Brendan Greeley: Understanding the Federal Reserve’s role as a bank, the historical roots of the dollar, and the challenges of achieving monetary sovereignty | Macro Musings

Exploring the dollar's origins reveals how historical practices shaped modern monetary policy and economic dynamics.

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Add us on Google by Editorial Team Jun. 1, 2026

Key takeaways

• Understanding the Federal Reserve’s function as a bank is crucial for financial analysis.
• The dollar’s history predates the founding of the United States.
• Monetary sovereignty is a complex and gradual achievement.
• The dollar originated as a valuable Spanish coin for trade.
• The transition from coins to the dollar was influenced by historical practices.
• Colonial economies used competitive devaluations to attract silver dollars.
• The shift from silver coins to bank notes was aided by domestic gold discovery.
• Different types of money serve unique functions within an economy.
• The US achieved a full currency union only after the New Deal or Civil War.
• Local bank notes were manageable within cities, contrary to chaotic perceptions.
• Historical currency transitions reveal the complexities of economic behaviors.
• The evolution of money in the US reflects broader economic and political dynamics.
• Understanding currency origins is essential for grasping modern monetary policy.
• Economic tensions in colonial America were driven by currency competition.
• The discovery of gold marked a significant shift in the American monetary system.

Guest intro

Brendan Greeley is a PhD student in the Department of History at Princeton University, specializing in the history of money and finance. He is the former US economics editor at the Financial Times and is writing a history of the dollar for Penguin Random House.

The Federal Reserve’s role in financial history

• Understanding the Federal Reserve’s mechanics is essential for historical financial analysis.

• The ability to sort of understand how the fed works at a structural level like it is a bank yeah it functions as a bank it’s our bank but it’s a bank

  — Brendan Greeley

• The Federal Reserve’s function as a bank is a key component of its role in the financial system.
• Historical context is crucial for analyzing the Federal Reserve’s impact on finance.
• The Federal Reserve’s structure influences its operations and historical significance.
• Analyzing the Federal Reserve’s role provides insights into broader economic trends.
• The Federal Reserve’s history is intertwined with the evolution of the US economy.
• Understanding the Federal Reserve helps contextualize modern monetary policy.

The historical roots of the dollar

• The dollar’s history extends beyond the founding of the United States.

• The history of the dollar has what I like to refer to as the $17.76 problem

  — Brendan Greeley

• The dollar’s name derives from a Spanish coin with a German origin.
• The dollar’s historical significance predates US sovereignty.
• Understanding the dollar’s origins is crucial for grasping its evolution.
• The dollar was crucial for trade in early America.

• It was a coin… it was a Spanish coin that the colonies and then the brand new states were desperate to import

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  — Brendan Greeley

• The dollar’s historical roots reveal its role in economic development.

Challenges of achieving monetary sovereignty

• Monetary sovereignty is difficult to achieve and requires gradual establishment.

• Monetary sovereignty is very difficult to achieve and constantly under attack

  — Brendan Greeley

• Historical context is essential for understanding monetary sovereignty.
• Achieving monetary sovereignty involves overcoming significant challenges.
• The complexities of monetary sovereignty impact currency and economic policy.
• Establishing monetary sovereignty is a slow and ongoing process.
• The struggle for monetary sovereignty is a recurring theme in financial history.
• Understanding monetary sovereignty helps contextualize modern economic challenges.

The transition from coins to paper money

• The shift from coins to the dollar was influenced by historical practices.

• I think it’s a slow shift very difficult to make people think differently about money

  — Brendan Greeley

• Promissory notes became transferable due to a lack of silver in the colonies.
• The transition to paper money reflects broader economic conditions.
• Historical practices influenced the evolution of currency in the US
• The shift to paper money was a gradual and complex process.
• Understanding this transition provides insights into economic behaviors.
• The evolution of currency reflects changes in economic and political dynamics.

Competitive devaluations in colonial economies

• Colonial economies engaged in competitive devaluations to attract silver dollars.

• We had a dramatically devalued pounds shillings and pence in the United States

  — Brendan Greeley

• Economic tensions arose from currency competition among colonial cities.
• Baltimore, Philadelphia, and Boston competed to draw in dollars.
• Competitive devaluations were a strategy to attract valuable currency.
• Understanding these practices provides insights into early American economics.
• Currency competition illustrates the complexities of colonial economic strategies.
• The impact of devaluations on trade and competition was significant.

The impact of gold discovery on American currency

• The transition from silver coins to bank notes was influenced by gold discovery.

• What’s going on in the transition from this silver dollar to what we now think of as the American bank dollar

  — Brendan Greeley

• The discovery of domestic gold marked a significant shift in the monetary system.
• Gold discovery provided a domestic source of precious metal for the US
• The transition to bank notes was a gradual process influenced by economic conditions.
• Understanding this transition is crucial for grasping the evolution of US currency.
• The discovery of gold had lasting implications for the American monetary system.
• The evolution of currency reflects broader economic and political changes.

The coexistence of different types of money

• Different kinds of money serve different functions within an economy.

• It’s not as crazy as you might think different kinds of money do different things

  — Brendan Greeley

• The complexity of monetary systems is reflected in the coexistence of various currencies.
• Understanding the role of different currencies is crucial for economic analysis.
• The coexistence of currencies reveals the intricacies of historical economic systems.
• Different types of money reflect diverse economic needs and functions.
• The evolution of currency systems highlights the adaptability of economies.
• The coexistence of currencies is a recurring theme in monetary history.

The path to a full currency union in the US

• The US did not have a full currency union until the New Deal or Civil War.

• I don’t think we had a full currency union until the New Deal arguably the Civil War

  — Brendan Greeley

• The evolution of US currency reflects broader economic and political dynamics.
• Achieving a currency union was a significant milestone in US history.
• Understanding the path to a currency union provides insights into economic unity.
• The significance of the New Deal and Civil War in shaping currency policy is crucial.
• The evolution of currency union highlights the complexities of economic integration.
• The path to a currency union reflects broader trends in US economic history.

The functionality of local bank notes

• Local bank notes were more manageable than often perceived.

• Mostly within a city you were dealing with bank notes of that city

  — Brendan Greeley

• Merchants primarily dealt with their city’s bank notes, simplifying transactions.
• Local bank notes reflect the complexity of historical economic transactions.
• Understanding the role of local bank notes provides insights into pre-war banking.
• The functionality of local notes challenges perceptions of chaos in historical banking.
• Local bank notes reveal the adaptability of historical economic systems.
• The role of local bank notes highlights the diversity of historical currency practices.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.