Rzar wrote: "I doubt having one currency and having no interest rate would result in less greed or corruption since these are instinctive characteristics of human beings as Adam Smith can attest, which he learnt the hard way after experiencing a perversion of human attitudes, which by the way was not the ideal end result he hoped for when writing "The Wealth of Nations". In short, his assumptions or hopes about human nature isn't what he liked it to be. However, this is becoming too philosophical as we speak." Rzar made a point, whether we're having a system of one currency with or without interest rates or having a system of multiple currencies with or without interest rates, it doesn't matter as long as it resulted in a better life, and a better world. "Better" means better in all aspects of life. No matter how good a system is, the final say would be on WHO executed the system. And Rzar, I think we're have to be a bit philosphical on this one. Cheers!
Lol, my second defense here. And yes, I agree with you eternalfuture that the crisis was the catalyst and not the sole cause as I've already stated. The question I was trying to state was if the financial crisis didn't happen and more time was given in terms of change, would Indonesia's bloodshed during the crisis been avoided but yet achieve similar results?
TerryL: I meant 'stable and low inflation'. Sorry. Interest exists for a reason, most important is inflation and risk compensation. Lending someone money, without receiving interest would be giving away a portion of the money (equal to inflation). Maybe it is interesting to know why interest is prohibited under Islamic law/rules. I don't know the answer for sure, but probably risk sharing. Because the climate can be irregular in the part of the world where Islam developed, (good harvest this year/bad harvest next year), a system of risk sharing developed, sharecropping. I have attached a document which analyzes sharecropping and fixed rent in ancient china. The conclusion: In todays world, risk can be managed in new, better, ways. This means the risk sharing advantage of sharecropping does not outweigh the disadvantage of transaction and incentive costs. In short: a good concept for past times, but not for todays world. The mandatory concept of risk sharing under Islamic rule developed into a static rule that never changed. The answer to your question: No. Different parts of the world are not yet integrated to such an extend that one policy can be applied to every economic zone. Once the world (in the far far future) is as integrated as a country today, one currency can exist. But this will take a long time.
Again its not my area but wasn't Japan recently a low interest country to the point of no interest? I believe they got themselves in a pickle because of it.
My original questions updated... How viable is the establishment of One world currency?? Does forex trading promote interest giving or taking ?? Does forex trading indirectly hurt societies ?? And related questions.....
I don't think Japan got into trouble because of their low interest rates, it is probably more of a belief that monetary policies are guaranteed to start up economies by lowering it or subduing an expansion of economies by increasing it. However, there are special events that do not guarantee this, like the "liquidity trap" (first observed by John M. Keynes) but of course this is an exception during a recession, which might be the case for Japan.
Rzar, With or without the crisis, the Soeharto Era would still end. It was just a matter of time. As for Japan, The assumption or perhaps, belief, that monetary easing could stimulate economic growth failed in Japan. Instead of breaking out of recession, Japan remained in it. The recession didn't induce inflation, but instead, it triggered deflation. Even after the rates were cut to the bone several times, the economy failed to pick up. I think Japan is still in search for inflation, but a demand-triggered inflation, not cost-triggered inflation. The case of Japan, like rzar wrote, was an example of a liquidity trap. TerryL, The establishment of universal currency is still far away. Forex trading includes trading money/exchanging money for commercial purposes. Don't view forex trading as merely a speculative acts by speculators. I believe more volume of trades have been for commercial uses, such as exports and imports, and mergers and acquisition across the continents (M&A). Those, I believe could as well serve more benefits for the people than creating damage. Sure some damages are done, but everything has its pluses and minuses. Like they used to say: Nothing's perfect. As for interests taking/giving... Well I think it's both. My brokers could charge/give interests on overnight positions. Cheers!
An appreciation of the domestic currency will reduce exports, as these become more expensive for foreigners. This could be seen as a damage to a group of people. Yet it can also be seen as part of the whole process. I can give you the condition(s) needed for ONE world currency, which were explored by Robert Mundell. For countries to constitute of an optimal currency area, Mundell argued, they need to satisfy one of two conditions: 1. The countries have to experience similar shocks (like same industries, that are affected by same problems, for example oil; impact of the business cycle at the same time; etc; etc). 2. High factor mobility; Workers need to be willing to move to other countries if unemployment is high. Now you know when the world is ready for one world currency.