The revelation that the dollar is not backed by gold may spark a question: what, if not gold, is the dollar backed by? Posed in other terms: what gives the dollar value, exactly?

What Gives the U.S. Dollar Value

The answer to what gives the U.S. dollar value today is: the “full faith and credit” of the United States government. Investopedia explains that this “faith” and “credit” backing is “an unsecured method of backing debt based on trust and reputation”. The U.S. dollar was not always a faith- or credit-backed currency, but instead a gold-backed currency.

The Congressional Research Service (CRS) notes that the U.S. dollar has been “on a metallic standard of one sort or another” throughout the majority of American history. Understanding the history and logic of installing gold as a source of value for paper dollars underscores why some continue to call for a return to a commodity-backed American (and, in some cases, global) currency.

The American Numismatic Society (ANS) explains that the earliest forms of currency in America all deteriorated in value because they were not backed by gold or another commodity. While fiat paper currencies like the Continental Currency served a purpose for a time, with no real backing of intrinsic value these mediums of exchange ultimately became worthless. 

The Library of Economics and Liberty traces the roots of an American currency backed by a single metal, gold, to 1834 (though some cite 1879 as the official beginnings of the U.S. gold standard). From 1834 until the abolition of the gold standard, paper money was in most cases “not gold, but promise(d) to pay gold”. This is the crux of the gold standard: paper money’s worth was the promise that it could be exchanged at any time for gold, a commodity with intrinsic value. 

The gold standard was formalized with the Gold Standard Act of 1900, and this nationally-recognized gold standard would last until 1933. It was then that president Franklin D. Roosevelt (with the backing of Congress) discontinued creditors’ ability to demand payment for debts in gold, therefore discontinuing the gold standard as Americans knew it.

From a practical perspective, “creditors” included the average American, who was no longer permitted to receive gold from banks in exchange for their paper dollars—FDR forbade banks to make such exchanges, and went a step further when he ordered citizens to turn in to the Fed “all gold coins and gold certificates in denominations of more than $100…for other money”, as History explains.

This death knell for the gold standard was the rebirth of fiat currency in America. As with previous American fiat money, inflation and devaluation of the dollar has become a fact of life. As a consequence, some have put their faith not in the full faith and credit backing the U.S. dollar, but instead in alternative currencies with a more identifiable source of value.

What Gives Bitcoin and Cryptocurrency Value?

The features that give Bitcoin and other cryptocurrencies their value can be explained through juxtaposition with fiat currency’s limitations. 

Some historical causes of fiat currencies’ collapse include:

• The widely-held belief that a currency does not have the value necessary to purchase goods or services, which may be sparked by:
  • Economic stagnation
  • Perception that a currency is artificially overvalued
  • Rapid printing of money
• Loss of faith in government institutions and policymakers by those who provide real value to an economy (business owners, owners of real assets, those who facilitate productivity) 

The value of the U.S. dollar derives not just from American consumers’ continued faith in and reliance on the dollar, but also from other nations’ willingness to accept the dollar as a form of payment and reserve currency.

And therein lies the weakness of the fiat U.S. dollar: the dollar’s value is hyper-dependent on the actions and perceptions of humans. If you haven’t noticed, humans as a whole can be fickle and prone to irrationality, though some would argue it is rational to doubt the real value of the debt-laden U.S. dollar.

Advocates of cryptocurrencies believe that digital currencies are less vulnerable to the whims of policymakers, the Federal Reserve, and consumer attitudes and beliefs. They believe this, in part, because:

• Cryptocurrencies are generally finite and relatively scarce, and cannot be mass-produced as fiat money can be (which is generally cited as a cause for currency devaluation)
• Cryptocurrencies are not subject to certain human-controlled phenomena that, while not technically the printing of new money, can alter money’s value—think fractional reserve banking
• Cryptocurrencies are not subject to the specter of massive, ever-growing debt which looms over the U.S. dollar and many other national currencies
• Cryptocurrencies do not require third-party intervention (think banks) to be sent from one user to another as a real mechanism of value exchange

Critics may point to fluctuations in cryptocurrency prices as an indication that they are intrinsically volatile. However, the limited supply of cryptocurrency insulates it from the complete devaluation that has demolished countless fiat currencies over the course of history. This value floor has led some to liken cryptocurrency to “digital gold”.

A Time for Cryptocurrency

History has proven time and again the extreme volatility of fiat currency, from Colonial times to Weimar Germany and modern Zimbabwe. Despite perceptions to the contrary, the U.S. dollar is not immune to the inherent flaws of all fiat currencies—insurmountable debt and ceaseless deficit spending only raise the stakes of the dollar’s potential collapse.

2020 is, more than any other period in recent history, a time to consider cryptocurrency as a rebirth of the gold standard—a value-backed medium of exchange built for the digital age.

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We found out through a recent study titled Perceptions and Understanding of Money — 2020 that half of Americans may have no clue what the Federal Reserve does. And yet, the policy decisions of the Federal Reserve could have a direct effect on:

• The value of your paychecks
• The amount of money you have once you retire
• Your ability to become and remain employed
• The general state of the American economy, and by extension the global economy

The Federal Reserve has an outsize impact on the state of money in America, and the state of money in America has an outsize impact on the global financial network. You’re a part of it all, and so you may want to understand just a bit about what the Fed does and how its policies may impact your life.

Why the Federal Reserve Matters

It is not possible to explain why the Federal Reserve (commonly known as the Fed) matters without laying a basic groundwork for what the Fed is. The Board of Governors of the Federal Reserve System notes that the Fed is, at its core, the central bank of the United States.

Created in December 1913, the Federal Reserve’s purpose is to “provide the nation with a safer, more flexible, and more stable monetary and financial system”, per the Board. This stated mission means little without more context.

What the Fed Does

There are specific mechanisms that decision makers within the Federal Reserve system use to manipulate monetary policy in the United States. The Chairman of the Federal Reserve (currently Jerome “Jay” Powell) is generally the face of the Fed’s policy decisions.

In terms of influencing monetary policy, the Fed may:

• Adjust the federal funds rate (commonly known as the interest rate)
• Regulate (and thus alter) banking practices
• Make asset purchases on a scale that may influence the American economy

Interest rates are generally the metric by which the Fed’s leaders are judged, as changing the interest rate dictates the relative cost of lending and borrowing, which may heat or chill the American economic furnace.  

