The Inequality of the Modern Financial System

In today's interconnected world, the financial system is dominated by a few major currencies: the US dollar (USD), the euro (EUR), the British pound (GBP), and the Japanese yen (JPY). These currencies, primarily backed by the economic powerhouses of their respective countries, exert a significant influence on global markets. This dominance creates a stark disparity between countries that issue these currencies and those that do not, leading to widespread financial inequality.

The Dominance of Major Currencies

The strength and stability of these major currencies make them the preferred choice for international trade, investment, and reserve holdings. Consequently, countries outside this elite group find themselves heavily dependent on the stability and value of these currencies. This dependence can have severe consequences, especially when their local currencies fluctuate dramatically against the major currencies.

For instance, the Russian ruble and the Argentine peso have experienced significant devaluation in recent years. The ruble has been subjected to geopolitical pressures and sanctions, while the Argentine peso has suffered from chronic inflation and economic mismanagement. These devaluations rapidly erode the purchasing power of ordinary citizens, leading to a drastic reduction in their standard of living.

Impact on Ordinary People

The volatility of exchange rates means that people in countries with weaker currencies see their incomes diminish when measured against the major currencies. Over the past decade, many individuals have found that despite their nominal incomes remaining unchanged, their real purchasing power has plummeted by more than 50% due to unfavorable exchange rates. This financial erosion exacerbates inequality, as those in countries with stable currencies, such as the US and the UK, do not face the same level of volatility and uncertainty.

A Global System Favoring the Few

The current financial system disproportionately benefits those in countries with major currencies. British and American citizens, for example, enjoy a level of financial stability and wealth that is often unattainable for those in less economically powerful nations. The systemic inequality is further compounded by the fact that these dominant currencies are often used as benchmarks for international trade and finance, making it difficult for countries with weaker currencies to compete on an equal footing.

The Need for Sustainable Development

The unsustainable nature of this global financial inequality highlights the urgent need for reform. The focus should not be on extravagant projects like building rockets to Mars but rather on creating a fairer and more equitable world system. The current state of the global economy, with its glaring disparities and inherent injustices, resembles the Middle Ages more than a progressive modern society. This environment is fertile ground for fraud and exploitation, leaving ordinary people with little hope for a brighter future.

Conclusion

The modern financial system, with its reliance on a few dominant currencies, perpetuates inequality and undermines the economic stability of many nations. To address this issue, a concerted effort is needed to create a more balanced and fair financial system that allows all countries to prosper. Until such reforms are enacted, the world will continue to witness the rapid deterioration of income and living standards for millions of people, exacerbating global inequality and hindering sustainable development.