Here is a quote from Mr Robert J. Samuelson, who writes a bi-weekly "op-ed" piece for the Washington Post. The quote comes from an article titled: "Dangers in a Dollar on the edge" which was published in the December 8 edition of the Post:
"In effect, the United States proves a service to the rest of the world -- a global currency -- and is repaid with imports" (emphasis ours)
This is true, its implications are monumental, and it is tossed off as if it was a triviality barely worthy of mention.
Later in the same article, Mr Samuelson has this to say: "The dollar-based global economy has been kind to countries such as Japan, China and Germany, whose prosperity rests heavily on their export industries."
What these two quotes actually say is very simple indeed, although Mr Samuelson does not develop the inescapable conclusion in the rest of his article. The United States "exports" Dollars to the rest of the world. The rest of the world, notably Japan, China and Germany, export REAL economic goods to the US. Far from being "kind to countries such as Japan, China and Germany", this arrangement has in fact been exceedingly "kind" to the United States. For the past four decades, the US has been waxing fat on the global production of real goods by flooding the rest of the world with IOUs, (AKA Federal Reserve Notes AKA US Dollars).
Now here's another quote, this one from the US Secretary of the Treasury. This one will be immediately familiar, having been mouthed by most of his predecessors. Mr Paulson said this: "I believe very strongly that a strong dollar is in our nation’s best interest and I feel very good about the strength of our economy right now."
This particular statement, also made on December 8, caused an abrupt turnaround in a US Dollar which had been plumbing new 52-week lows before Mr Paulson stepped to the microphone and stripped a quick $US 10 or so off the spot future price of Gold. The London PM Gold fix on December 8 was $US 637.40 (up $US 9.65 from the PM fix on the previous day). The Comex spot future contract closed in New York at $US 626.10 - down $US 5.80 from its close of the previous day and down $US 11.30 from the London Gold fix of a few hours earlier.
Is a "strong Dollar" in the US "national interest". The term "national interest" is of course meaningless, but a "strong Dollar" is certainly in the interest of every American. That's all very well, but it begs a vital question. What IS a "strong Dollar" (or Euro or Pound or Yen or Yuan etc)? A money is strong to the extent that it is accepted as a viable medium of exchange. It is acceptable as a viable medium of exchange to the extent that it can be expected to hold its purchasing power through time.
It is a truism hardly worthy of mention that no currently existing money has held its purchasing power through time, not is there any prospect of any change in this situation. The US Dollar, as just one example, has lost about 98 percent of its purchasing power since the advent of the Federal Reserve and (very important in this context) the 16th Amendment which introduced the income tax in 1913.
In today's context, the context of global fiat moneys redeemable in nothing, the "strength" of a currency is measured by the speed at which its purchasing power falls. The slower the fall, the "stronger" the money in comparison to other forms of money which are losing purchasing power faster.
And this is the context in which the "strength" of the US Dollar is indeed very important, nay vital, to every individual American. Why? Because as Mr Samuelson correctly points out, Americans must export Dollars to pay for the economic goods on which their "lifesyles" depend. For more than thirty years, since the first comments in the 1970s about the "rust belt" taking over what had once been the US manufacturing heartland, the US has been on a steady progression away from exporting GOODS and towards exporting "money". Today, the result is that US manufacturing capacity, the capacity to actually produce economic goods, is all but defunct.
Please note this very carefully. Money is a MEDIUM OF EXCHANGE. It is NOT a substitute for economic goods. It is the means by which the exchange of economic goods is facilitated. People hold money only because it is the means with which to acquire economic goods. The problem for the US, and the US Dollar, is that global holdings of US Dollars now far outstrip the capacity of the US to produce goods which the foreign holders of those Dollar can acquire. That is the inevitable consequence of paying for goods with Dollars instead of goods.
It is also the reason why the US Dollar is in reality a very weak money indeed. The US has neither the real wealth nor the capacity to produce it remotely offsetting the gargantuan quantity of Dollars which have been created and spent on the real goods of the rest of the world. The rest of the world knows this, as does the US, but nobody, least of all the monetary and financial "powers that be" of the world can afford to admit it.
In the US, the reasons why the myth of a "strong" US Dollar are clung to is obvious. Elsewhere, they are less obvious but only marginally less compelling. The US Dollar is the world's reserve currency, the "foundation" upon which all national monetary systems are built. The Dollar is the global exchange currency in most of the markets for raw materials and resources. The rest of the world holds so many US Dollars that they they face financial hardship or ruin should the Dollar weaken substantially. And much of the rest of the world has indeed structured their productive capacity so as to export goods to the US.
A truly strong US Dollar would be of great benefit to every American. A US Dollar which is perceived to be strong (or at least not markedly weaker than other major currencies) is of great benefit to those who derive their power over Americans (and everyone else) from their control of the issuing of US Dollars. A truly strong currency is never of benefit to those who want power because a truly strong courrency is one which is NOT manipulated in its quality or quantity to serve the purposes of those who want power.
The present US Treasury Secretary does not want a truly strong Dollar any more than his predecessors did. What he wants is to remain in a position by continuing to control the nation's money with impunity. He wants to Mr Samuelson's arrangement, by which the US provides the Dollars and the rest of the world provides the goods, to continue indefinitely.
Far from being a "barbarous relic", Gold is in fact a constqant reminder of the possibilities of returning to a free and civilised society. Being the strongest money ever discovered, it is at the same time the strongest bulwark underpinning what the US once was, a nation of freedom, liberty, and therefore prosperity the like of which the world had never seen.
When a US Treasurer sings the praises of a strong money in the midst of a producing economy which has dwindled to the vanishing point all around him he is relying on three things. The first is the complicity of the other men in power in his nation and all over the world. The second is ignorance of the vast majority of his listeners as to what a truly strong money is. And the third (allied with the first) is his ability and the ability of those like him to continue to manipulate the "price" of the truly strong money - Gold (and silver) - in terms of the money over which he has control.
We do not think that his control over the first and third of these "allies" will last much longer. As to the ignorance about the nature of money, that one can only be overcome with knowledge, and it is up to every individual to gain that knowledge. We do our bit here, and we are not alone. The knowledge is easily available. If you are new to our work,or if you would simply like to refresh your memory, may we suggest that you read - or re-read - these pages.