In addition to setting monetary policy, the Fed also provides oversight for American financial institutions (with varying degrees of success), conducts payment services like check clearing and digital payment processing, oversees the printing of money, and issues loans to banks. 

The Fed does a lot, but you may be concerned with one matter over all: how the Fed’s decisions impact your life.

How Fed Decisions May Directly Affect You

When the Fed changes the federal funds rate, it effectively alters interest rates for consumers. By doing this, the Fed may directly affect:

• The likelihood that a bank or other financial institution will issue you a loan such as a mortgage
• The terms of any loan that you are approved for
• The rate at which you accrue interest on your savings

As if these direct impacts of the Fed’s policies were not substantial enough, you could be further affected by the greater effect of interest rate changes on the economy. If Federal Reserve policy enacts a material change in economic activity, then it may dictate:

• Whether you are hired for a job
• Whether you are laid off for a job
• Whether you are forced to take a pay cut at your job
• Whether you may secure a promotion or receive a bonus
• How the stock market performs

You know better than anyone how these sort of professional consequences could affect you day to day. The global woes precipitated by the 2008 housing crisis and following recession reminded many of the importance of understanding monetary policy on some level and protecting yourself to whatever extent possible. Understanding and following Fed policy is a start to fiscal literacy.

Losing a job or feeling a sense of anxiety about your job security can take a toll on your health and general quality of life. Conversely, receiving a bonus or promotion can enhance your sense of accomplishment, security, and zest for life. In this sense, the Fed’s potential to impact you is incalculable.

When framed in these terms, it becomes clear that the Federal Reserve has a greater effect than the average person might realize. Seeing the Fed’s decisions through the lense of self interest may prompt you to pay a bit more attention to the next headline involving an interest rate hike or forecast for American economic performance.

Conclusion

You’ll be hard-pressed to get Joe American to attend a seminar, even a webinar, about the importance of the Fed. This is no knock, but is only meant to say it is tough keeping up with the Kardashians and the latest Fed-related news. 

General malaise about economic matters is not unique to America, as financial systems have become entangled webs which can induce migraines upon even surface-level examination. Plus, no news about financial institutions such as the Fed may generally be considered good news. Despite such hurdles, understanding the Fed and financial systems in general has its merits.

For some, the primary benefit of learning about the Fed is to realize the tenuousness of fiat currency and to shift some portion of their assets to more simplistic and scarce value stores such as cryptocurrency, and Bitcoin in particular.

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The average consumer is lacking an understanding of the Federal Reserve in particular, despite it being arguably the most important institution in American economics.

Our study found that 54% of respondents believe the government owns the Federal Reserve network, which is not technically true. 22% of respondents confessed not knowing who owns federal reserve banks, while 16% believe that a state-corporate partnership owns the Federal Reserve System (hyper-realists, perhaps?).

7% of respondents cited corporations as the owners of the Federal Reserve. Assuming that those who believe corporations or a corporate-state partnership own the Fed are not simply exercising a healthy cynicism, it seems clear that most Americans could use some clarity on who, exactly, lords over the Federal Reserve.

The Federal Reserve, Explained

Those who don’t have a clear understanding of who owns the Federal Reserve (the “Fed”) may not have a strong understanding of the Fed itself. The Federal Reserve is comprised of:

• The Federal Reserve Board of Governors
• 12 Federal Reserve banks
• The Federal Open Market Committee (FOMC)

The Federal Reserve System is, chiefly, the central bank of the United States. Within this seemingly-simple designation lie many duties and functions, including setting monetary policy for the United States. 

The Board of Governors is the conduit between the federal government of the United States and the Federal Reserve system. The Board of Governors has seven members who set discount rates (also known as interest rates) and requirements for what percentage of deposits banks must keep in reserves.

The Federal Open Market Committee (FOMC) has 12 members centered in New York City. Seven of the members are the Board of Governors plus the head of the Reserve Bank of New York and four rotating heads of other Reserve Banks. This Committee meets eight times per year and is said to formulate their monetary policy through these meetings.

Federal Reserve Banks Span the Nation

12 Federal Reserve Banks make up the physical network that is the national Federal Reserve System. The Reserve Banks lie within 12 geographical districts spanning the nation, and each bank services the states within its jurisdiction. While banks were originally given leeway to set their own policy, they were eventually resigned to being outlets for FOMC-set policies.

Reserve Banks do not have the impact that the Federal Open Market Committee or Board of Governors do. Reserve Bank heads alone cannot change interest rates, implement new regulations, or change reserve requirements. The Reserve Bank heads do, however, serve on the Federal Open Market Committee and so the specific presidents of Reserve Banks are important in that respect.

On an individual basis, Reserve Banks’ importance includes:

• Regulating FDIC member financial institutions within their geographical region
• Providing financial services to depository banks in their region
• Implementing Fed-dictated policy on a regional level

You can think of Federal Reserve Banks as the arms of the Federal Reserve’s greater body. You may be able to live without them, but you probably wouldn’t choose to. 

Federal Reserve Banks, and the Fed Itself, are Independent

I have a confession: the question of who owns the Federal Reserve was something of a trick one. The Democratic Staff of the Joint Economic Committee (p.4) notes that, upon the creation of the Federal Reserve, “Congress designed the Fed to be an independent agency within government.”

Independent, but of the government. Huh?

This unique arrangement essentially means that the Fed is, at least in theory, supposed to make the decisions it believes to be in the nation’s best interest without being subject to political pressures. Despite this supposed independence, Fed leadership is still “accountable to Congress”, as the Democrafti Staff puts it.

Noted features that support the view of the Fed as independent include:

• That it is not federally-funded, but instead funded by its own revenues created by lending, fees, and investments
• Long, staggered 14-year terms for Fed appointees intended to limit the impact that any single presidential administration can have on Fed policy

These features are intended to make the Fed independent, but it certainly does not make the Fed beyond reproach.

Criticisms of the Federal Reserve System

A 2009 Gallup poll found that the only federal entity Americans viewed more negatively than the Federal Reserve was the IRS. When tax collectors are the only ones you are looking down on popularity-wise, you know that you have your fair share of critics.

