Trust and confidence are supreme in economics and society
World leaders look to the Dollar in managing their governments and economies. How? Well, the Dollar and Dollar related instruments, managed by institutions such as Central Banks, the IMF and World Bank is the last port of call for leaders of most world economies.
Then, Central Banks and leaders worldwide look to the Federal Reserve for economic leadership when the stakes are high, such as a time of war, depression, and crisis. That leadership is the task of the Federal Reserve as Supreme Global Bank. When the Federal Reserve puts up interest rates, the world takes stock and responds accordingly. The USA’s central bank got to that exalted position through history, war, and geopolitics.
The Federal Reserve is the sole Dollar factory. The world’s most powerful bank prints, distributes, and manages the world’s most powerful currency, the Dollar. It is the USA’s Central Bank created by Act of Congress but fully independent. In this Writer’s view, it is the most powerful institution on earth. Why? Because the men and women who manage the Federal Reserve decide the value of the world economy.
That is not a surprise. Throughout history, the currency of the dominant world power whether it was Holland and Great Britain- seafaring powers- and now the USA, their currencies ruled the seas and international trade. That dominant value of the Dollar today is an invisible chain linking US power and the Federal Reserve, to global corporations and capital assets: a powerful link that decides the value of your bank account, mortgage, and wallet.
Now, confidence in the US economy guarantees global debt. Federal Reserve backed debt finances governments and agencies worldwide. Confidence in the Dollar – which is representative of US Power-, prevents runaway debt from creating economic havoc. That the buck ends with the Dollar appears poetic, but it is true in world affairs.
In the Virgin Islands, the Dollar is the backbone of the economy and drives debt management, and social and economic activity. The Dollars talks and Dollar debt rules in Virgin Islands finance and economy, like elsewhere.
Debt exists because lenders and investors expect borrowers – consumers – to honor their obligations. Debt exists because governments and most businesses run on deficits and overdrafts. That lender and borrower symbiosis is rooted in trust and confidence. A culture of trust in the Dollar drives Virgin Islands business and finance. Debt anchors in trust and confidence in the Dollar. Trust is the raw material of finance and banking.
Dickson Igwe is an education official in the Virgin Islands. He is also a national sea safety instructor. He writes a national column across media and has authored a story book on the Caribbean: 'The Adventures of a West Indian Villager'. Dickson is focused on economics articles, and he believes economics holds the answer to the full economic and social development of the Caribbean. He is of both West African and Caribbean heritage. Dickson is married with one son.
