Dickson C. Igwe. Photo: VINO/File

A basic understanding of economics offers us a look at how the world works through scarce resource management. Economists rule silently through their control of the tools of social and economic policy. These tools adopt monetary, fiscal, and scarce resource management, to drive national wellbeing. The powerful listen to economists, whether these thinkers get it right or wrong.

Stories on economics, whether commentary or news, are a type of awareness of civics for non-experts. It allows readers to look at governance through an alternative lens, than the standard news whether traditional or online.

OK. A great mind asserted once upon a time, that to control a society one did not need an army or police force: one just needed to control the money. Money is the key measure of scarce resource ownership and management. Any reader living from paycheck to paycheck; who joins a long bank queue; travels abroad for a few days using a credit card; or who simply needs food and rent to safeguard loved ones, will completely agree with these assertions on money.  The Dollar has us all in a chokehold whether we see it or not. The Dollar is the King of Currencies.

The Dollar- the world’s key currency- drives the world economy. The Dollar represents American power, which rules the globe. American power derives from multi-faceted sources but the simplest way to define that power is to look at history that saw the emergence of a bountiful and resource rich North Atlantic country locked into a hemisphere isolated by two vast oceans that eventually became hegemonic in its own geographic region called the Americas: the Monroe Doctrine. Then after Two World wars and a Cold war in the twentieth Century, the USA became the sole superpower and largest economy: the pole to which smaller poles attached. The Dollar was its currency.

Every time we spend US Dollars in the grocery store or restaurant, the seller will honor the exchange. The same is with any currency pegged to the Dollar. That exchange of currency for goods and services relies on the trust and confidence the world’s teeming societies have for the Dollar. 

Now, November 5, 2024, the USA goes to the polls to elect a new President. It is unlikely the power of the Federal Reserve and the Dollar changes under either Donald trump or Kamala Harris. The history of the Federal Reserve has shown minimal interference by past Presidents. The idea that the Central Bank manages the currency- monetary policy- without interference by government is sacrosanct in economics.

Most global Currencies peg to the Dollar to offer these monies measure, stability, and credibility.   In a currency mix that is a basket of currencies pegged against the Dollar, this pegging to the Dollar is an anchor. The Dollar as stated in previous stories is dependent upon the confidence of investors and consumers.

The Dollar is the face of US Debt. Yes, the Dollar is paper debt we all spend, even when we earn that Dollar legitimately in dividends, capital gains, profits, wages or gifts and inheritances. The Dollar is dependent upon investors who confidently buy that debt from the Federal Reserve. All value depends on trust.

Then pundits argue that American taxpayers back the Dollar.   That is false in this writer’s view. US annual Government spending is in the region of $11 Trillion on tax revenues of about $5 Trillion. There is no way US taxpayers could finance US annual deficits, and national debt. For every Dollar of tax, there is two Dollars of spending. US debt and government spending depends on investor confidence in the US economy and society. Investors provide the cash that funds the government- not taxpayers. Therefore, all transactions are based on trust and confidence, and the greater the trust and confidence, the stronger and more valuable the transaction.

At the end of the day, the Dollar exists because of the trust and confidence of the world in American power. Taxpayers are just part of the equation.