Some criticisms of the Fed include:

• That it is, despite its design, susceptible to political sway
• That it has an outsize impact to contribute to financial busts
• That it lacks transparency
• That it does not truly have the interests of the American people at heart, with bailouts of investment banks with taxpayer dollars being one specific critique

Critiques of the Fed, fair or not, shine a light on why cryptocurrencies have been embraced as what some see as a more trustworthy, less manipulable store of value than the U.S. dollar.

Conclusion

The Federal Reserve remains a lightning rod for criticism despite our findings that many Americans do not fully comprehend the Fed’s role in the American and global economies. The Fed shapes American monetary policy, which ultimately contributes to the ebbs and flows of global markets and economies.

Though it purports to be an independent entity, proponents of cryptocurrency often beg to differ. We argue instead that decentralization is the only true building block for financial independence.

Yet, our findings in the study Perceptions and Understanding of Money — 2020 indicate that the significant majority of Americans are not psyched about parting with their paper money on a permanent basis. 

To be more specific, we found that 60% of respondents are opposed to the idea of paper money being replaced with “digital-only money”. This could be a devil-you-know versus devil-you-don’t situation where familiarity with paper money is the driving force behind wariness of giving it up. Understandable, but if resistance to change for resistance’s sake were humans’ driving principle then progress of any kind would be impossible.

It is possible that better acquaintance with the pros of digital transactions could change the minds of those willing to have their minds changed. 

It is also possible that the movement towards a cashless society is a non-Democratic issue—that is, it could be inevitable depending on who wishes to see a cashless society emerge. Embracing the benefits of digital money could ease your transition into a new financial frontier.

Covid-19 Has Accelerated the Cashless Revolution

Axios cites several figures and facts indicating that increased health-consciousness amidst the global pandemic has accelerated the migration towards a cashless society. Its findings include that:

• People in various nations are wary of physical money, which they see as a potential conduit for viral transmission
• 63% of consumers report using cash less often than they did before the pandemic
• Payment for goods and services through apps and websites, rather than with physical money, has increased

Of course, we must consider the fact that quarantine measures have prevented many from accessing ATMs, paying for goods and services in person, or engaging in activities where they might normally use cash. In some sense, the increase in cashless payments has not been completely reflective of voluntary consumer attitudes. It may, however, be habit-forming.

The idea that your dollars and coins are dirtier than you would like to consider is—unlike the coronavirus—not novel. A 2017 study found that a collection of bills circulating around New York City contained various bacteria and viruses.

Many people’s aversion to unnecessary risk has been illustrated by widespread willingness to wear masks, quarantine, and take other health-conscious precautions. Foregoing physical money in favor of primarily-digital payments could be increasingly viewed as yet another way to protect oneself from possible viral infection.

The Benefits of Going Cashless

Even before “Covid-19” became a universally-recognized term, advocates for digital payments were touting the perks of completely or largely-cashless societies. We’ve already touched on the potential health benefits of eschewing dirty cash for cleaner forms of payment.

In addition to health benefits, the advantages of cashlessness may include:

• Greater difficulty for muggers and thieves to rob you of your physical money
• A greater ability to trace illegal activity, namely money laundering, that could be more easily perpetrated by washing cash through businesses, banks, and other means without a trace
• Commerce-related perks, which Visa notes includes faster transactions (on average), less hassle for customers who would otherwise have to procure, store, count, and dole out cash, and the fact that customers are statistically more likely to spend more at a business using a card rather than cash
• Ease of currency exchange 

Some forms of digital payment may also provide greater security. Security standards used to protect cryptocurrency wallets are being adopted for other purposes, as Deloitte notes, and the further adoption of such practices could further bolster asset protection in a cashless society. Cryptocurrencies themselves may emerge as a more widely-adopted means of exchange as consumers grow increasingly comfortable with cashless transactions as a rule rather than merely an option.

The move towards cashlessness falls in line with the general shift towards global uniformity, for better or worse. Some note that uniformity itself is not necessarily a net positive—one of several critiques of emerging cashless societies.

Critiques of Going Cashless

It would be unfair to pose the prospective benefits of going cashless without mentioning known drawbacks and still-unfounded critiques of the cashless concept. 

For one, there is the notion that moving all nations and individual cultures towards a universal standard of exchange is akin to whitewashing. There is something to be said about coming home from a vacation with a paper bill or coin that you had never before seen or held as a keepsake of your trip. Losing the uniqueness of different currencies is a fair concern, to be certain. But is it a greater loss than the potential benefits of cashlessness?

The answer to that question may vary depending on your values and beliefs. Other critiques of taking societies cashless include that:

• The elimination of cash will be followed by the imposition of ubiquitous transaction fees for businesses and consumers which, without the alternative option to pay with cash, may be unavoidable and costly over time
• Cashlessness represents a greater trend towards limited choice and autonomy 
• A reduction in cash services will eliminate a substantial swath of jobs that revolve around cash processing, issuance, and management
• Less cash and more easily-traceable digital transactions mean less privacy

These are not illegitimate concerns, and there is debate to be had. Alleviating these concerns with robust security measures and good faith will be necessary to make a fully-cashless society work as it should.

Conclusion

Cash was once king, but it appears that digital and card-based payment may increasingly rule the day. With proper oversight and security, the move towards cashless payment mechanisms could provide numerous benefits, and cryptocurrency-level security may be an integral feature of the move towards cashlessness.

There are certainly kinks to be worked out and concerns to be addressed, but the age of Covid-19 has further reinforced that a shift towards all-cashless payments may be not only beneficial, but more necessary than many previously realized.

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The fact is that:

• Because of fractional reserve banking, your bank likely does, in fact, hand much of your money over to third parties without your knowledge or consent
• You may not be cool with it

Findings from our study Perceptions and Understanding of Money — 2020 indicate that a significant number of Americans are not aware of how fractional reserve banking works. More than a quarter of respondents believed that banks had to have the exact amount of customer deposits in their reserves at all times.

While others may be generally aware that banks can re-lend or invest your money, they may not know the extent to which banks are doing so.

If you intend to continue using the American banking system, you will not have a say in the matter of where your money goes after you deposit it. But you may at least want to have a general idea of where your money is going thanks to fractional reserve banking. If so, keep on reading.

Explaining Fractional Reserve Banking

The Federal Reserve Bank of Atlanta (tenuously) traces the roots of fractional reserve banking back to an unnamed goldsmith in ancient times. The story goes that the goldsmith, while holding clients’ stores of gold, eventually realized that he could make a tidy sum by re-lending the gold. So long as he returned the gold to his stores before the client realized it was gone, then there was no harm to be done.

