Gold as money For as long as we can remember, there has been a persistent core of gold-bugs committed to restore the US’s link between the dollar and the price of gold, via the holding of the metal itself. In the world of the 1930s Great Depression, the “gold standard” for the currency became an albatross for President Franklin Roosevelt, who became the father of modern fiat currency through his de-coupling of the gold and the dollar. All gold coins were called in by the government and melted into bars. Fort Knox, Kentucky was built in the 1930s to house [...] Read more »
Getting Down to Business of Federal Debt and Deficits
Consensus: present course is unsustainable Does debt matter? There is no shortage of business press and TV coverage about US government and the individuals who hold “power” in it. But, what power is that? Elected politicians do, and always did understand that they simply have no power, means, or tools to create productive jobs. But political speech making, egged on by a cable TV world that needs ongoing themes to feed its 24/7 yack-format had framed the 2010 general election to be all about jobs, jobs, jobs. Voters went to the polls in unusually large numbers and collectively, more or [...] Read more »
Debtor-Nations Club
In 1985, the US flipped from its long-held status as a creditor-nation to that of a net debtor. In March 2010, the Congressional Budget Office (CBO) published its annual 10-year costing-out of the President’s proposed budget. [The CBO’s denominator for budget numbers is % of GDP (which avoids the need to separately forecast and measure the impact of future inflation).] Some facts: 1. Annual budget US deficits are large: almost 10% of GDP last year; it will be over 10% this year [Greece’s deficit was about 11% of GDP last year] and, even 5 years hence, the US forecast shows [...] Read more »
Financing the Past with Future Dollars
Strong Dollar Policy One hallmark of all US Treasury Secretaries in the 21st Century has been their public claims to unflagging support for “a strong dollar policy”; this, in contrast to the fact that each of their tenures oversaw, and is overseeing new record levels of deficits, relative to overall US economic activity. The process has resembled images of the Global Warming Movement’s “poster-glacier”, shearing off massive chunks of ice into the ocean. In brief, what has long been the world’s greatest economy has recently been steaming ahead with an open vein…. Its currency has long been the only world-class [...] Read more »