In the United States, the twentieth century began with a centralization of power that replaced key elements of the tradition of American liberty with a new interpretation of federal authority. Participants in the 1910 Jekyll Island Conference wrote the Federal Reserve Act, passed into law in 1913, which established the Federal Reserve, the US Central Bank. The Fed was given the dual mandate of keeping inflation low and employment high, and the main tools it had at its disposal were control over the money supply and control over the price of money via the federal funds rate. Before long, the Fed was put to the test when an unprecedented financial crisis in 1929 metastasized into the economic crisis we call the Great Depression. The Fed neither prevented nor ameliorated either crisis, but the conclusion many economists and political leaders drew from this was that the state needed to exert more control over American economic life. The subsequent authoritarian turn in the United States mirrored the trajectories of other countries: When US President Franklin Delano Roosevelt (FDR) issued Executive Order 6102 in 1933, which ordered everyone living in the United States to surrender their gold to the US Treasury and suspended the redeemability of dollars for gold, he was engaging in asset confiscations that mirrored those executed by other authoritarian leaders of the same era, including Winston Churchill, Joseph Stalin, Benito Mussolini, and Adolf Hitler.^,

During the First and Second World Wars, countries allied with the United States purchased American-made weapons with gold. This led the US to amass the world’s largest gold stockpile. As the Second World War drew to a close, allied nations met in Bretton Woods, New Hampshire, to determine the outlines of a postwar international monetary order. They decided to establish the US dollar—once again redeemable for gold—as the global reserve currency. The same conference also resulted in the foundation of the International Monetary Fund and World Bank, multinational lending institutions whose mandate was ostensibly to facilitate and balance trade between nations while promoting international development, but whose mixed legacy has included the ensnaring of dozens of poor countries in webs of inescapable debt peonage.

Meanwhile, in the United States, a postwar military-industrial complex emerged that ensured both the normalization of a wartime posture in peacetime and GDP-enhancing arms dealing to allies and others. The routinization of war as a central pillar of American anticommunist foreign policy—beginning with the Korean War and continuing in Vietnam, Laos, Lebanon, Cambodia, Grenada, Libya, Panama, and other countries, not to mention the countless clandestine operations and proxy wars that occurred during this time—had to be funded somehow. This imperative led the Nixon administration to suspend the redeemability of dollars for gold in 1971 and, a few years later, to strike an informal agreement with the government of Saudi Arabia to denominate oil purchases in dollars and recycle those dollars back into the US economy. This petrodollar agreement, although it had the characteristics of a treaty, was concluded entirely in secret by the executive branch, in part to bypass the constitutional requirement that Congress approve all treaties into which the United States enters.

The petrodollar system is now itself unraveling, as major oil producers around the world have begun pricing oil in other currencies. That is a predictable international response to US foreign policy since the end of the Cold War, which has insisted on unipolar American dominance in the conduct of international trade and military operations. The terrorist attacks of September 11, 2001, in particular, became the pretext for the United States to declare an open-ended war on terror and to spend trillions of dollars on foreign wars, to remilitarize or fragment countries that would otherwise have been on trajectories toward greater stability, and, most consequentially, to formally militarize the US homeland via the establishment of a new military command (USNORTHCOM) and new executive department (the Department of Homeland Security).

The militarization of the homeland—anathema to the founders of the United States—has entailed snuffing out the last vestiges of a citizen’s right to privacy in the name of counterterrorism via the AML/KYC of everything. The roots of this development extend to the 1970s, long before the war on terror. Indeed, the 1970s can be seen as the decade in which the Banker Revolution came into full maturity and the American experiment in liberty truly unraveled. The Bank Secrecy Act kicked off the decade with its passage by Congress in 1970. It required US-based financial institutions to keep records of all financial transactions that “have a high degree of usefulness in criminal, tax, and regulatory investigations or proceedings,” as interpreted by the US Treasury, and to share those records with any law enforcement agency upon request. Likewise, financial institutions had to report the transfer of any amount over $5,000 into or out of the United States. The Treasury subsequently promulgated a rule under the legislation that all domestic transactions over $10,000 had to be reported. That reporting threshold has remained unchanged until the present day, despite the fact that even under conservative estimates, the US dollar has lost nearly 90% of its purchasing power since 1970.^,