Now, replace gold in the above story with your bank deposits, and the goldsmith with your bank of choice. Here you have a simple explanation of how fractional reserve banking works.

The mechanism that allows for fractional reserve banking to take place is the reserve requirement, set by the Federal Reserve Board of Governors. The reserve requirement is the percentage of customer deposits that a bank is required to keep on hand. 

Per the Fed Board of Governors, the reserve requirement for banks was reduced to zero effective March 15, 2020. This effectively means that your bank can lend out or invest 100% of the money that you and other customers give them. Fed Chairman Jerome Powell has indicated that the nonexistent reserve requirement could persist for the foreseeable future.

Why Fractional Reserve Banking Exists

There are several reasons given for fractional reserve banking to exist. They include that:

• Banks lending and investing customers’ deposits allows the banks to make profits and sustain their business
• Money “created” through lending and investment by banks grows the money supply
• By growing the money supply and stimulating the flow of credit from banks to other institutions and individuals, fractional reserve banking “grows the economy”

Fractional reserve banking is one of several tools that the Federal Reserve uses to manipulate the supply of money, and thus the relative value of the American dollar. In times of stagnant economic activity, the Fed may lower the reserve rate to encourage greater lending and, as the theory goes, stimulate economic activity. In times of inflation, it may do the opposite.

The idea that lending money while simultaneously showing that the money is present in your banking account constitutes “growing” the money supply may be confusing or even hollow—such critiques certainly exist.

When there is a run on a bank, as may be the case in times of financial panic, then the perils of fractional reserve banking become abundantly clear. The money just isn’t there when customers want it.

The idea that customers cannot theoretically withdraw their money en masse at any given time is just one of the criticisms of fractional reserve banking practices.

Critiques of Fractional Reserve Banking

On a simple level, fractional reserve banking exposes customers to risk that they would likely prefer not to face. If, as a banking customer, you wanted to reap returns beyond modest bank interest rates, then you would have put your money in the stock market or another higher-yield investment vehicle. 

The benefit of banks for many is reliability. When you deposit your money in a bank, popular thinking may go that:

• The bank should store your hard-earned money in a vault far more secure than anything you have access to
• The bank should guarantee that you can access your money when you need it, without excuse or exception

Under fractional reserve banking, it may instead be true that:

• Your money is not held by the bank you deposited it in at all, let alone in a vault
• If enough customers of consequence request to withdraw their money at the same time, then there may not be enough money in bank coffers to guarantee access to your money

This may happen if, say, there is a bank run precipitating an economic Depression. Or, perhaps if banks have lent large swathes of customers’ deposits to borrowers that should not have qualified for a mortgage under any circumstance.

History has painfully demonstrated the risks of having too few assets on hand and too many assets tied up in non-guaranteed (or downright risky) investments. These risks are, in a nutshell, those presented by the fractional reserve banking system.

Conclusion

The history of fractional reserve banking is one of extreme booms and busts. A reserve requirement of zero theoretically permits banks to maximize their revenues, but boom times can cause widespread financial slaughter on individual and societal levels. It may even leave customers with little to no cash to show for their bank deposits.

The extreme tides of the American fractional reserve banking system is enough to sew the seeds of mistrust, and those seeds may be the impetus for once-burned victims of the fractional reserve system to turn to new means of asset protection such as cryptocurrency.

Cryptocurrencies are a great alternative to our flawed financial system. Why don’t you start mining them with us? Create your free dashboard, and buy some hashpower! Sign up now!

Did they know what the US dollar was backed by? Did they understand fractional banking? Our results weren’t all that surprising. Many didn’t understand the basics of how our financial system worked. Our intention of doing this study wasn’t just to prove people didn’t understand money — it was to set a benchmark report that would be measured year over year. 

A lot has happened over the past year. To say 2020 has been eventful would be an understatement. Governments across the world have fired up their money printers and are pumping money into their economies to keep them afloat. 

To find out how the average American’s views toward money and our financial system have evolved over the past year, we surveyed 400 Americans on July 28, 2020 and asked them a series of 22 questions. 

Our findings are divided up into four parts: 

Part 1: Understanding of the Financial System 

Part 2: Trust of Financial Institutions 

Part 3: Beliefs about Money 

Part 4: Bitcoin and Cryptocurrencies

Part 1: Understanding of the Financial System 

We interact with banking and financial systems every day to ensure that our earnings are being protected, our investments are growing, and that we have easy access to cash when we need it.

Yet many American’s are unaware of how our financial system actually works. What is the Federal Reserve and how does it act to influence monetary policy that directly affects Americans? What is the gold standard and why should we be aware of it? How much cash does your bank keep on hand?

These may seem like questions we don’t need to pay attention to, so long as the balance in our bank account is correct. But knowing these answers — or not knowing them — shows how much we understand how one of the most important systems in our nation works.

Here’s what we found.

What is the US dollar backed by?

One dollar is one dollar of what? Beginning in 1879, the United States adopted the gold standard, which meant that one dollar was backed by one dollar’s worth of gold. But in the early years of the Great Depression, President Roosevelt adjusted the gold standard in order to ease the economy. The price of gold remained steady only until 1971, when President Nixon completely suspended the gold standard, meaning that the US dollar was no longer backed by gold.

But how many Americans are aware of this history? Our survey revealed that most people aren’t quite sure.

42% answered that it’s backed by the US Government, which is up from 30% last year. But 28.5% said it was backed by gold, which is about the same percentage as our survey last year — which we now know is incorrect — and the remaining 30% answered that they thought it was backed by either oil, bonds, or nothing, or they just didn’t know.

We then asked, “Who is responsible for creating more US dollars?”

We then asked who is responsible for creating more money. About 60% of our respondents knew that the Federal Reserve, which is considered the nation’s central bank, is able to create more money and inject it into our economy, and is responsible for the overall money supply. They don’t do this by printing money, but by buying up securities, with the purchase money going back into the economy.

The remaining 40% of our respondents, however, weren’t sure, with a quarter of respondents believing it to be the US Mint (who simply makes coins in response to policy demand). 6.8% said they didn’t know.

“Who owns Federal Reserve banks?”

In 1913, President Wilson signed the Federal Reserve Act to establish a national central bank. While considered both a public and private entity, the Federal Reserve’s board reports directly to Congress, while its twelve banks function more like corporations and operate relatively decentralized. 

