And it can continue to do so for a longer time without the damage becoming obvious to Joe Average, because it will continue to have an inflated exchange rate (allowing it to buy stuff from abroad on the cheap) for a long time, due to the inertia in the system.

If you had two or three reserve currencies, it would be a lot more viable for the rest of the world to shift away from the Anglo Diseased currency. Which would remove the upwards pressure on the exchange rate, and make life more difficult both for the people who are strip-mining the country's industry and for the people who are tasked with running the bread and circus shows.

- Jake

Friends come and go. Enemies accumulate.

Unless there is an effective mechanism to share the burden of adjustment between surplus and deficit countries,

That's where Keynes was onto something with the Bancor/ICU approach.

His design built in a charge on both positive and negative balances. He was apparently a fan of Gesell.

This is in line with the proposal I advocate for credit creation (ie the time to pay/unsecured credit that makes the world go around), as follows:

Point One: Treasuries  -probably decentralised Treasury branches as is still nominally the case in Canada - issue undated interest-free credit (which they do already - it's called cash).

Point Two: Service-providers-formerly-known-as-banks" operate the accounting system and assess/manage the issue of this credit to business and individuals in line with policies set by a Monetary Authority.

Point Three: both sellers and buyers using this credit would pay a charge for the use of the guarantee. ie a charge would be made on both credit and debit balances. This is exactly analogous to Keynes' Gesellian approach.

Point Four: Service-providers-formerly-known-as-banks would be paid reasonable costs plus a share in the outcome.

Point Five: A Default Pool of funds - held by a Custodian-foremerly-known-as-a-Central-Bank would provide necessary liquidity to cover defaults, and any excess would be shared equally as a National Dividend.

Point Six: settlement of credit obligations could be made using positive balances of Treasury credits, or in "money's worth" acceptable to the seller.

Point Seven: defaults would be settled by the Pool and collected from defaulters, if possible. Defaulters could have the option to settle in hours of community service.

Settlement could be, and among businesses often would be, in barter. More generally, through "Unitisation" of existing secured debt, new classes of acceptable units would be developed redeemable in:

(a) energy value - the "Petro's" I have in mind as a generic global reserve currency;

(b) land rental value - an essentially "land-locked" currency.

"The future is already here -- it's just not very evenly distributed" William Gibson