finance – Page 2 – Learning, Science and Society

It is June 2025, and the world has learned that it no longer has a reserve currency, a role hitherto held by the US Dollar. The chain of events which began with the election of Donald Trump by a disputed majority in the Electoral College (readers will recall he lost the popular vote) have now reached their logical conclusion. You will also remember how attempts to enforce the result by the US Supreme Court could not be accepted by some States who alleged, with some justification, that the Court was no longer an objective and unbiased institution, Their de facto secession, pending a recount, undermined the integrity of both the US Treasury and Federal Reserve. Meanwhile, attempts by the Provisional Trump Administration to impose import tariffs (20% on all comers, 60% on China) have only led to a retaliatory fire sale of Treasury Bonds and other US assets, which led to this morning’s news of the suspension of dollar convertibility. The United States of America (or rather the three new nations into which it seems to be splitting) is no longer at the centre of the world’s financial system.

But, as of this summer of 2025, do we still have a world financial system? Attempts by the BRICS nations to set up their own reserve must end in failure. The lack of transparency in their systems(one or two are more or less open kleptocracies) mean that no one dare trust them to hold their money . The Euro area is too small and fragmented to possibly bear such a role, and their can be other candidates. How can world trade now be anything more than a slightly sophisticated form of barter?

Yet there is one measure by which value is judged. And always has been. Gold has been prized as the ultimate yardstick of worth by humans, and has been by for millennia. It is transportable, it is tradeable, and its price is known at once by everyone in the market. History suggests that world trade works best when most reserves are held by a single, hegemonic power(think Britain before 1914 or the US before 1971) But even if the world’s gold is diffused across the vaults of many competing nations and empires, it can still provide a standard against which everyone can measure the value of their trades. Expect its price to rise now for the rest of 2025, and perhaps even more next year.

#US dollar #world trade #BRICS #reserve currency #gold

Imagine that every country was so prosperous that there was little need for migration. That the climate crisis was fixed, with wind turbines and electric cars in every land you visited. New drugs for every conceivable illness were not just freely available, but there were active substitutes for each of them waiting in laboratories. There were no hungry children at all, and everyone in the world had an old age pension. Would about $250 billion* a year about cover it?

That’s what could be obtained if there was a single world effort to fairly tax the planet’s 3000 or so billionaires, according to a report by Gabriel Zuchman, helpfully written up for us by Larry Elliott of the Guardian [1] At the moment this gilded class pays about 0.3% of their income in tax, which compared to most of us is nugatory indeed. But we’ll let Larry’s article cover the details-(you must read it), and instead riff on a theme of our own. The case for tax is not moral, nor Marxist nor religious, nor based on Natural Justice . It’s actually historical, and its about survival

The 18th century, or Enlightenment, or whatever, was full of learned economists who preached the gospel of lower taxes as the source of the wealth of their nations. The country that really put this in to practice was Imperial China, then the world’s largest economy. But the western barbarians-nations like England, Portugal and so on, kept their taxes high, despite all the domestic preaching. The result? Huge fleets and armies, able to dismember poor China’s attenuated defences, and open them to the enlightened benefits of trade. The chief result of which was a mass opium addiction. The moral? You need taxes if you are going to survive. remember that next time you read a bit of propaganda from a billionaire think tank or news outlet.

*in these pages billion=10⁹

[1]https://www.theguardian.com/news/article/2024/jun/25/international-scheme-to-tax-billionaires-wealth-technically-feasible-study-finds

#china #opium war #tax #billionaire #G20 #Gabriel Zuchman

Tag: finance

In a world without a reserve currency, Gold is King

Time to Tax the Billionaires?