We asked our respondents if they knew who owns the Federal Reserve banks, and 61.3% said the government does, while 19.3% responded that it was a partnership between corporations and the government, which is a bit up from last year. 13.3% responded that they didn’t know.

We asked respondents, “Does your bank need to hold the exact amount of money that customers deposit at all times?”

More than half — 63.7% — responded that no, your bank does not need to hold the exact amount of money at all times, which is correct. Banks tend to only keep enough cash in their vaults to anticipate their transaction needs. Otherwise, banks will use the cash behind your deposits to loan to others or invest (remember the scene in It’s a Wonderful Life?). Yet 36% of our respondents incorrectly believe that yes, banks hold all cash amounts in their vault at all times.

For those that said no, we asked what percentage of customer cash deposits do they need to hold in reserves? 

Up until March 2020, banks with less than $16 million eligible deposits didn’t need to hold any cash in reserve; banks between $16 and $122.3 million needed to reserve 3%; and banks at $122.3 million or above needed to hold 10% in reserve. But as of March 2020, due to COVID-19 concerns, the minimum reserve number was reduced to 0% for all banks regardless of the amount of eligible deposits.

45% of our respondents didn’t know how much needed to be in reserve, with 13% answering “1-10%,” which would cover the rate up until March 2020. The remaining 42% chose rates much higher than needed.

Part 2: Trust of Financial Institutions 

Even with our collective historical knowledge of the bank runs that precluded the Great Depression, financial institutions causing the bottoming-out of our economy in 2008, and the new recession caused by COVID-19, we found that our respondents had a good amount of trust in their banks. Still, is it trust or a false sense of security?

We asked our respondents if they trust their bank.

77% of our respondents replied that yes, they do trust their bank. Only 1.5% strongly disagreed.

When we asked more specifics, we found that an even higher percentage — 84% — agree that they trust their bank to keep their money secure, with only 1.3% saying they strongly believed it wouldn’t.

What about personal information? Again, 79% of our respondents believed that yes, they trust their bank to keep their personal information secure.

But who do you trust more?

When we compared banks to other societal and cultural institutions, we found that our respondents still had a lot of confidence in their banking institutions.

Respondents trust banks more than they trust police…

…much more than they trust Congress…

…much more than they trust the media…

…and even more than they trust lawyers.

We then asked, “Which banks do you associate the most with trust?”

Of the banks we asked about, Bank of America, Chase, and Capital One were the major banks most associated with trust. (Though a high percentage of our respondents answered “I don’t know.”)

When it came to who our respondents trusted the least, the majority answered Wells Fargo, with good reason: In 2016 news broke that millions of fraudulent accounts were created by Wells Fargo employees under customer names, without customer consent. Even though the criminal charges were recently settled with the SEC, the bank essentially marred its reputation — as our survey showed.

Part 3: Beliefs about Money 

Because money is such an important part of our lives, we took a look at some beliefs about money, specifically in regards to inflation. Inflation concerns the decreased buying power a dollar has. We know inflation happens in the US because a loaf of bread fifty years ago cost a fraction of what it does today — it’s not the loaf of bread that’s changed, but the buying power of our money. Yet while we’re accustomed to a steady 3% inflation rate in this country, we hear stories about countries where the money to buy a chicken outweighs the chicken, and how trillion dollar notes are barely worth anything. That couldn’t happen here, right?

What are your views on inflation?

Maybe inflation is more of a concern than we might think — especially in 2020. 88.6% of our respondents were concerned about inflation, split between Somewhat Concerned at 53.3% and 35.3% saying they’re Very Concerned.

Of those respondents, nearly half — 46.8% — indicated that their concerns about inflation had increased over the past year. This is most likely due to one of the biggest hits to our economy in recent history: COVID-19. Has the global pandemic lead not only to fears about employment and the economy, but to an increase in fear that the dollar is going to lose buying power? Yes.

We also asked if the US government added additional money to stimulate the economy due to COVID-19, with 73% saying yes, and it has. Not only has the Federal government provided stimulus checks, the Federal Reserve has injected trillions of dollars into the economy and exacted other monetary policies to keep everything afloat. But such policies could — as our respondents maybe sense — lead to higher levels of inflation.

The future of cash

Even though we talk about how “Cash is king” and “It’s all about the Benjamins,” we have to acknowledge that most of the transactions we do today are digital, from swiping a card, having automatic deposits or withdrawals from our bank accounts, tapping our phone to a POS system, Venmo-ing our friend, or linking a PayPal account online. 

Still, 26.8% of our respondents believe that in 100 years, our society will still be using physical cash. Another 25% stated they weren’t sure, leaving just a bit less than half our respondents believing that in a century, we’d be in a cashless society. All things point to us moving in that direction already.

When we asked whether the US government should replace physical currency with a digital-only dollar, only 24.8% said “Yes,” with more than half our respondents saying “No.” In other words, despite our increasing reliance on monetary payments and exchanges being only numbers online, there’s still a high level of dependence, confidence, and trust in physical currency.

But there’s a different story here when looking at our answers to this question from last year. In 2019, only 13.3% of respondents said yes, a digital dollar should replace physical currency. In just a year, the number of people saying “Yes” nearly doubled. The number of respondents answering “No” decreased, from 76.2% to only 60%, and the number of “I don’t know” went from 10.5% to 15.3% — possibly indicating uncertainty, but possibly indicating an increased openness to a digital dollar.

Part 4: Bitcoin and Cryptocurrencies  

Cryptocurrency was designed as a decentralized system of currency not under the control of any government or banking system, that is 100% digital, and inflation-proof. Since we surveyed our group about their concerns around inflation and what they thought about the possibility of a digital dollar, we also wanted to get a pulse check on how our respondents view Bitcoin and cryptocurrencies. 

Have you heard…?

In the documentary Life on Bitcoin, a newly-married couple attempts to live for one hundred days on Bitcoin and, in 2013 when they filmed it, most people they encountered never heard of cryptocurrency. In 2020, 87.3% of our respondents have heard of either Bitcoin specifically or cryptocurrency in general, which indicates an incredibly widespread awareness — which is the first hurdle to getting the word out about a new product or technology.

