Posted on 04/11/2016 6:08:24 AM PDT by Kaslin
This is the first in an eight-part series about America's awesomeness.
The United States of America is the most awesome country in the world – even when I was a child. I was grateful to live in America and not in some impoverished Third World country. But it is really my experiences living abroad and traveling across the globe that have utterly convinced me that America is a uniquely great country.
Democracy and liberty are clearly the two most important birthrights of Americans. But today I want to write about the U.S. dollar. A stable national currency and low inflation are fundamental to a prosperous society as well as to democracy and liberty. But it is easy to take the dollar for granted. (And for as long as I can remember, Nervous Nellies and hucksters alike have been predicting the dollar’s imminent collapse, even as it has continued to reign as the dominant global currency.)
People in foreign countries often appreciate the virtues of the greenback more than Americans, because they know what it is to not have money worthy of the name. In Saturday’s NY Times there is a fascinating story about how in Cambodia even the dead prefer U.S. dollars to their own country’s currency, the riel.
Qingming is the annual festival to honor one’s deceased ancestors. After a family feast, Cambodians show their respect to the departed with burnt offerings. They buy specially made paper houses and cars and facsimile currency and set them afire, whereupon their deceased relatives can benefit from these gifts in the afterlife.
And apparently even these Cambodians no longer with us prefer dollars. Replica one hundred dollar bills are considered a more dignified tribute, and more convenient.
As one retired Army officer explained, the riel (which trades around 4,000 to the dollar) is “too small. If we give the big note ($100) the ancestors can get a lot of money. If we give them small money, they will need so many notes that they’ll go crazy carrying them around.”
I know that feeling. Ten years ago I was in Turkmenistan, where the dollar rate was 24,000 manat, and the biggest banknote was 1000. Down at the local bazaar, moneychangers had paper bags already stuffed with 2.4 million of notes adorned with the picture of the President-for-life to exchange for a single Ben Franklin. Paying for dinner required tediously counting out a hundred or more “Turkmenbashis.”
In most countries around the world, every man, woman and child knows the daily exchange rate for American dollars. That’s because ultimately the real price of most goods are in dollars. And in most countries, the only way to protect whatever savings you have accumulated is to keep them in dollars.
I live in Russia, and today’s USD rate is 67. A pair of jeans costs about 2,800 rubles, or about 40 bucks. Two years ago the dollar rate was 32, those same jeans cost 1300 rubles (or about 40 dollars). And 20 years ago, when the ruble was 6 to the dollar, they cost 240 rubles (you guessed it, about 40 dollars). And by the way, those same jeans cost about 15 dollars at Wal-Mart (they cost more than two times as much in Moscow because of the added costs of corruption and economic inefficiency).
A constantly declining and instable ruble harm Russians in ways more than just constantly increasing ruble prices. Russians are notoriously profligate spenders. There is a deeply ingrained reluctance to save for the future when you know your currency will likely be worth less next year than this year. And since it became an independent country in 1991, Russia has endured not only severe devaluations of the ruble but also several waves of bank failures where depositors lost their savings (but the bank owners themselves typically absconded with millions of dollars).
Since 1996 the ruble has lost more than 90% of its value versus the dollar. But between year-end 1991 and early 1992 it lost 99% of it value. And then it proceeded to lose 99% of its value all over again by 1996. (The Soviet ruble was officially worth $1.40. In 1997 the ruble was redenominated, 1000 new rubles for each old one. To put this in perspective, if you had converted one million USD for 714,000 rubles, after 1997 you had just 714 new rubles, or just a bit more than ten bucks today.)
People who had saved all their lives saw their savings absolutely incinerated as thoroughly as if they had burned them like firewood.
It was heartbreaking to see. The parents of one friend of mine had set aside part of their salaries every month for eighteen years in a special account for children, expecting it to be enough on her 18th birthday to buy a car, or perhaps be a start on a down payment for an apartment. By the time she could withdraw the money, it was exactly enough for a pack of chewing gum.
In contrast with Russia and Cambodia (and most all other countries) America has been blessed with a remarkably stable currency and low inflation. And many other things we sometimes take for granted, like the rule of law and social stability, depend in no small part on a reliable currency.