The Bank Secrecy Act represented an unprecedented erosion of the Constitution’s Fourth Amendment protections against warrantless search and seizure. Although it was challenged, the Supreme Court upheld the law in United States v. Miller (1976), which established the third-party doctrine: That Americans have no reasonable expectation of constitutional protections for records held by a third party. This ruling surprised and outraged some, which in turn led Congress to pass the Right to Financial Privacy Act two years later (1978). However, this act carved out twenty substantial exceptions to the right to financial privacy, which ended up weakening privacy protections even further. In the same year, Congress also passed the Foreign Intelligence Surveillance Act (FISA), whose stated purpose was curtailing illegal surveillance practices by federal intelligence and law enforcement agencies in the wake of abuses by the Nixon administration. However, the FISA purported to achieve this by establishing a kangaroo court, the Foreign Intelligence Surveillance Court (FISC), a secret court that issues classified warrants for virtually any surveillance activity requested by the state.^,,,

The Bank Secrecy Act (1970), United States v. Miller (1976), the Right to Financial Privacy Act (1978), and the FISA (1978) were the seeds of the full surveillance system of government we have today in the United States. These four legal maneuvers killed American liberty long before personal computers or the internet had any meaningful traction in the world, but they have been used to justify the full collection and sharing of financial-transaction data (and communication data more broadly) that occur via software platforms and digital networks—the virtually inescapable infrastructures of modern life. They have also given rise to, at minimum, eight additional federal laws that have vastly broadened the scope of legal surveillance: The Money Laundering Control Act (1986); the Anti-Drug Abuse Act (1988); the Annunzio-Wiley Anti-Money Laundering Act (1992); the Money Laundering Suppression Act (1994); the Money Laundering and Financial Crimes Strategy Act (1998); the USA PATRIOT Act (2001); the Intelligence Reform and Terrorism Prevention Act (2004); and the FISA Amendments Act (2008), which includes the infamous Section 702 amendment, which authorizes the circumvention even of the Foreign Intelligence Surveillance Court when authorized by the attorney general and the director of national intelligence. Finally, these laws and legal decisions have served as justification for the formation of at least three new intelligence agencies with the mandate to collect and share financial-transaction data worldwide: The Financial Action Task Force (1989), FinCEN (1990), and the US Treasury Office of Intelligence and Analysis (2004).

In short, within a generation, the US banking system, which had been centralized at the beginning of the twentieth century, became an extension of the policing function of the state. The revolving door between Wall Street, the Federal Reserve, and the Treasury—a career circuit in which elites cycle between appointments at these institutions—has only accelerated the flywheel of collusion between those who make and enforce laws and those who control money. This has ensured that the machine first built by the Banker Revolution and then bolstered by the petrodollar system keeps running well for elites via unofficial coordination and official bailouts. The actions taken by nation-states worldwide following the 2008 Great Financial Crisis did not right any of these wrongs. Bankers were bailed out in virtually all countries, save in outliers like Iceland. They were bailed out again, along with much of industry, in 2020 during the COVID-19 pandemic. In the US, these bailouts get sanctioned, renewed, and funded through zero-debate omnibus bills endorsed by leaders of both political parties.

But the 1970s did not just merge banks with the state and usher in the end of financial privacy; the decade also inaugurated rule by state of emergency, a practice in which US presidents declare national emergencies in order to arrogate to themselves powers that would otherwise be prohibited them by the Constitution. In 1976, Congress passed the National Emergencies Act (NEA), which formalized the process by which a president could declare a state of emergency. Although ostensibly intended to limit the president’s emergency powers, the formalization was so procedurally precise and broad in scope that it resulted in presidents declaring national emergencies with much greater frequency. President Jimmy Carter declared the first national emergency under this law in 1979—Executive Order 12170—imposing sanctions on Iran in the wake of the Iranian hostage crisis. To do this, he also relied on the International Emergency Economic Powers Act (IEEPA), a 1977 law that authorizes presidents to freeze the assets of and block transactions with any entity outside of the United States if they decide that it poses an “unusual and extraordinary threat.”

This combination of laws effectively gave US presidents unilateral power to prohibit and punish economic activity by anyone, anywhere in the world, simply by declaring a national emergency. Because transactions in US dollars generally pass through a US-controlled financial network, and because the dollar remains the world’s primary commercial unit of account and sovereign reserve currency, the NEA and IEEPA—domestic US laws—have been used to punish people and organizations otherwise operating outside of US jurisdiction. As a result, the executive branch of the US government—US presidents and the US Treasury Department, the cabinet agency that enforces presidential orders pertaining to financial transactions—extend a form of effective rule over most of the world.