When asked what their thoughts were regarding Bitcoin and cryptocurrency, the largest response at 35% was that it’s an “interesting idea that may have potential but too early to tell” — even though Bitcoin was created in 2008. Still, 17% of respondents were open to learning more about it, and 15.5% believed cryptocurrency would in fact someday replace the US dollar. While there were responses that felt negatively about cryptocurrency, they fell into the lower percentiles, meaning that while awareness is increasing, understanding around the potential and benefits of Bitcoin and cryptocurrency is increasing as well.

Conclusion

As Liza Minnelli sang in the musical Cabaret, “Money makes the world go ‘round.” And whether it be clocking in to earn a paycheck, buying our morning coffee, making an online purchase, or putting a down payment on a house, our interactions with money are daily, if not hourly. 

Yet while we’ve found that a segment of Americans do understand how our financial systems and intuitions work, the majority either have the wrong information about it or, as seen with our high level of “I don’t know” responses, simply don’t have any knowledge about it.

But this isn’t disheartening at all. It just shows us that there’s a great opportunity to educate others about where their money comes from and where it goes, how banking systems work, and how Bitcoin and cryptocurrency can play a major role in elevating and advancing our usage of money going forward. 

Want to download this report as a PDF? Here you go: GM_MONEY_REPORT_2020

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Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money

by Nathaniel Popper | HarperCollins, 2016

With engaging storytelling and character-focused narrative, New York Times reporter Nathaniel Popper recreates the early days of Bitcoin, starting with Hal Finney tinkering with Satoshi Nakamoto’s source code to finally generate the first coin. Popper conducted over three hundred interviews to tell the story of Bitcoin, from its roots in 1990s cypherpunk activity to Satoshi Nakamoto’s white paper on its creation, from early adopters like Gavin Andresen and Erik Voorhees to the early roadblocks like Silk Road’s dark web exchange, Charlie Shrem’s arrest, Mt. Gox’s mismanagement, and the regulations that followed. Popper covers the people, events, and philosophy behind Bitcoin in its infancy.

Why we like it: Excellent storytelling and behind-the-scenes extensive journalism make this a key read.

The Bitcoin Guidebook

by Ian DeMartino | Skyhorse, 2018

The Bitcoin Guidebook is essentially just that: Author Ian DeMartino, the cofounder of CoinJournal and someone who has been in the space for a while, takes your hand and gives you a tour through everything Bitcoin. The book is well-research and comprehensive, with easy-to-understand examples, and stories and advice from DeMartino’s own experience. It has the expected sections on what Bitcoin is and how it works, its history, and what it can do for the economy, but also contains sections on how to invest in Bitcoin, how Bitcoin mining is done, and where to find a job in the industry. It also includes a glossary of terms and a “Who’s Who.”

Why we like it: While it may be a bit denser, it covers everything you need to know about Bitcoin.

Blockchain Revolution: How the Technology Behind Bitcoin and Other Cryptocurrencies Is Changing the World

by Don Tapscott and Alex Tapscott | Penguin, 2018

Father and son Don and Alex Tapscott explain their book on blockchain technology as this: “We tried to get inside Satoshi’s mind and tease out his design principles for blockchain.” In addition to what blockchain is and the trust protocol it relies upon, the book details how financial services will change with its implementation, how new business models will come about, how it will support the Internet of Things, how it can solve global economic inequality, how it can bolster democracy, and how it can positively affect culture. But this revolution won’t be easy, and Blockchain Revolution brings up challenges to the new system as well.

Why we like it: It’s all about how the technology at the foundation of Bitcoin may quite literally change the world.

The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous | Wiley, 2018

What is money, what are its properties, how is it used, and how does Bitcoin fit into it? Professor of Economics Saifedean Ammous explains just that in The Bitcoin Standard, starting with the basic properties of money and examples of how exchange of value works from primitive currencies. He then moves on to money’s role in economic systems and free markets, and how governments manage the money supply — and if that’s a good thing or not. Finally, he reviews the evolution of digital currency and how “Bitcoin represents the first truly digital solution to the problem of money.”

Why we like it: A book on money and economics? It’s surprisingly easy to read and helpfully educational.

Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond

by Chris Burniske and Jack Tatar | McGraw-Hill, 2017

Cryptoassets is the book for anyone wanting to get into investing in Bitcoin, or looking to expand their knowledge of the market. Authors Chris Burniske and Jack Tatar, both with extensive experience investing in Bitcoin, provide a technical yet accessible look at cryptoasset investing, from what Bitcoin is, a history of its pricing in the market, and how to explain its volatility (including a chapter showing how Bitcoin is not a Ponzi scheme). They go over how to manage a portfolio, and provide a framework for investing, including evaluating Bitcoin’s security through decentralization, how to invest directly in mining, exchanges, and wallets, and everything you need to know about ICOs, or Initial Coin Offerings.

Why we like it: Since Bitcoin has become an investment asset, it’s great to have a book that covers that side of Bitcoin’s existence.

Mastering Bitcoin: Programming the Open Blockchain

by Andreas M. Antonopoulos | O’Reilly Media, 2017

When Andreas M. Antonopoulos was introduced to Bitcoin in 2011, he admits he thought it was “nerd money.” But after reading Satoshi Nakamoto’s white paper, he was convinced it was something much more. Mastering Bitcoin is a look at Bitcoin from the computer science side of it: Not just what Bitcoin is, but a look at the source code, how transaction chains work, how to set up a node in the network, what mining and proof of work code looks like, and more. While Antonopoulos claims this book is for coders, anyone with a working knowledge of Bitcoin will gain more knowledge, insight, and awareness of Bitcoin from it.

Why we like it: Really dig into how Bitcoin works with exposure to the math and code behind it.

The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order

by Paul Vigna and Michael J. Casey | Picador, 2016

Wall Street Journal financial reporters Paul Vigna and Michael J. Casey have been covering Bitcoin since the beginning, and draw on their interviews for an overview of the creation and implementation of Bitcoin and the blockchain. They begin with money — what is it, how is it based on trust, how has it failed in unstable economies like Argentina — and then go on to cover the origins of Bitcoin, how the early community grew, and the various start-ups that exploded. Self-proclaimed early doubters, Vigna and Casey not only wanted to write about Bitcoin, but wanted to put the puzzle pieces together for themselves — and the reader gets to come along with them.

Why we like it: Journalists make great storytellers, and their coverage draws you in.

Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption

by Ben Mezrich | Flatiron, 2019

Mezrich is the king of movie-like non-fiction, and his most recent book follows the story of the Winklevoss twins — yes, the ones from The Social Network — from the wake of Facebook to becoming the first Bitcoin billionaires. The book opens with Tyler and Cameron Winklevoss settling their lawsuit with Mark Zuckerberg, then follows them as they pivot to their next project: Investing seed funding into Charlie Shrem’s BitInstant, and buying 1% of available Bitcoin. The book follows the twins’ journey as they interact with the people, technology, regulations, fiascos, and adoption of Bitcoin, seen through the eyes of its first billionaires.

Why we like it: Bitcoin Billionaires reads like a novel, so grab a drink, find your favorite chair, and settle in.

Blockchain Bubble or Revolution: The Present and Future of Blockchain and Cryptocurrencies

by Aditya Agashe, Parth Detroja, Neel Mehta | Paravane Ventures, 2019

Is blockchain a bubble or a revolution? The authors — three project managers from Google, Microsoft, and Facebook respectively — aren’t going to simply answer that, but they provide a framework for helping the reader understand blockchain technology. The first part of the book delves into the technical aspects of what the blockchain is and how it works, using graphs, charts, and illustrations (it even has a photo of the two pizzas, which were the first Bitcoin purchase). The second half of the book provides case studies on where blockchain is being used, from climate change to voting to gaming, and where it best serves society — or doesn’t.

Why we like it: A more recent book, it shows where blockchain disruption is becoming a reality.

The Book of Satoshi: The Collected Writings of Bitcoin Creator Satoshi Nakamoto

Collected by Phil Champagne | Wren Investment, 2014

In the beginning were the words, “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.” This was how Satoshi Nakamoto, a mysterious pseudonymous coder, introduced his white paper detailing his creation Bitcoin and the blockchain upon which it functions. Satoshi communicated with early adopters of the technology, getting it off the ground and giving guidance on its usage, until he disappeared completely two years later, his identity never revealed. This book collects his writings from emails and forums, providing his wisdom on the establishment of his new currency, solving the double spend problem, 51% attacks, and proof of work — even his thoughts on the Bitcoin logo.

Why we like it: Like a religious text, it’s the collected wisdom of a legendary founder.

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One event may have a significant effect on how crypto is mined in the coming months: the block halving event, when Bitcoin rewards will be cut in half as a way to regulate the system and stop inflation. While halving events have seen Bitcoin prices soar in the past, it may cause individual miners to pull out of their mining efforts.

We wanted to know what Bitcoin owners knew about the mining process, as well as get their thoughts on how the upcoming block halving would impact Bitcoin. We conducted a survey on March 17, 2020 of 750 respondents who either own or have owned Bitcoin at some point in the past. 

Key findings: 

• 50% of miners expect to see the price increase after the next halving. 
• 60.8% felt either somewhat or very concerned over Chinese organizations control of the Bitcoin network. 
• 64.9% – believe that a 51% Attack is a legitimate concern for the Bitcoin community and investors.
• One third believed that power will shift from large centralized groups to smaller home miners. 

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Yet we still see misconceptions about the state of the gold standard. For instance, 29% of respondents in our recent study How Well Do Americans Know Money? 2019 believes that the U.S. dollar is still backed by gold. The public deserves some conclusive answers about the state of the gold standard, how it came to be, why it was valuable, and why we ultimately did away with it. Lucky for you, we have those answers right here.
 

What is the gold standard?

The gold standard is a measure of value for a nation’s currency that is based upon the amount of gold that nation holds in its reserves. The idea becomes more tangible when presented as an example: if Tim or Jane holds fifty paper dollars from any nation, they should be able to swap those dollars out for a certain amount of gold based on a defined exchange rate. That’s the idea, at least.
 

The amount of gold that one would receive in exchange for their dollar is often referred to as the “par value”. Whether you were to be exchanging a franc, pound, euro, or dollar for gold, the par value would determine how much gold you’d receive in return.
 

So, the concept of a gold standard isn’t too complicated, at least on the surface level. What is less clear is how the gold standard came to be, and how most of the world eventually broke from the gold standard as a tangible measure of value.
 

What is the history of the gold standard?

The Greek historian Herodotus wrote of what we believe to be the earliest use of gold as currency. He pointed to the use of gold coins by the Lydians, who resided in the region that is modern-day Turkey, during the fifth century. These coins arguably represent the earliest use of a gold standard, albeit one that was more directly tied to gold (the currency itself was at least partially comprised of gold) than the gold standard Americans and others would come to know centuries later.
 

We can trace the roots of the American gold standard to the discovery of gold in California in January 1848. This discovery precipitated the Gold Rush, and America’s newfound abundance of the valuable precious metal would lead President McKinley to sign the Gold Standard Act in March of 1900.
 
Source: americanbullion.com

The Gold Standard Act set the price of gold at $20.67 per ounce, and the value of each dollar at 25.8 grains of gold. This put an end to long-held debates over whether gold or silver was preferable as a store of value — fans of silver would simply have to deal with this new reality. It would turn out that they wouldn’t have to deal with it forever, though.
 

As worsening economic conditions leading up to the Great Depression caused the stock market crash of 1929 and banks to increasingly fail, Americans began to hoard gold. One economic tool for stimulating the economy — increasing the money supply — became impossible, as the amount of money was directly tied to the amount of gold in government reserves, and citizens were wary of selling their gold to the government or anybody else.
 
Credit: Bettmann Archive/Getty Images

This led the administration of Franklin D. Roosevelt to follow England’s lead, signing the Gold Reserve Act in 1934. This made it illegal for American citizens to own most forms of gold, in doing so requiring them to turn their gold coins over to the Treasury at a set price of $20.67 per ounce.
 

This seemingly helped stimulate the economy, but many have argued its long-term effects remain primarily detrimental. The final nail in the American gold standard’s coffin came in 1971, when President Richard Nixon ended the ability to exchange dollars for a fixed amount of gold, and in doing so upended the fixed nature of international currency. Prior to 1971, the Bretton Woods System tied most international currencies to the dollar, which was tied directly to gold.
 

This was no longer the case post-1971, and while the cessation of the gold standard initially halted inflation and a run on gold, it would have far-reaching effects, many of them negative.
 

What are the advantages of the gold standard?

