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Local News & Opinion
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Letters
Ref. : Letters to the editor Open Letters:
03.05 Open Letter to Congressman Bart Stupak Health & Environment
Video National Health Care Systems In Other Countries 03.12 Slick Barry and the $100-Billion Medicaid/Medicare Fraud Claim 03.09 Kill Bill: Death to Obamacare! 03.09 Obama’s Rhetoric May Be “Fiery,” But His Health Care Reform Is Still Lukewarm Media Watching
03.17 CNN Scrapes Bottom of Right-Wing Barrel With Erickson Hire 03.16 WPost Blames Obama First, on Israel 03.16 Letter to the New York Times' Editor: Stovepiping To Persia 03.12 Cud and Complicity: Burying the Alternatives to Empire's Dominion 03.11 NYT and the ACORN Hoax 03.05 Sorry, Rove, Bush Did Lie About Iraq 03.03 It's Snow News 03.03 The Woeful Washington Post Ref. : The Daily Howler Legal Matters
02.26 America's Supremes: Court Over Constitution US Politics, Policy & Culture
03.11 Power Rangers: Policing the System With the "Fightin' Progressives" 03.09 Thinking About Countings 03.07 Unnatural Acts: Breaking the Fever of Militarism 02.25 Future Shock: A Better World Beyond the Imperium High Crimes?
03.16 America's Secret Prisons 03.13 Palestinian Dispossession in East Jerusalem 03.12 Israeli Settlement Expansions Continue 03.11 Brutalizing Palestinian Children 03.08 The Russell Tribunal on Palestine: Barcelona Session 03.05 Targeting Israeli Apartheid 03.01 America's Permanent War Agenda 02.25 Global Sweatshop Wage Slavery Economics & Business Non/Mis/Malfeasance
03.14 The Crisis in America's Telecommunications Network 03.09 The Business of Water: Privatizing An Essential Resource 03.05 Is the Recovery Real? 03.04 IMF-Style Austerity Measures come to America: What “Fiscal Responsibility” Means To You 03.04 Barry C. Lynn's "Cornered: The New Monopoly Capitalism and Economics of Destruction" 03.01 Thinking About Fees International
03.15 Peace Process Hypocrisy: Stillborn from Inception 03.03 Muslim Disunity 03.02 Funding Israeli Militarism, Belligerence and Occupation 02.26 Iran Captures a 'Good' Terrorist We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.
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ECONOMIC MELTDOWN:Watching the Dollar DieToday the US, heavily dependent on imports, is subject to double-barrel inflation from both domestic money creation and decline in the dollar’s foreign exchange value. The US inflation rate is about twice as high as the government’s inflation measures report.
I’ve been watching the dollar die all my life. I sometimes think I will outlast it. When I was a young man, gold was $35 an ounce. Today one ounce gold bullion coins, such as the Canadian Maple Leaf, cost more than $1,000. Our coinage was silver. Our dimes, quarters, and half dollars had purchasing power. Even the nickel could purchase a candy bar, ice cream cone or soft drink, and a penny could purchase bubble gum or hard candy. If a kid could collect 5 discarded soft drink bottles from a construction site, the 2 cents deposit on the returnable bottles was enough for the Saturday afternoon movie. Gasoline was 32 cents a gallon. A dollar’s worth was enough for a Saturday night date. Our silver coinage was 90 per cent silver. People sometimes melted coins in order to make silver spoons, known as coin silver, which can still be found in antique shops. Except for the reduced silver (40 per cent) Kennedy half dollar which continued until 1970, 1964 was the last year of America’s silver coinage. The copper penny departed in 1982. As Assistant Secretary of the Treasury, I opposed the demise of America’s last commodity money, but I couldn’t prevent the copper penny’s death. During World War II (1941-1945), nickel was diverted from coinage to war, and the US mint issued a wartime silver (35 per cent) nickel. It is not easy to find items to purchase with today’s US coins, but the silver coins of the same face value still have purchasing power. The 10 cent piece of my youth contains $1.42 worth of silver at today’s silver price. The quarter is worth $3.55, and the half dollar contains $7.10 of silver. The silver dollar is worth 15.2 times its face value. These are just the silver values of coins that might be worth far more depending on condition and rarity. The silver in the wartime nickel is worth $1.10, which is 22 times the coin’s face value. Even the copper penny is worth 2.5 cents. When I was a young man enjoying travels in Europe, the German mark or Swiss franc traded four to one US dollar. The euro, which is today’s equivalent to the mark, costs $1.55. People who haven’t accumulated much age have little idea of the corrosive power of “acceptable” inflation. Unlike gold and silver, fiat money has no intrinsic value. When money is created faster than goods and services it drives up prices, thus driving down the value of the money. If freely traded currencies are excessively printed or if inflation, budget deficits, and trade deficits drive currencies off their fixed exchange rates, prices of imports rise as the foreign exchange value of the currency falls. Today the US, heavily dependent on imports, is subject to double-barrel inflation from both domestic money creation and decline in the dollar’s foreign exchange value. The US inflation rate is about twice as high as the government’s inflation measures report. In order to hold down Social Security payments, the government changed the way it measures inflation. In the old measure, inflation measured the nominal cost of a defined standard of living. If the price of steak rose, up went the inflation rate. Today if the price of steak rises, the government assumes that people switch to hamburger. Inflation doesn’t go up. Instead, the standard of living it measures goes down. This is just one of the many ways that the government pulls the wool over our eyes. With the dollar value of the euro rising through the roof, today a vacation in Europe is far more costly than in the past. Thanks to China, so far Americans have been sheltered from the greatest effects of the dollar’s declining value. Our greatest trade deficit is with China. The prices of the goods from China have not risen, because China keeps its currency pegged to the dollar. As the dollar goes down, China’s currency goes with it, thus holding down price rises. The resignation of Admiral William Fallon as US military commander in the Middle East probably signals a Bush Regime attack on Iran. Fallon said that there would be no US attack on Iran on his watch. As there was no reason for Fallon to resign, it is not farfetched to conclude that Bush has removed an obstacle to war with Iran. The US is already over stretched both militarily and economically. An attack on Iran is likely to be the straw that breaks the camel’s back. Paul Craig Roberts is an economist who served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as the "Father of Reaganomics". He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. He is the author of
Supply-Side Revolution: An Insider's Account of Policymaking in WashingtonThis article originally appeared at counterpunch.org and is published in the Baltimore Chronicle with permission of the author. Copyright © 2008 The Baltimore News Network. All rights reserved.
Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent. Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own. This story was published on April 15, 2008. |
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