If you hear a call for “monetary reform,” we’re talking big news and a major overhaul. Monetary reform refers to changing our current system of how “money” is supplied to the economy.
We say “money” because some monetary reformers argue that the U.S. dollar isn’t worth anything.
Why? Because it isn’t backed by anything.
In ye olden days, the USD was “on the gold standard”—ever heard of it? That tied paper bills to actual gold. You could walk into a bank and redeem your cash for gold. This made people feel better about using little bits of paper to trade for things. Today, however, we’re off the gold standard, and the U.S. dollar isn’t backed by anything tangible.
Another major way that the monetary system could change is by changing (or getting rid of) the central bank, which was made to support the economy when, um...stuff hit the fan (crisis time). Some economists argue that things would be better off without a central bank. For instance, some economists argue that, if the banks weren’t bailed out during the 2008 financial crisis, it would be better, since now that bad behavior is incentivized. Now, banks have no reason not to be irresponsible with consumer money, because they know the central bank will step in to save them.
Less familiar (to Americans, anyway) proposals for monetary reform include government-issued credit, free (no interest), and government-issued social credit, which would theoretically disperse economic and political power to individuals.
Welcome to the Pandora’s Box of monetary reform.
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Finance: What is Balance of Trade?14 Views
Finance a la shmoop... what is balance of trade...up, down, up, down yeah all right [Squirrels riding a see-saw]
think of balance of trade the same way you would think of that seesaw in your
schoolyard instead of the big-boned third-grader
weighing in against the you know waiting to grow kindergartner when it comes to [Ship sailing out of harbor]
international economies and the goods they buy and sell from into each other
we have exports this guy and imports this guy if two countries have a balance
in trade well then the financial weight on this seesaw thing here is even the
three future NFL linemen weigh about the same as eleven future tax auditors yeah [Linemen players and tax auditors in a see-saw]
but that's rarely the case when countries trade among each other
and if you're on the seesaw you want to be heavy like fat with feet firmly
planted on the ground where you are exporting or selling to another country [Goods travelling to foreign countries]
a whole lot more stuff than you're importing what you want is to be
collecting boatloads of their currency or oil or velcro kilts from Scotland and
as you capture more and more of their trade or wealth [Wealth sucked into the US]
the powerful imbalanced one well that'd be you here you get to have more and
more influence on them and the world they live in is there a way to gain this
system cheat? well sorta yeah politicians and governments get very nervous when
the balance of trade is not in their favor and they have the ability to pile [Imports and exports pile on a see-saw]
a bunch of books on their side of the seesaw to help their skinny accountants
compete better how do they do this magic you ask okay yeah we know you didn't ask
but we'll tell you anyway they smack a tax on goods they import from you like
the US government in the middle of our loss of dominion over the auto industry [Auto industry logos land in a seesaw]
to Japan and Korea and Germany well we placed a big fat tax on foreign cars
being imported into the US and we still lost the war there so yeah the seesaw ie
the balance of trade isn't always fair and by the way if you ever see this guy
coming run at least feed him [Man running in a park]
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The Federal Open Market Committee's purpose is to manage financial outcomes through monetary policy.