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Folksinger, songwriter and ever-sharp wit Oscar Brand got a nice laugh out of me when he recalled that his father once worked in western Canada as an interpreter between the local Indians and the Hudson Bay Company. He said his father could not speak the Indians’ language, but the only way the Indians could convey that to the Hudson Bay Company was through his father!
I’ve long held the silent feeling that somebody in government is deliberately failing to convey certain vital facts of monetary life to the American people. My silence owed to my ignorance of advanced economics and my sappy assumption that somebody in Washington was an expert. I now conclude there are no experts, only varying degrees of ignorance; so suddenly I value my own opinion enough to express it.
The old dollar bills used to say something like, “This note is redeemable for one dollar in silver.” And there was one in every crowd, somebody who actually went to the Treasury Department in Washington and tried to get his “money” back in return for the government’s one-dollar note. And you know what? They were handed a tiny cloth bag containing some black powder – silver or silver ore or silver something. Today our currency says, “This note is legal tender for all debts, public and private.”
In other words, our dollar is worth a dollar because the government says it is. They throw around a reassuring phrase: Our currency is backed by the “full faith and credit of the United States.” It doesn’t say what happens when that faith becomes history and that credit becomes a horror story. Dictatorships make an offer their subjects can’t refuse: accept our money from one another, or else!
Everybody knows you can lose your life in a building collapse. How many Americans in a lifetime ever stop to think of massive loss of life in a currency collapse? And what authority, what legislature, what scoreboard, what show-of-hands is required before people look at American currency and say, “No, thank you!”? The late currency-trading genius Nicholas Deak led me through a little “museum” he confected in his Wall Street-area office tracking the forint, the basic currency unit of his native Hungary, as it progressed upward after World War I until one forint became 3 trillion forints! The joke in inflationary Europe was, “We used to carry our money in a purse and our groceries home in a big bag. Now we carry our money in a big bag and our groceries home in a purse.” It became somehow less funny as the death toll mounted. The inflation in Zimbabwe today is much worse.
Neither earthquakes nor currency collapses tend to happen on schedule. A children’s science book guided me to an experiment that haunts me more and more as we unashamedly continue to print money to pay for our bills, buyouts, bailouts and blowouts leaping now into the trillions; totally uncharted turf for America. It was the experiment called “surface tension.” If you take a totally “quiet” glass of water, no ripples, and skillfully lay a needle atop the surface completely flat, that needle will float. One little ripple, however, and the needle plunges to the bottom.
Think of the phrase, “Swiss gold franc.” Let it roll around your tongue like an expensive brandy. Then think of American printing presses running full-speed down at the mint. Which do you prefer? Our money is paper. It no longer even pretends to be anything else. I still feel like a slot machine winner when the ATM machine purrs and hands me five nice-looking $20 bills. But what “ripple” will send our needle crashing to the bottom of the glass? What stands between the dollar and, for example, the Cuban peso? Cubans would prefer to accept the currency of almost any country but their own, making the very existence of the peso an anti-Castro joke.
And the appropriate administration cheerleaders talk of “recovery.” Others, not wedded to the party line, warn of a depression that will make the last one look like a misplaced paycheck. When, in early 1942, my father promised little Barry we were going to win World War II, he was lying. What historian would dare offer a scenario for victory with the Nazis, in command from deep-Arctic Norway to the approaches to the Suez Canal in North Africa and from the English Channel to the city limits of Leningrad, Moscow and Stalingrad? And in Asia the Japanese had conquered clear across China and down to one island north of Australia. The free world was shaking, neutrals were quaking. And Daddy didn’t want little Barry to worry.
OK, we lucked and plucked and heroed out our way to victory back then. Maybe it helped that our commander in chief was a former secretary of the Navy and not a “community organizer.” And our allies were less squishy than those today.
“Recovery”? “Depression”? Have we turned the corner, or just stepped on the gas enroute to the cliff?
Have we found a bridle, or lost a horse?