Posted on 12/05/2009 7:23:20 AM PST by FromLori
Ben S. Bernanke doesn't know how lucky he is. Tongue-lashings from Bernie Sanders, the populist senator from Vermont, are one thing. The hangman's noose is another. Section 19 of this country's founding monetary legislation, the Coinage Act of 1792, prescribed the death penalty for any official who fraudulently debased the people's money. Was the massive printing of dollar bills to lift Wall Street (and the rest of us, too) off the rocks last year a kind of fraud? If the U.S. Senate so determines, it may send Mr. Bernanke back home to Princeton. But not even Ron Paul, the Texas Republican sponsor of a bill to subject the Fed to periodic congressional audits, is calling for the Federal Reserve chairman's head.
I wonder, though, just how far we have really come in the past 200-odd years. To give modernity its due, the dollar has cut a swath in the world. There's no greater success story in the long history of money than the common greenback. Of no intrinsic value, collateralized by nothing, it passes from hand to trusting hand the world over. More than half of the $923 billion's worth of currency in circulation is in the possession of foreigners.
In ancient times, the solidus circulated far and wide. But it was a tangible thing, a gold coin struck by the Byzantine Empire. Between Waterloo and the Great Depression, the pound sterling ruled the roost. But it was convertible into gold—slip your bank notes through a teller's window and the Bank of England would return the appropriate number of gold sovereigns. The dollar is faith-based. There's nothing behind it but Congress.
But now the world is losing faith, as well it might. It's not that the dollar is overvalued—economists at Deutsche Bank estimate it's 20% too cheap against the euro.
(Excerpt) Read more at online.wsj.com ...
Wow. A comment removed that fast. What the heck?
A simple but precise summary of where Central Banks have brought us.
If the dollar is extremely devalued, government will receive fewer and less valuable dollars. If the big default occurs, government will get far fewer dollars. If I worked for the government or one of the many recipients of government funds, I would be afraid. But I’m not afraid and am no longer an unwitting cheerleader for bipartisan political interests.
>> ...Of no intrinsic value, collateralized by nothing, it passes from hand to trusting hand the world over...
I’m telling you blam! Get in before it’s too...
Oh wait a minute — what did he say? No intrinsic value?
I’ll get back to you.
*ping*
Best article I’ve read on this topic. Grant is a magnificent writer. This thread should have gotten 300 replies at a minimum.
Gold Standard bump!!
Glad people are reading that.
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