The dollar is the world’s reserve currency. Estimates are that 2/3rd of dollars in circulation are held outside the U.S. There are 7.4 billion people on the planet, and one way or another in our connected, quantum world, management of the value of the dollar affects everyone. Either directly by holding or trading in dollars, or indirectly by the privately held Federal Reserve’s influence on other central banks’ monetary policy. Governors of global central banks meet regularly in Basel, Switzerland under the auspices of the BIS, Bank for International Settlements. Observers of central banks can assume that governors coordinate monetary policy at these meetings. It is not by coincidence that after the 2008 financial crisis, global central banks adopted Bernanke’s policy of quantitative easing. Countries who link their currency to the dollar, such as China, had Bernanke’s policy forced upon them. The trend toward previously unthinkable negative interest rates is a global phenomenon fostered by central banks. For now, the dollar’s role in global commerce remains dominate. Global central banks follow the Fed’s lead and import its policies, but the dollar’s power, like all fiat currencies, is ephemeral and requires constant maintenance.
Since 1971 all currencies are floating. The dollar is now linked to nothing of fixed or discernible value other than the whim of unelected central bankers who control dollar creation via targets based on hindsight economic data of questionable validity and constantly changing academic theory. In our global floating system, the economic fate of the world is today increasingly held hostage to unaccountable acts of central bankers, led by the Federal Reserve.
The Federal Reserve System consists of the Federal Reserve Board and twelve regional Federal Reserve Banks. There are seven members of the Board of Governors, of which five are currently filled, and twelve regional FRB presidents. The Federal Open Market Committee, FOMC, holds eight regularly scheduled meetings a year to decide Fed policy. The voting members of the FOMC consists of the members of the Board of Governors, and five FRB presidents. The president of the FRB of New York has permanent voting status and the other four voting FRB presidents serve a one year term on a rotating basis. The next FOMC meeting is on June 14-15 and these ten, unelected individuals will once again enact in secret deliberations, policy that affects the value of the dollar, and ultimately, the standard of living of all citizens. This is no way to run the world.
Currency is not wealth, but the measurement of wealth. Wealth is the result of the exchange of the production of goods and services, and currency measures the value of those exchanges. If currency were wealth, then government’s power over creation of currency would ensure unlimited, universal wealth for all citizens. A currency’s value must remain stable, like any measurement unit. Today, because of global currency’s constantly changing value due to mismanagement by central banks, traders of currency exchange $5.3 trillion in global currency every day. This useless act of churning global currencies—by the chaos industry, who profit off of financialization rather than productive enterprise—has subsumed the value of all the globe’s stock markets, and is far greater than the trade in goods and services. High frequency “flash boys” trading facilitates this perversion of markets for the exorbitant benefit of a few at the expense of everyone else.
Government sanctioned, privately owned and issued Federal Reserve notes, dollars, have lost 97 percent of their value since Nixon ended the Bretton Woods international monetary system in 1971. Enough is enough. If the Federal Reserve is unwilling or intellectually incapable of maintaining the value of the dollar, legislators should give citizens the right to transact enterprise in currencies of their choice without federal government interference, subjection to arbitrary laws, or capital gains taxation on every transaction.
Great article!