Regarding Carnegies and Standard Oil a century ago and their power: sure, but that was only the case because humanity suddenly invented fantastic source of energy in the form of oil. Previously it was horses, wood, steam engine, coal. Entities who will monopolize such incredibly concentrated source of energy for transportation useful in ships, cars, planes will be extremely powerful economically. It has little to do with a monetary system. You correctly point out, that in 21st century similar thing occurs with Internet - those who monopolize Internet based services like Google, Amazon will absolutely gain huge advantage over others. I would argue however that fiat currency system is much much much worse in its damage and distortions it created than the quasi monopoly of Google & Amzn. Why? Because we can choose to buy at Costco, use Brave Browser, duckduckgo, other email services, shop at 1000s other online retailers. But we cannot stop using fiat currencies since they are being FORCED upon us. You certainly cannot say to washington tyrants: stop creating any more debt. You do not have such powers. RE: about Russia. Good points. Sure, fiat currencies do not automatically mean a country will run budget deficits. But they surely make them much easier to run. Russia has trade surplus mostly because its the Worlds top NET exporter PER CAPITA (per capita being key here) of : Oil, Natural Gas, Nickel and Gold. Also it has huge agric. land vs its population size. As a result its much easier for them to run budget surplus. When price of oil was around $10 back in 1998 (and other commodities also at multi decade lows), Russian Rubble was in deep trouble. But it also depends on spending habits of the population and political landscape. Russian people can stomach hard times, whereas American people would revolt if they could not buy newest iphone, newest 4k TV, biggest SUV , 4 times per each decade - americans simply furiously DEMAND consoomerism at the cost of ever rising debt. In Russia, large portion of the population simple lives without such luxuries.
Hey Piezoe, Answer also why the heck China is reported to own 15,000 tonnes of gold? What for they hoard that much if it cannot ever be used as a possible currency or store of wealth? Why Russia has over 2,500 tonnes and why small Switzerland owns 1000 tonnes or approx 10X more per capita than China? What for? Is it just for PR reasons? Central banks do not own much real estate or means of production.... so why the hell most of them do NOT own 100% fiat currencies but put that damn gold in their vaults? It is costly to guard and protect..... Why German central bank has over 70% of its reserves in gold? Why not zero %? On top of that even more difficult question. Why major central banks (not australia /canada/norway) own gold but zero silver? Vaulting gold may cost them hmm like 0.1% of its value per year, so vaulting silver would probably cost 0.2% per year. Still if Switzerland 1000 tonne gold is worth 60 Billion USD, it probably costs around some 60 million USD each year to guard it? What is 60 million USD where USA wastes few trillion on Afghanistan and still population is not enraged about it? I guarantee you, Americans wont be angry if Fed would hoard silver apart from gold at 2x higher vaulting costs. Nope, some 60M usd per year more costs, when silver is clearly 10x undervalued vs gold wont make avg Joe or plan Jane mad
And what underlies that? In other words why might you need a particular currency, not just any currency, to make this needed future transaction.
No, it has to be that specific currency to make the trades within or with that nation in the future. What use is holding another country's currency if you live in America and intend to make transactions there in the future? There is some use if you think the other country's currency value will rise and want to sell it for a profit at a later date. But if you want to purchase something in America in the future then you will have to hold a certain amount of dollars, this is where the demand and value derives from. The other aspect is international trade when other nation's businesses want to trade with America in the future, they will have to hold a certain amount of dollars to do this. The demand and value of a currency is in the expectation or need to make transactions with it in the future. It might as well be a future expectations expenditure model, if you need to buy things in the future then you will need the money to do so. This requires the purchasing and ownership of that currency to do it, thus demand is created.
I will address your first demand because you might have some difficulty with that one, since to get the total picture you'd end up, probably, having to consult several sources. (This is a topic on which I am fairly expert, but if I slip up on minor details then you still have the literature to fall back on.) I am not inclined to bother with the other of your demands because most, probably all, of your other demands you can be quickly satisfied with a quick probing of the various relevant .Gov sites. As you are aware, I have given suggestions for further reading. . You'll need to do that first, before we can have much of a dialog. I will, nevertheless, from time to time speak up when I see something posted here that simply demands to be corrected before it can mislead others, such as your bizarre claim that our federal agencies are not audited... Since you seem interested in the Fed, why not start your reading with Joseph Wang's wonderful book just out. Wang was(is?) a trader on the NY Fed's Bond Desk. His book is right up to date and his writing is clear and to the point. Now for the question of why the U.S. was forced to go off the gold standard in 1971. ( For background I suggest https://www.federalreservehistory.org/essays/gold-reserve-act ) In the opinion of Fed Governor Eugene Meyer (1930-33) it was Roosevelt's gold program that took the U.S. off its then existing gold standard -- an absolute necessity in my opinion!. Roosevelt's program was formalized in 1934 with the signing of the Gold Reserve Act -- it actually began to be implemented in 1933. This Act is relevant to your interests. It was the 1934 Act, plus other banking acts passed in the 1930's, that wrested control of the Federal Reserve System from the private banks and placed it where it had always belonged with the Federal Government. It is true, that as originally enacted by Congress in 1913 -- a reincarnation, as it were, of previous short-lived U.S, "Central Banks" -- the Federal Reserve System, always a creature of Congress, was "private". However that arrangement ended with Roosevelt. Today's Hybrid Fed Structure is thoroughly under Federal Control via the Fed's appointed Board of Governors, and the Board's FOMC, Federal Open Market Committee. (Note carefully the underlining!) On the Board of Governors website, Federal Reserve.Gov, you'll find the Federal Reserve System described as having a "Hybrid Structure." Bankers drawn from