A couple of responses to the OP.
First, it is a GOOD thing that the dollar is the reserve currency; it allows our economy to stand at the center of world economy,and, if dollar supply increases are managed effectively (more on that later), then wealth creation is the end result.
Second, a central bank, like the Federal Reserve, is essential for a smooth operation of currency supply. Now, the Federal Reserve has been TOTALLY mismanaged over the past 25 years, for a variety of reasons. But mismanaging an institution, doesn't necessarily mean the institution is flawed.
Third, the creation of additional currency is ESSENTIAL to an economy's growth. Think about it. If the supply of currency DEcreases, or stays steady, then currency hoarding becomes incentivized, and people, invariably, move to a barter economy. Trust me, you DON"T want a barter economy. In contrast, if you have a steady but slow growth in the currency supply, businesses and individuals now can take that money, invest in productive activity to generate wealth.
Now, the Fed has totally mismanaged the currency, beginning in the Greenspan era and now into the Bernanke era. Too many dollars are floating around out there.
Finally, fractional reserve banking. It is NOT necessarily a bad thing because it creates money. It's bad if (a) it creates TOO much money, and (b) that extra money is invested in unproductive enterprises.
In other words, the problem with the global economy is not leverage...it's TOO MUCH leverage and the leverage is in the WORST places -- national budgets, current accounts, and, yes, financial institutions.
The reason the economy is in the toilet right now is that households, being smarter than financial elites, are de-leveraging. The financial elites -- governments, bankers -- can't bring themselves to do it, because it takes away their reason for existence (Politicians: giving out goodies via borrowed money to get re-elected. Bankers: earning big bonuses on pseudo profits from re-arranging securities).
Until the financial elites get their shit together, we will remain in big economic trouble.
First, it is a GOOD thing that the dollar is the reserve currency; it allows our economy to stand at the center of world economy,and, if dollar supply increases are managed effectively (more on that later), then wealth creation is the end result.
Second, a central bank, like the Federal Reserve, is essential for a smooth operation of currency supply. Now, the Federal Reserve has been TOTALLY mismanaged over the past 25 years, for a variety of reasons. But mismanaging an institution, doesn't necessarily mean the institution is flawed.
Third, the creation of additional currency is ESSENTIAL to an economy's growth. Think about it. If the supply of currency DEcreases, or stays steady, then currency hoarding becomes incentivized, and people, invariably, move to a barter economy. Trust me, you DON"T want a barter economy. In contrast, if you have a steady but slow growth in the currency supply, businesses and individuals now can take that money, invest in productive activity to generate wealth.
Now, the Fed has totally mismanaged the currency, beginning in the Greenspan era and now into the Bernanke era. Too many dollars are floating around out there.
Finally, fractional reserve banking. It is NOT necessarily a bad thing because it creates money. It's bad if (a) it creates TOO much money, and (b) that extra money is invested in unproductive enterprises.
In other words, the problem with the global economy is not leverage...it's TOO MUCH leverage and the leverage is in the WORST places -- national budgets, current accounts, and, yes, financial institutions.
The reason the economy is in the toilet right now is that households, being smarter than financial elites, are de-leveraging. The financial elites -- governments, bankers -- can't bring themselves to do it, because it takes away their reason for existence (Politicians: giving out goodies via borrowed money to get re-elected. Bankers: earning big bonuses on pseudo profits from re-arranging securities).
Until the financial elites get their shit together, we will remain in big economic trouble.