America is not a perfect place, and we regularly argue among ourselves how to make her better. Since our first forbearers arrived at Jamestown in 1607 America has been a work in progress, never perfected but continually striving for betterment. The more I see of the human condition in other nations around the globe, the prouder I am of America, and the more grateful to be a citizen of such an awesome country.
Pretty good way to describe it.
Isn't today the "emergency" "routine" meeting at the Fed Reserve?
Go back to 1910, and you could have printed this story by substituting the words “Pound Sterling” for “dollar” and nothing would have been lost in the article.
Back then, the British Pound was the world’s dominant currency, but it was not destined to remain so. The United States was in the process of passing Britain as the world’s largest industrial economy. Yes, two world wars bankrupted Britain, but they only acted to hasten or increase the effect of a process that was already underway.
Fifty years from now this article will be written in Beijing with the words “yuan” substituted for “dollar.”
AUD and EUR fighting to gain traction. I think aud/usd is up from .68 to around .75.
MORE IMPORTANTLY!! I am saving certain websites to my FAVORITES folder in duckduckgo.com.
WHERE DOES THAT FOLDER EXIST!!!
Why is the USA now embracing socialism?
The article confuses two issues: inflation and the foreign exchange rate. The dollar is high now on foreign exchange markets for a number of reasons. Inflation is also low. But the two do not always move in lockstep. I would not be surprised to see the exchange rate deteriorate in the coming months. We may ultimately see inflation too but probably not for a while.
I think that if we want to see the future of the USA, we only need to look to the UK.
Formerly a major player on the world stage.
Formerly an economic powerhouse.
Formerly had its own culture.
Today, a shadow of itself.
Low economic growth.
Ruled by socialist oligarchs.
High taxes.
A relatively minor power.
Lots of debt.
Lots of political correctness.
Lots of welfare.
The same could be said for Portugal, Spain and France.
This is the path we are on and have been on for quite some time. The symbols remain the same on the outside. The inside is gutted.
Wealth moves to where it is wanted and valued.
Don’t miss that US banks are some of the weakest worldwide, in terms of reserves.
We are following the UK’s path. Our corporations were the model of international business in the 1950s. Today they are not structurally competitive. It was British corporations that went through the same process two generations ahead of us.
British industry is only mentioned in the past tense. The same will be said of American industry only a decade from now. It will all be in China.
The British people went from the starving Dickens kids who grew up to build an Empire on which the sun never set. Today...meh. Americans of the Greatest Generation built an economic and military superpower that was greater than any state that had ever existed before. The next two generations squandered their legacy, just as the British did.
It’s not so much that history repeats but that human nature does not change.
The entire world and it’s economy relies 100% on the Fed and its printing presses.
It’s why I believe this game of spend-and-spend three card monte can do on indefinitely.
“It’s why I believe this game of spend-and-spend three card monte can do on indefinitely.”
It is a confidence game. It will fail as it always has throughout history.
Prepare while you can.
Because the socialists captured the education system and brainwashed the students to their viewpoint. It started with the "Schools of Education" at universities, and spread from there.
I like conspiracy theories - always have. They are mostly goofy and harmless.
One theory that I believe fully though is that “inflation” is not a natural occurrence but an orchestrated action to strip wealth from the producers of society and transfer it to the ultra wealthy.
The same with depressions. In these cases many people lose wealth, but some, usually at the very top, reap immense benefits.
It could be true depending on how they do it. For example if the do it by having the Fed print money and use it to bid up the price of stocks and bonds then yes. But the other situation is where the inflation has some other source such as the oil shock of the 1970s. Back then the inflation wiped out the savings of the elderly because it effectively reduced the value of dollar denominated assets. So it was the people who did not have wealth that fared the best. In fact I suspect that is one of the reasons it took so long for the politicians to do something thing about it. They thought it redistributed the wealth to the poor.
The US dollar is honored around the world because of the American history of justice, laws and .......oh, never mind.
In a fit of rationalization I keep reminding people that it the dollar is “relatively” good compared to other currencies. How long this justification persists is up for grabs.
I had a young man on my front porch yesterday who is trying to figure out a way to feed his family after having lost a good oilfield job two months ago. The same company has not let go another 30%. There are no good jobs to be had.
The nations economy is FLAT and has pretty much been that way since 9/11. The DOW has only gone up a paltry 3% since 1/1/08.
This nation is DEAD in all respects.
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