The US Fed seems to be the defacto central bank for the whole world. I don’t know what POTUS plans, but I believe the Big Wigs have plans to redo the International Financial System.
Their Plan is to replace the USD with SDRs based on a basket of currencies using the IMF. The USD would then be just a local currency rather than the main reserve currency. Some apparently want to phase out cash all together.
I am not impressed with a system that has presided over the reduction by about 98% of the value of a dollar. I have no particular desire one way or the other-I am sure that whatever POTUS does will be good for the USA-so I don’t worry about it-he’s a genius and will make whatever changes need to be made. YMMV.
“The US Fed seems to be the defacto central bank for the whole world.”
It has become so because international lenders don’t trust getting repaid in Euros or the Renminbi or the Yen or the Pound. They insist on getting repaid in US Dollars. The US has the largest, most liquid, and safest bond market in the entire world. And if it does have problems, the others are even worse.
“Their Plan is to replace the USD with SDRs based on a basket of currencies using the IMF. The USD would then be just a local currency rather than the main reserve currency.”
This is nothing new. Keynes suggested it during the Bretton Woods Conference of 1944; he called his version of SDRs “Bancors”. And despite what freepers imagine they know about Keynes, he wasn’t a socialist nor a fool.
Making the Dollar the reserve currency instead of gold or a currency basket posed dangers to the Dollar. And those problems began showing up as early as the Eisenhower years. The problem is known as the Triffin Dilemma after the economist who described it.
Foreign banks began holding ever larger quantities of Dollars as their reserves. Eventually they had as many Dollars as we had gold to back them, leaving no Dollar supply for domestic American use.
Our “solution” was to issue more dollars than we could back, which resulted in a dual gold market. A real one, which reflected actual market values, and an “official” one that exhanged dollars for gold at an artificially low price.
This would only work as long as our trade partners agreed not to redeem their Dollars for gold, which the French soon didn’t. They began draining our Treasury gold. Inflation began affecting the Dollar. This became critical by the time Nixon became President. And instead of defending the Dollar’s link to gold Nixon scrapped it by executive order. The big inflation of the 1970s ensued. Presidents have no reason to know the arcana of monetary theory and I’m sure he had no idea he had lit the inflation fuse.
“I am not impressed with a system that has presided over the reduction by about 98% of the value of a dollar.”
Thank those at Bretton Woods who chose the Dollar as the reserve currency. Thank those who couldn’t understand or who chose to ignore Triffin’s warning. Thank Nixon for ending the Dollar’s last link to gold. IMO we should go to a basket of currencies and take the pressure off of the dollar.