Executive Order 12170 was only the first instance of the United States imposing sanctions on a foreign nation via executive order. Since that time, the executive order has become a routine way for US presidents to bypass the lengthy legislative process to impose sanctions quickly. The International Emergency Economic Powers Act, always invoked in conjunction with the National Emergencies Act, has been used to legitimate nearly seventy separate emergency declarations, amounting to a roster of over fifteen thousand sanctions, and counting.^, In addition, the US has also used its influence over the United Nations Security Council to pass a host of resolutions imposing multilateral sanctions on specific entities and those associated with them; member states are then obligated to enforce these sanctions under chapter 7 of the UN Charter. UN sanctions are implemented without legal due process, and many of their target entities have never been accused or convicted of a crime. The ease with which sanctions can be imposed and their popularity as a tool of punishment and coercion, which on the surface appears to have few downsides for American politicians, have contributed to their accelerating proliferation. As of this writing, the United States has sanctioned approximately one-third of all countries in the world. The enforcement of these sanctions has become so onerous that the Treasury Department is experiencing record staff turnover and an unmanageable caseload. Another revolving door has emerged: Between the Treasury and private legal, consulting, and lobbying firms, as former Treasury officials leverage their understanding of the byzantine sanctions system and their government connections to secure better political and legal outcomes for their clients.

Perhaps most importantly, however, sanctions appear to have little political effect on the regimes they target. With few exceptions, autocratic regimes remain in place, while democracies subject to sanctions tend to react by spending more on defense, further entrenching existing regime power. The sheer number of countries sanctioned by the United States has incentivized dozens of countries to forge new geopolitical alliances and to build alternative financial systems that can avoid the US-controlled banking system entirely. What sanctions have been shown to achieve, however, is routinized poverty, if not economic collapse, that affects the people of sanctioned countries.^, This reliably turns the hearts and minds of sanctioned populations against the United States, breeding resentment and enmity for decades. Even so-called smart sanctions, which target specific industries or specific entities, are usually ineffective politically; their limited scope and weak incentives for those in power create insufficient pressure to force the desired change in policy or regime turnover. Moreover, their actual implementation tends to have binary effects on targeted parties: Travel bans and asset freezes can be relatively minor inconveniences for powerful actors who have planned ahead, while arms embargoes and bans on commodity exports from targeted countries create more collateral damage than they purport to. This obviously calls into question whether such sanctions can be called smart in the first place.
There is a perversity to the consolidation of bank-state power since the 1970s: Most of the legislation recounted above was introduced with the ostensible public objective of limiting the power of seemingly unaccountable actors. The Bank Secrecy Act was intended to limit the power of banks. The National Emergencies Act was intended to limit the power of the presidency. And the Foreign Intelligence Surveillance Act was intended to limit the power of federal law enforcement and intelligence agencies. However, all of these attempts produced exactly the opposite of their publicly intended effects because they suffered from a fundamental and fatal error: Seeking to achieve by statute a limit that was already in the framework of the Constitution. By overriding the Constitution with federal law, lawmakers have created a legal, political, and military environment that has returned political assumptions to what they were prior to the American Revolution. The primary political actor is now understood to be the state; individual rights have been reconceptualized as privileges; the individual is now presumed guilty before the law; and the state is now seen as the holder of rights, money, and power, which it deploys imperially and unaccountably. These are symptoms of a political culture in deep crisis.

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[6] Franklin D. Roosevelt, “Executive Order 6102—Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates,” The American Presidency Project, April 5, 1933, https://www.presidency.ucsb.edu/documents/executive-order-6102-forbidding-the-hoarding-gold-coin-gold-bullion-and-gold-certificates.

[7] Elites largely did not lose their gold in this national asset seizure because they had alternative ways of holding the asset through trusts, companies, and custodians.

[8] For the summative historical narrative that follows, see Josh Hendrickson, “The Treasury Standard: Causes and Consequences,” in The Satoshi Papers: Reflections on Political Economy after Bitcoin, edited by Natalie Smolenski (Nashville, TN: Bitcoin Policy Institute, 2024), XX-XX; Michael Hudson, Super Imperialism: The Economic Strategy of American Empire, Third Edition (Dresden: Islet, 2021); and Jamie Martin, The Meddlers: Sovereignty, Empire, and the Birth of Global Economic Governance (Cambridge: Harvard University Press, 2022).

[9] Norbert Michel and Jennifer J. Schulp, “Revising the Bank Secrecy Act to Protect Privacy and Deter Criminals,” Cato Institute, July 26, 2022, https://www.cato.org/policy-analysis/revising-bank-secrecy-act-protect-privacy-deter-criminals.

