More than a decade ago The New York Sun unleashed a series of editorials marking the collapse of the value of the dollar as measured in gold and proposing to rename the greenback to personalize the blame. One such editorial was headlined "The Pelosi." Another was "The Greenspan." It was followed by "The Bernanke," a classic of the genre.
The series of editorials trailed off as subsequent stewards of our currency — thank Janet Yellen, Secretary Mnuchin, Speaker Ryan, President Trump, or anyone else who deserves the credit — mostly avoided the weak-dollar error.
The recent announcement by Facebook of a newly formed subsidiary to produce a "digital wallet" for Libra, a new digital currency, had me thinking, though, that it may be time to update the series, with “The Zuckerberg.”
Facebook and its founder and CEO Mark Zuckerberg aren’t the only ones behind the Libra, which was launched with a “network of partners” that included Visa, Mastercard, PayPal, Lyft, and Uber. But Zuckerberg is the headline name.
It might seem like an odd moment to launch a competitor to the dollar, and especially for such an effort led by Zuckerberg.
With unemployment and inflation low and the stock market soaring, and with the dollar still significantly stronger than it was in 2010, you’d think the dollar’s customers would be pretty satisfied. As for Facebook and Zuckerberg, they are widely portrayed as villains, blamed for everything from the collapse of local newspapers to Donald Trump’s election victory to rising anxiety and suicide rates.
What’s the opportunity here?
Well, the dollar has dipped a bit recently, falling from being worth about 1/1280th of an ounce of gold in May to about 1/1413th of an ounce of gold at the end of June.
The situation has tempted other billionaires in the past — Amazon’s Jeff Bezos introduced "Amazon Coins" in 2013. The Amazon coin inspired me to read the Nobel laureate economist F.A. Hayek’s paper "Denationalisation of Money," written after President Nixon, in the early 1970s, delinked the dollar and gold. As Arthur Seldon described it in an introduction, "In effect, Professor Hayek is arguing that money is no different from other commodities and that it would be better supplied by competition between private issuers than by a monopoly of government."
It’s the monopoly aspect of it that is ironic.
Politicians across the ideological spectrum from Trump to Senators Elizabeth Warren and Bernie Sanders are running around denouncing Google, Amazon, Facebook and Google as monopolies and suggesting, with varying degrees of directness, that they be broken up.
Perhaps in the online advertising or online retail business, the market power of some of these companies does approach some definition of a monopoly, or an oligopoly.
Yet in the currency game, Bezos and Zuckerberg have hardly any market share. They begin as bit players against the overwhelming giant that is the U.S. government.
Political observers of big business often see it as a corrupting influence on government. Sometimes, it is. But other times, businesses such as Facebook and Amazon are something unusual: rare institutions with the resources to challenge federal power by competing with it in the market.
Government control of the money supply offers certain potential advantages — the technocratic power to fine-tune the economy and the law-enforcement power to track bank accounts to prevent terrorism and tax evasion. But if Zuckerberg and his partners think they can do better, why not let them try to compete? They won’t only be competing, after all, against the dollar, but against plenty of other currencies — the Euro, the renminbi, the Venezuelan Bolivar — with much shakier backing.
As a fiat currency, the dollar is based in important ways on trust. The Libra’s website promises "stable value," a statutory goal set out for the dollar but one only intermittently achieved. Libra also bills itself as a “global” currency. “Global” is a hot-button word these days, with President Trump promising "America First" but the dollar nonetheless functioning as the world’s reserve currency.
I’m not likely to shift my own bank accounts out of dollars and into Libras, or Zuckerbergs, anytime soon. But I do feel a little better about the dollars knowing that there are private competitors out there poised to gain market share in the money business if the dollar’s stewards mismanage their monopoly. If Congress doesn’t keep Federal Reserve Chairman Jerome Powell on his toes, maybe Mark Zuckerberg will.
Ira Stoll is author of "J.F.K. Conservative," and "Samuel Adams: A Life." Read more reports from Ira Stoll — Click Here Now.
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