Stefan Gleason offers a brief history of our U.S. currency, and makes a couple of predictions that reflect both pessimism and optimism at the same time. Let's go with the bad news first.
Today, U.S. debt is so enormous, and the long-term projections so unworkable, that a debt crisis is unavoidable. The only question is what form it will take – default or hyperinflation?
History shows that unpayable sovereign debts denominated in fiat currencies tend to be inflated away rather than defaulted on outright. There are some exceptions, of course. The recent $1.7 billion Greek debt default owes to the fact that Greece is on the euro and can’t print its own euros.
The U.S., on the other hand, owns its own printing press. As former Federal Reserve chairman Alan Greenspan explained, “The United States can pay any debt it has because we can always print money to do that.”
In my politically formative years inflation was a major crisis. President Richard Nixon had implemented his four phases of wage a price controls, and they had about as much effect as you would expect. None. I became an avid reader of Harry Browne who wrote some of entertaining books, such as You Can Profit From A Monetary Crisis and Complete Guide to Swiss Banks. He had zero faith in the U.S. dollar.
I liked Browne's books but I didn't follow any of his advice, although I might have if I'd had any money. I was just starting out as a Burroughs Field Engineer after four years in the Air Force. If I had a savings account, it would have amounted to about a hundred bucks.
At any rate it wasn't until President Jimmy Carter appointed Paul Volcker as Chairman of the Federal Reserve that inflation began to come under control. Turns out Carter did something right after all. Volcker instituted a tight money policy. Before it was all through home mortgage rates went into the 18% to 20% range, but inflation was no longer a big problem. Volcker demonstrated pretty conclusively that inflation is a monetary condition in which the number of dollars in circulation grows at a substantially faster rate than the pool of goods and services that those dollars will buy. Which brings us to Mr. Gleason's optimism.
At present, the modern-day Progressives have another revolution in mind. Their agenda is focused more on overturning the culture rather than the economy. Hence, they’ve been dubbed “Cultural Marxists.” Their strategy is to strike at the root of American identity by denigrating its history and its people.
The culture wars won’t ever end, because demonizing people for holding ideas that were socially acceptable in the recent past is how the hard left makes advances. But what could set the Cultural Marxists back is the bankruptcy of the government.
The coming debt crisis will set the nation on a new monetary course. It just might spark a political revolution, too, against the failed tenets of Progressivism that caused the crisis.
Is it wildly optimistic to think that we may be on a political revolution against the "failed tenets of Progressivism?" Maybe not. We went through a similar revolution when we elected Ronald Reagan to succeed Jimmy Carter. Reagan's reforms to U.S. tax policy, the perfect follow up to Volcker's attack on inflation, initiated an economic boom that lasted through the Clinton administration. So there is a parallel.
On the other hand, it seems odd that we're not seeing the effects of our current monetary expansion in the form of more rampant inflation today, but I think that has to do with our anemic employment situation. Consumer demand depends on consumers having some disposable cash, which is tough to do when so many don't have jobs. Another reason might be that a substantial amount of money is being diverted into the stock market through IRAs and 401Ks, more than was occurring back in the 1970s when there were no such vehicles. In any event I suspect when the economy finally takes off and the real employment picture improves, we'll begin to see inflation ramp up. From that point a debt crisis may be averted if our economy is unleashed and embarks on a run of sustainable growth. In that way we might gradually inflate our way out of our debt crisis, rather than hyperinflate our way out of it.
So what does that say about a revolution? Not much, I guess. If Hillary gets herself elected, there won't be one. Tax reform and monetary reform will be dead, and the U.S. Government will continue on its present course towards becoming a full fledged criminal enterprise.
Our chances for real and lasting reform are questionable, maybe more so if Trump is elected. I've had my doubts about his sincerity as well as his conservative bona fides. On the upside he says he will consult with various experts, and as successful as he has been you would have to conclude that consulting with the experts is key to it. That means Trump would not become another Obama, who still seems to consider himself the smartest person to set foot in whatever room he happens to be in at the moment. The bigger question would be whether or not Trump could stand the pressure, and I think he might just do that.
Still, I'd say our best chances lie with Ted Cruz, Ben Carson, or perhaps Carly Fiorina. I like their willingness to attack the tax code. Without meaningful tax reform, I don't see how any other reform is possible. As to the rest of the Republican field, they fall into the "establishment Republican" category, which leads me to fear that if any of them are elected we might expect only a brief respite from the totalitarian progressive onslaught. That said, any of the Republican candidates would be vastly superior to whomever the Democrats nominate, and most especially superior to Hillary, and if Trump holds on and wins the nomination, I'm a Trump man.
But the only guarantee I'm willing to offer is that our liberal media will embark on a massive campaign to smear the Republican candidate, whoever that might be. And the earliest that their campaign will end is with the election of the next Democrat, whether that occurs in 2016 or after some number of presidential terms in the future. In fact the media smear campaign may never end. Especially if our next Republican president is a successful president, as we should realistically expect.
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