Finance, Forex and Investments

Is it possible to eliminate the exchange rate between currencies altogether?

This question is probably geared more towards people with backgrounds in economics and finance. In theory, if every nation on earth used the same currency, then an exchange rate couldn't exist. That would resolve the complaint the U.S. has with China keeping its currency (the yuan) artificially low. I think problems would arise with who would actually get to control the printing presses. Also, it's one of the goverment's most powerful tools to combat inflation. I'm trying to figure out if a global currency could potentially work, and what the advantages and disadvantages would be.

Public Comments

1. That is the current Goal of the World Bank - The US Federal Reserve is working in agreement with them. There was also a report just release by the council on Foreign Relations saying the same thing.
2. If your goal is to resolve the China currency peg ratio by introducing a uniform currency, I think more problems will spring out. We all heard it, "China's gaining unfair advantage! It's so cheap to buy Chinese goods and labor so US is losing its jobs!" IF China and US are using the same currency, then technically market power will bid up the cost to manufacture stuff in China (instead of paying $100 for 1200 yuan for some laborers, you'll be paying $200~$300 straight up). Increase costs will drive price of goods up in the US, while labor cost will increase in China but remain stagnant in the US. So we'll see raging inflation in US, but moderate inflation in China until the US and China hits economic equilibrium. I actually think that'll accelerate to a US economical crisis.