Monetary Issues

Does the current financial crisis resemble Japan's "lost decade" of the 1990s? It may be even worse, argues Robert Madsen. Not so, replies Richard Katz.

Global financial instability has sparked a surge in "monetary nationalism" -- the idea that countries must make and control their own currencies. But globalization and monetary nationalism are a dangerous combination, a cause of financial crises and geopolitical tension. The world needs to abandon unwanted currencies, replacing them with dollars, euros, and multinational currencies as yet unborn.

Financial abuses -- money laundering, tax evasion, and rogue banking -- have been around for as long as there have been finances to abuse. But globalization is creating new challenges as borders dissolve. New technologies enable tiny, remote countries to make quick money through their underregulated banking systems. Recent multilateral initiatives have started to attack the problem. But if the Bush administration fails to follow through on reforms, the entire effort could fall apart.

U.S. immigration policy is strict enough as it is. Those who want it even stricter should realize that less immigration means fewer workers and higher inflation.