Private Banks manage the day to day running of the Fed's Branch Banks, which are relics of the old private Fed and have .ORG net addresses. Any profits, however, generated in the Fed system flow back to the U.S. Treasury; not to Private banks. Now to your question, or should I say, demand!. In 1944 the allied powers met and decided on a mechanism to establish currency exchange rates. The system eventually settled on was one in which nations would deposit their gold with the U.S. Treasury and the U.S. would agree to redeem U.S. Dollars held by foreign Central Banks at $35.00 per Oz. All the other currencies would be valued relative to the U.S. Dollar according to an agreed upon mechanism. (This $35 value was the same dollar vs. Gold value established in the 1934 Gold Act that devalued the previous Gold Standard dollar, preferred by the private banks of the day, by ~60%.) To carry out Roosevelt's New Deal it was essential to unleash the dollar from the absurd confines of the gold standard. Thus the 1934 Gold Act necessarily took away the private, for profit banks power over the old Federal Reserve. Had this not been done, private bank control over the Fed would have locked the country into a depression for the foreseeable future without any light at the end of the tunnel. A gold standard like that re-adopted at Bretton Woods in 1944 requires that the quantity of gold backing dollars be adjusted according to the number of dollars issued; every additional 35 dollars supplied required that an additional oz of gold be either encumbered or acquired. But where will additional gold come from. If dollars are printed without additional gold being acquired the dollars purchasing power will decline. If no dollars are printed and the demand for dollars increases, as it must over time because of the growth of populations and economies, then the dollars purchasing power will appreciate, prices will deflate, and real interest rates will rise. In principle, more gold can come from the printing of gold certificates and the use of these certificates to purchase the gold. Now there are more dollars in the form of certificates in circulation and sufficient gold backing them. But those dollars enter the economy in the hands of the suppliers of gold and it will be some time before they circulate, according to their velocity, in the general economy ; a cumbersome, impractical and unsatisfactory mechanism. And if the the gold certificate is redeemed rather than circulated, the process is reversed. Alternatively, this problem can be circumvented by purchasing gold with newly printed, non-redeemable dollars. But even then the problem of the money not arriving directly where it is needed remains. And what if there is an insufficient supply of gold to satisfy the demand for more dollars? Could we expect to always go on acquiring more gold at a constant $35/Oz.? Hardly! (As a practical matter the price of gold has to be discounted as there are costs associated with carrying out the overall scheme including the printing and distribution of money.) Furthermore, the U.S. under the Bretton Woods arrangement was obligated to supply other countries with enough dollars to carry on international trade; trade that was growing rapidly. It was less than 13 years after Bretton woods was fully implemented in 1958 (I believe)-- an insanely archaic and impractical system for any economy running on fractional reserve banking and credit -- that the entire system began to collapse, exactly as Keynes, in 1944, predicted it would. By 1971 the French Central Bank was redeeming dollars for gold at $35/Oz like hot cakes at the U.S. Treasury while elsewhere gold was selling for $40/Oz. Yikes! Of course the U.S. had no choice but to let the dollar float and stop redeeming at below market rates. Today no one has since been able to propose a practical commodity based currency that can meet the requirements of a modern credit based economy. Fiat money eliminates the problems associated with commodity linked money. It is flexible and it is fundamentally backed by the sovereign issuer's power to tax and the productivity of its linked economy. These are the fundamental factors which undergird open market demand for a sovereign's currency. Of course, just as with a commodity linked currency, there are real constraints that must be paid attention. But these constraints are no where near as debilitating to an economy as the constraints that attend archaic, commodity based currencies.
see the last paragraph of my response to DT-waw. I put the part I was hoping you'd catch on to in italics. This in no way negates the points you made, however i wanted to make sure you understood there is something very fundamental underlying sovereign currency and demand for it. Your remarks hint at this but don't directly identify these most fundamental features backing sovereign, fiat currencies. This is why Zimbabwe's currency became worthless; not because they printed it to pay off creditors but because productivity collapsed when Rhodesia became Zimbabwe.
Yes tax is a deterrent to purchase a country's currency and can reduce foreign investment, which in turn can reduce a currency's value due to the decrease in demand. Taxation has for a long time been observed to be a negative factor impacting the operation of the free market. Regardless the actual operation that determines a currency's value is the volume of and price paid for transactions performed on an exchange. The implementation of taxation or an increase in taxation is one of many factors that can impact the demand to purchase the currency, which can reduce the currency value if demand decreases. Too much taxation can deter foreign investment and effectively crash a country's currency. But it is only one factor that can impact the demand for a currency, which helps to set the price. The operation that ultimately determines the value or price of a currency is the function of transaction when the currency is purchased at a certain volume or price. I wrote an article about this topic a few years ago at the Huffington Post. I think you will enjoy reading it, it was very popular at the time and was syndicated around the world. The tax was avoided in the UK, which the article may have played a role in. https://morganisteconomics.blogspot.com/2012/01/investment-currency-mechanism-uk-and.html?q=currency
According to some economists, taxes are one of the things that give a sovereign currency value. The sovereign will not accept anything in payment for taxes other than its own currency. And if you don't pay your tax will go to jail!
Ive lost my motivation to write more in this thread after realizing that one of the members here is mentally ill - the one who wrote the most He should get 5X vaxxxkillated immediately ! Oh and also go to a border and vaxxcinate AAAAAAALL the immigrants! Quickly! Rush rush rush Why is somebody wasting time to talk about economics when hundreds of thousands cross USA borders without a mask or vax which will mean huge genocide? Jeeesus.