MotM Briefs – The Floating Currency Fallacy

George Gilder has authored a prescient piece that succinctly sums up the challenges that the Trump administration faces in righting the global economic system.  Titled Trump Can Succeed On Trade By Ending Global Currency Manipulation, Gilder gives fair warning that the Trump administration must address monetary policy if Trump desires to make his campaign slogan a reality.  A return to a stable dollar linked with the fixed standard of reference of gold is the essential first step to correct 45 years of monetary error and chaos.

For the Trump administration to address its number one economic concern, it has to start with the perspective that the entire edifice upon which our current global financial system rests is a fallacy. The idea of floating currency is a misnomer. Central banks have 100 percent monopoly control of currency supply issuance. Currencies don’t float. The free will and vagaries of the market do not determine a currency’s value. The monopoly central banks’ adjustment of currency supply relative to a fixed standard of reference determines the value of a currency. The market simply reacts to the constantly changing value of currencies that emanate from the monopoly control of central banks. 

This is a simple concept. Yet like so many other simple economic concepts, it became lost in the miasma of economic gobbledygook that serves the interests of a select few over the common, beneficial interests of all.

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