[10] Aaron O’Neill, “Purchasing power of one US dollar (USD) in every year from 1635 to 2020*”, Statista, July 4, 2024, https://www.statista.com/statistics/1032048/value-us-dollar-since-1640/.

[11] US Bureau of Labor Statistics, “Consumer Price Index for All Urban Consumers: Purchasing Power of the Consumer Dollar in U.S. City Average,” FRED, Federal Reserve Bank of St. Louis, October 29, 2024,  https://fred.stlouisfed.org/series/CUUR0000SA0R.

[12] Nicholas Anthony, “The Right to Financial Privacy,” Cato Institute, May 2, 2023, https://www.cato.org/policy-analysis/right-financial-privacy#right-financial-privacy-act-1978.

[13] Congressional Research Service, “Foreign Intelligence Surveillance Act (FISA): An Overview,” April 11, 2024, https://sgp.fas.org/crs/intel/IF11451.pdf.

[14] Carol D. Leonnig, Ellen Nakashima, and Barton Gellman, “Secret-Court Judges Upset at Portrayal of ‘Collaboration’ with Government,” The Washington Post, June 29, 2013, https://www.washingtonpost.com/politics/secret-court-judges-upset-at-portrayal-of-collaboration-with-government/2013/06/29/ed73fb68-e01b-11e2-b94a-452948b95ca8_story.html.

[15] Evan Perez, “Secret Court’s Oversight Gets Scrutiny,” The Wall Street Journal, June 9, 2013, https://www.wsj.com/articles/SB10001424127887324904004578535670310514616.

[16] Electronic Privacy Information Center, “Foreign Intelligence Surveillance Act Court Orders 1979–2022,” https://epic.org/foreign-intelligence-surveillance-court-fisc/fisa-stats/.

[17] Dan Roberts, “US Must Fix Secret Fisa Courts, Says Top Judge Who Granted Surveillance Orders,” The Guardian, July 9, 2013, https://www.theguardian.com/law/2013/jul/09/fisa-courts-judge-nsa-surveillance.

[18] Electronic Privacy Information Center, “Foreign Intelligence Surveillance Court (FISC),” https://epic.org/foreign-intelligence-surveillance-court-fisc/.

[19] Congressional Research Service, “The International Emergency Economic Powers Act: Origins, Evolution, and Use,” March 25, 2022, https://crsreports.congress.gov/product/pdf/R/R45618/8.

[20] Congressional Research Service, “The International Emergency Economic Powers Act.”

[21] Among numerous examples, see, for instance, US Department of Justice, “Credit Suisse Agrees to Forfeit $536 Million in Connection With Violations of the International Emergency Economic Powers Act and New York State Law,” Press Release, December 16, 2009, https://www.justice.gov/opa/pr/credit-suisse-agrees-forfeit-536-million-connection-violations-international-emergency.

[22] Brennan Center for Justice, “A Guide to Emergency Powers and Their Use,” September 4, 2019, https://web.archive.org/web/20200401070744/https://www.brennancenter.org/our-work/research-reports/guide-emergency-powers-and-their-use.

[23] Jeff Stein and Federica Cocco, “The Money War: How Four U.S. Presidents Unleashed Economic Warfare Across the Globe,” The Washington Post, July 25, 2024, https://www.washingtonpost.com/business/interactive/2024/us-sanction-countries-work/.

[24] See, for example, United Nations Security Council, “Resolution 1267,” Adopted October 15, 1999, 4051st Annual Meeting, https://documents.un.org/doc/undoc/gen/n99/300/44/pdf/n9930044.pdf.

[25] Joy Gordon, “Smart Sanctions Revisited,” Ethics & International Affairs 25, no. 3 (2011), 315–35, doi:10.1017/S0892679411000323.

[26] Agathe Demarais, Backfire: How Sanctions Reshape the World Against US Interests (New York: Columbia University Press, 2023).

[27] Stein and Cocco, “The Money War.”

[28] Ibid.

[29] Ibid.

[30] Demarais, Backfire.

[31] Jerg Gutmann, Matthias Neuenkirch, and Florian Neumeier, “The Economic Effects of International Sanctions: An Event Study,” Journal of Comparative Economics 51, no. 4 (December 2023), 1214–31.

[32] Demarais, Backfire. BRICS+ is the most notable recent example of this geopolitical and financial realignment.

[33] Francisco R. Rodríguez, “The Human Consequences of Economic Sanctions,” Center for Economic and Policy Research, May 4, 2023, https://cepr.net/report/the-human-consequences-of-economic-sanctions/.

[34] Gordon, “Smart Sanctions Revisited.”