The U.S dollar deserves a score greater than zero only because it is an improvement over its predecessors. The Federal Reserve performs functions that are vital to the domestic and global economy. It is feasible to imagine how emerging alternatives to the dollar will be more economically or socially sustainable, but there are no guarantees that they will be. Some of the same problems that led the U.S to abandon the gold standard may very well manifest when cryptocurrency adoption becomes sufficiently widespread. Regardless of the ramifactions that its replacement will have, the dollar’s days may be numbered. Even if the technology that eventually supercedes it will upset the global economy for some time, it will likely be more accountable to people and not have to rely on a destructive mechanism of force or economic exploitation for the maintainance of its status. Expansionary policy relies on a growing population and increasing consumption to remain viable. As population growth slows and current levels of consumption reach more sustainable levels, the world will need a currency that reflects existing value rather than promising unsustainable growth that wealthy countries and individuals disproportionately profit from.
The dollar is made of 75% cotton and 25% linen. $100 bills also contain a plastic security strip. The cotton to make U.S paper currency comes from the Plains Cotton Cooperative Association. This is a relatively sustainable source of cotton, but the most sustainable source would be organic. PCCA cotton growers use resources far more efficiently than their predecessors. Their farming techniques result in reduced water, pesticide, and energy use as well as reduced top soil loss. Organic production is not a requirement for PCCA growers, however, and cotton is a resource intensive commodity to produce even when practicing conservation measures. Water and pesticide use are lower for PCCA cotton than the global average, but still high relative to other crops. Paper notes have a higher carbon footprint than polymer notes because they do not last as long. Coins are the worst offenders in terms of how sustainable it is to produce and use physical money. The mining industry is even more resource and energy intensive than the cotton industry. Coins weigh more, and transporting them causes far more emissions than an equivalent value in paper denominations. They do last longer than paper money. This offsets the environmental impact of their production to some extent but not that of their transportation. Most dollars do not exist or get transferred in their physical form, however. In the 21st century, digital transactions have become the norm. Although most transactions are now digital, there are emissions associated with this as well. The networks and infrastructure required to keep financial institutions operating have a significant environmental impact. Meanwhile, debit and credit cards are made of plastic and they usually expire more quickly than the Federal Reserve removes banknotes from circulation. Intrinsically, a dollar is not a note or a number at all. Instead, it consists of the value that they promise. The industries that create this value are often unsustainable, especially when taking into consideration that they incentivize environmental degredation and labor exploitation beyond U.S borders by encouraging deregulation. To some extent, a dollar is made of child labor.
The Federal Reserve produces physical currency in U.S mints. Some of the material used in coins comes from recycling old coins that were no longer fit for circulation, but most metal purchased for minting is newly mined. Mining is energy intensive and causes pollution of surface and groundwater. The process of minting and printing currency has a significant environmental impact in terms of resource and energy use. U.S mints have reduced their water use and pollution over the last decade, but the water and resources that go toward the creation of physical currency are being devoted to an increasingly archaic medium of echange. The environmental impact of the financial industry is far more significant, however. The Federal Reserve does not need to print dollars to make them. It makes dollars by lending them to other banks or purchasing treasury bonds. Since the U.S dollar is the world’s favored reserve currency, the Federal Reserve’s decisions have consequences for the global economy. This has resulted in a more stable economy, but sound monetary policy has failed to prevent growing inequality in recent decades. It is debatable whether a monetary system can be socially sustainable while it priviliges U.S interests and affords the wealthiest people greater access to capital than they already enjoy in comparison to others. This finances unsustainable consumption in the U.S, and a strong dollar incentivizes the outsourcing of labor to countries where it is cheaper because there is less regulation to ensure acceptable working conditions or adherence to pollution standards. This results in multinational companies based in the U.S being able to profit from labor exploitation with support from the financial industry without the expectation of serious repercussions. The people working where there are fewer labor regulations could be underpaid, coerced, children, or any combination of those conditions. This system is clearly not working for people or the environment right now. The Federal Reserve creates dollars as a prescription for growth, but neither the reserve nor the government it serves have demonstrated a reliable committment to sustainability. As a consequence, economic growth has come at the cost of the environment and economy that future generations will inherit.
This is the least sustainable aspect of the dollar’s creation. The U.S backs its dollar with the world’s most formidable coercive apparatus. Military hegemony is neccessary to maintain the dollar’s status as the world’s reserve currency. Without it, international trade would be vulnerable to piracy and other threats. This would cause widespread economic devastation, particularly among countries that rely on exports. Rather than allowing that to occur, the U.S maintains a military with oil consumption exceeding that of Sweden and a budget nearly equal to the same country’s entire GDP. Even if the dollar has facilitated a long period of economic expansion, it seems unlikeley that it can continue to do so indefinitely. There is a demand for dollars because they are the world’s reserve currency. This encourages the U.S government to run a budget deficit because the Federal Reserve can continue lending to it as long as demand for its currency remains high. It also causes a trade deficit because demand increases the dollar’s value, making imports cheap for American consumers and exports expensive for foreign markets. This increases the profits of multinational coorporations at the expense of workers around the world by perpetuating the exploitation of labor. Economic growth in terms of GDP has become a shortsighted metric for the Federal Reserve to use exclusively when determining its monetary policy. Until growth reduces, reverses, or otherwise becomes sustainable, the Federal Reserve is borrowing from the wealth and wellbeing of future generations when it lends.