World War I served as an early and a prime example of the value of tying paper currency’s value to something of tangible value, in this case gold. In the face of massive wartime costs, several European nations abandoned the gold standard, allowing those nations to print as much money as necessary to pay the high cost of war.
 

However, this ultimately led to massive hyperinflation, as the value of paper money lessened as it saturated the marketplace and consumers (and the government) lost confidence in the real value and purchasing power of paper money. The reality of hyperinflation is common when any nation moves away from a real basis of value, such as gold, as an anchor for its paper currency.
 

Herein lies the value of the gold standard: paper money is worth a defined amount, and that paper money can be exchanged at any time for the item of real value that backs the paper currency, in this case gold. This tends to stabilize the real value of money as well as consumers’ confidence in the value of that money.
 

As we’ve seen, abandoning the gold standard can cause a funny money effect that can ultimately causes worldwide inflation and degrade the sense of true, definable value that paper money is supposed to have.
 

What are the disadvantages of the gold standard?

History illustrates that the primary disadvantage of the gold standard is the inability of a government to manipulate the money supply in tough economic times. When signs of trouble arise, the public tends to exchange their paper money for gold, preferring the item with inherent value versus paper money, which is only theoretically linked to the item of inherent value.
 

This understandable human inclination to hoard gold only exacerbates a contracting economy, and the government’s inability to purchase gold from the people in exchange for paper money only lessens the perceived value of that paper money. Put yourself in the government’s shoes: how could you allow the people to hoard all of the gold, and thus the element that imparts value on a nation’s paper money?
 

The answer: you can’t allow this, and therefore we get The Gold Standard Act of 1933 and Nixon’s outlawing of paper money’s exchangeability for gold in 1971. With these acts, America and the world kissed the gold standard goodbye, with little likelihood of a future return.
 
 

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If you’re unclear on the purpose of these regional federal reserve banks, what they do, how they function, and why they’re important (or not), we’ve got you covered. We answered some basic questions (you didn’t ask them, but we answered anyway) about the twelve federal reserve banks, and we’re hoping that those answers will clear up any uncertainty you may have.
 

What’s the history of federal reserve banks?

When the Wilson administration proposed establishing a national bank circa 1913, there was a clear upside to the proposal. A unified national banking system would, in theory, help stabilize the national economy and serve as a better framework for regulatory oversight. The central bank would also provide unprecedented liquidity between member banks and standardize reserve requirements, a key lever for manipulating the money supply. 

Source: Federal Reserve

But there was also opposition, with one concern being that a single central bank located in Washington, D.C would not adequately serve or represent the varying attitudes and demographics that existed, and still exist, across America.
 

And so the 1913 Federal Reserve Act would ultimately include a charter for twelve regional banks to serve as operating arms of the D.C.-based federal reserve. They would prove to be critical in maintaining the health of not only the domestic and global economies, but also the existence and integrity of the smaller financial institutions that makeup the American banking network.
 

What is a federal reserve bank?

Federal reserve banks are extensions of the Fed, and function according to policy set by the twelve-member Federal Open Market Committee (FOMC). The FOMC dictates the policies that we collectively dub “monetary policy”, a term that remains murky at best to most Americans. In fact, 41.2% of respondents in our recent study How Well Do Americans Understand Money? 2019 answered incorrectly when asked “who decides if and when more US dollars should be created?”.
 

The correct answer: the Fed, specifically the FOMC.
 

You should know that the FOMC is comprised a seven-member Board of Governors and also five heads of the twelve regional federal reserve banks. So, in a way, the regional federal reserve banks (through their presidents) do have an impact on monetary policy, but those banks mostly follow orders — how much money to keep in reserves, how much can be lent out, what interest rates to charge, etc.
 

How many federal reserve banks are there, and where are they located?

Excluding the real-deal Fed that resides in Washington, D.C, there are twelve Federal Reserve Districts, with each serviced by a regional federal reserve bank. The districts are skewed towards the east coast, as is reflected by the banks’ locations.

Source: fraser.stlouisfed.org

The cities with a federal reserve bank are (from West to East) San Francisco, Dallas, Kansas City, Minneapolis, St. Louis, Chicago, Atlanta, Cleveland, Richmond, Philadelphia, New York, and Boston.
 

How do federal reserve banks work?

Regional federal reserve branches serve as depositories for smaller banks. They maintain accounts for smaller financial institutions, and guarantee those deposits for future withdrawal, which is precisely the role those smaller institutions fill on behalf of their customers (us). Regional federal reserve banks also extend loans to financial institutions at a rate set by the FOMC, known as the discount rate.
 

Federal Reserve Banks As Regulators

Just to clarify: the Federal Reserve System includes the Fed in Washington, D.C., the twelve regional federal reserve banks, and smaller member banks that fall under the purview of those twelve regional banks, according to their geographic location. The twelve regional federal reserve banks serve as a ground-level regulator of the roughly 7,800 member banks that have chosen to join the Federal Reserve System.
 

Regional federal reserve banks are tasked with ensuring that member banks in their district are complying with Fed-set monetary policy and are not engaging in risky banking practices — cough subprime mortgages cough. While history has proven that oversight from regional federal reserve branches is imperfect, it is something.
 

As Service Providers for the U.S. Treasury

The regional federal reserve banks act as a sort of checking account for the U.S. Treasury by issuing and redeeming government securities. They also collect unemployment, income, and excise taxes on behalf of Uncle Sam, ultimately handing that money over to the Treasury. Regional federal reserve branches also store collateral on behalf of the federal government for dealings with private institutions and make interest payments on behalf of the U.S. government.
 

Though the twelve federal reserve branches are technically not for profit, they do increase the money supply and pad their coffers (temporarily) by issuing loans that collect interest. They can also profit from the sale of government securities and through fees on the payment services they provide, but all additional earnings are turned over to the U.S. Treasury each year.
 

As Financial Service Providers

The twelve regional banks facilitate withdrawals and deposits from the smaller federal reserve member banks in their district. They also extend member banks credit in the form of loans. The regional federal reserve banks clear approximately 18 billion checks each year as a clearinghouse for federal reserve member banks, showing just how critical they are to daily banking operations in the United States.
 

Who owns federal reserve banks?

As the main branch of the Fed, the regional federal reserve banks are technically not owned by anybody — not the Fed chairman, not the President, not you or me. They are a part of the independent network that is the federal reserve, which is designed to be above partisan influence or corruption.
 

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