Greenspan hints at Fed's end
By John Browne
Published: Saturday, March 23, 2013, 9:00 p.m.
In an effort to correct America's economic woes, some economists have suggested an end to the Federal Reserve Board.
Forbes, for example, published an article by Nathan Lewis on March 14 titled: “If Alan Greenspan Wants to ‘End the Fed,' Times Must be Changing.”
As the world's leading central bank, the Fed's demise would certainly signal a new monetary age.
The Fed is uniquely powerful and privileged. It possesses the monopoly of creating the world's Reserve Currency, the U.S. dollar, by which all major raw materials are priced. It is this control of the Reserve Currency and the setting effectively of international interest rates that makes the Fed the world's most powerful central bank. Unlike any U.S. corporation or individual, the Fed is subject neither to tax nor audit. Amazingly, it is owned privately and not by the U.S. government.
Since the Fed opened its doors in 1914, the dollar has been reduced in value by some 98 percent. Dollar debasement has effectively helped to impoverish all Americans, especially the working middle class who do not benefit from many government handouts.
The Fed also has instigated a sometimes covert international currency war as trading partners have sought to protect the price competitiveness of their exports into the lucrative American consumer market. Often camouflaged temporarily by monstrous government debts, this has spread the effects of middle-class impoverishment to many other countries.
“… Some mechanism has got to be in place that restricts the amount of money produced, either to a gold standard or a currency board. …. There are a number of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard,” Greenspan said in the Forbes piece.
The debasement of currency, particularly the dollar Reserve Currency, has not suited the producers of cheap products and raw materials like China and Russia. They swap their exports and natural resources for fiat currency that derives its value from government regulation and is constantly depreciating in value.
Led by China, a group of nations including Russia, oil producers and surplus nations has sought to replace the dollar as the International Reserve Currency. China, the world's largest gold producer and hoarder, has reportedly been pushing behind the scenes for a Renminbi — China's national currency — and gold link to any Reserve Currency.
China appears to be seeking to break the monopoly hold of the dollar for pricing key raw materials and money. China controls more than 95 percent of the world's rare-earth minerals.
Losing International Reserve status would erode severely the power of the United States and its currency. America's vital interests are to ensure that any new world currency is designed around U.S. ideas for a continuation of fiat money, even with a re-establishment of the gold link abandoned by President Nixon in 1971.
Greenspan's vague hints at the need for a global central bank or currency board to replace the Fed may appear less surprising if one recognizes his likely aim of ensuring the survival of a U.S.-sponsored Reserve currency over any Chinese initiative.
John Browne, a former member of Britain's Parliament, is a financial and economics columnist for Total Trib Media. Email him at firstname.lastname@example.org.
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