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The Fed is as powerful as it is boring. (Alright, maybe not that powerful, but you get the point). See, its job is to make sure the U.S. economy stays in the Goldilocks zone: growing neither too fast nor too slow, but just right to keep both unemployment and inflation low. It raises interest rates when it thinks growth is too high, and cuts them when it thinks growth is too low — and it does all this by controlling how much money is in the economy. But the Fed’s interest rate decisions don’t just set the course for the U.S. economy; its decisions set the course for the world economy too. That’s because the dollar is the world’s reserve currency, and so many emerging markets have pegged their own to it — which means they’ve decided to import our monetary policy. Think about it this way. If I say my currency will always be worth a certain number of dollars, then I have to print more of it when the Fed prints more dollars. That’s why economists call the Fed a monetary superpower: it’s the world’s central bank all but in name. And, as you can see in the chart below from economist David Beckworth, the Fed’s hegemony isn’t limited to emerging markets. The European Central Bank (light blue line) and the Bank of Japan (black dotted line) have also followed the Fed’s lead the past 10 years or so.
In other words, Janet Yellen will have more control over the global economy than any other living person once she’s confirmed as Fed Chair. Now, the Fed is a democracy, not a dictatorship, but it’s a funny kind of democracy — the Chair alone sets the agenda. So if Yellen even just talks about slowing down the Fed’s bond-buying, Europe’s troubled economies are liable to see their interest rates rise, and emerging markets are liable to see their currencies collapse.
This might be enough to get conspiracy thinkers going: the Fed Chair, an appointed position, certainly has a lot of international power. This got me to thinking: if Yellen has all this power, who else might be in the conversation for most powerful person in the world? Here are some options:
1. The President of the United States. Political power backed with a lot of economic, military, and cultural power. The “leader of the free world.”
2. The wealthiest person in the world. Bill Gates has $72 billion, the most in the United States, but Carlos Slim has the wealth in the world at $73 billion. Both men are connected to powerful companies. However, just how much can even the wealthiest business leader do compared to the economic prowess of a large country?
3. People that Time names as Person of the Year. It is an American publication so that skews the data with lots of American political leaders. But, still a well-known list.
4. Another Time list: the 100 most influential people in the world. This list tends to make room for more cultural and artistic leaders, in addition to the more typical political and economic leaders.
5. People who subvert international norms on a global scale. Think Adolph Hitler or Osama bin Laden. With some resources put to more nefarious uses, they are able to dominate policy decisions and cultural understandings.
6. The flip side of #5: people who are leaders of successful large social movements. Think Gandhi or Martin Luther King, Jr. They become icons for helping bring about great good.
7. Whomever currently has the most Twitter followers. Justin Bieber currently tops the list followed by Katy Perry, Lady Gaga, and Barack Obama. Definitely more about cultural power and Twitter users are still a relatively small percentage of the population.
I’m sure there are more options out there. From a Marxist perspective, we would want to look more at economic leaders while Weber’s addition of status and power are also helpful. And, we could also think of how big of a structure or number of followers a single person can leverage – by themselves, individuals, even the wealthiest, may not be able to do much.