Tag Archives: value

Give me a dollar’s worth

The US dollar is not backed by gold any longer since FDR outlawed that in the early ’30’s.  All those old gold backed notes had to be turned in for the new ones.   William Jennings Bryan would have finally been so pleased.  You recall his famous speech about not punishing the American public on this “cross of gold”.   It was thought by he and his populists supportors that any financial system or markert system was more or less criminal because it was used to trick and cheat the average Joe.   That is a paraphrase of course but I believe it pretty accurate.  I invite you to do your own reading and disagree if you like.

The US dollar is backed not by gold or anything else of a tangible nature but by the “full faith and credit” of the US.   Exactly what the hell does that mean?  It is a fair and necessary question.   After all when you pay for something with a dollar you want to be sure that the merchant or seller is willing to accept it for the good or service you want.   Now put on your thinking cap and don’t shy away from where the logic takes you in the examination.   At heart what that phrase means is that we are a big dog.   We have lots of what not only we want here within the confines of our border but also that many people around the world want what we have to offer.  Microsoft sells primarily services; we used to sell lots of steel, autos and other manufactured goods that everyone wanted.   We don’t sell much of those overseas any more but we do still have an export business think goodness.   We continue to sell manufactured machines, agricultural products, airplanes, services (oil and gas development and production skill for example) and hi tech equipment.  It is a shame we don’t also sell  TV, radios, Ipods and all those other products we formerly made right here.   Our textile, shoe , auto, furniture, and applicance industries are shells of their former selves.

We also have had stability in our economy, banking  and governmental systems for most of the last century.  Those are huge advantages for us.  But at the heart and soul of the backing for the dollar is a combination of several factors.   First is miliatry might.  You might not like to think of this one but it is a fact.   Every country can make demands, invoke sanctions against other nations, put tariffs on imports or exports or appeal to the United Nations but in the end if there is no muscle behind the rhetoric the world won’t pay much attention to you.   We have the power to enforce our will on others when push comes to shove.   Study your history and you will see that the US did not emerge as a true international power and player on the world stage until WWI and that was because we shipped a few million men to Europe along with the material to help defeat Germany.   Until then we were a important but nevertheless second rate power.   England was the big dog and had been for a century after its defeat  of Napolean.

Second, we have so many things the world still wants–even our real estate.   Surely you have noticed the foreigners buying American buildings and land for development.   This has been an accelerating trend for about 3 decades now.   We are the epicenter of marketing and merchandising.   The global markets love getting into the American market.   The Chinese love us.  Their sales to us are making them rich and building their nation.    You think the Chinese economy would grow the way it has without those billions in sales each year to the US?   They may not like us, but they love our consumers.  For those foreigners to do business here or to buy goods or services here they have to pay in dollars–hence value for the dollar.

Lastly, I submit it is the moral authority of the US and respect for our beliefs–yes, those corny beliefs set out in the Delcaration of Indendence and the
Constitution.   In the long haul that is what counts the most.   Even if we make mistakes on occasions we usually right the ship after a while.  We  survived the moral ignominy of being allies with Stalin after all.  We were truely in bed with the devil there.   We fought a war of ideas with the Communists for decades and held our own militarily and ultimately prevailed by having the better ideas for human advancement and hope.

So, the value of the dollar is an abstraction.   You can line up all the Phd. economists you want and let them lecture about bell curves, GDP, supply  side or demand economics but those things don’t really define what the dollar is worth.  The value of the dollar is like one’s reputation it can move up or down depending on how others perceive you.   The value of the dollar is based on ideals, principles, might and tenets of behavoir as a nation that will win the approbation of its own citizens and those around the world.   We, Americans, are the value of the dollar.   If we will be worthy of our heritage then the dollar will remain strong.

You can have your own ideas about this and no doubt some of you will have thoughts superior to mine.   I enjoy thoughtful reflection about fundamental questions of our time.  The value of the dollar is very fundamental. If its value diminshes so does ours and our lifestyles.

The pound sterling was 20 shillings and was made of silver.   Just like the sterling silver set on your hutch.   At the time silver was valued more than gold.  A guinea was 21 shillings.   A quid was a pound but of gold.

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Value and Meaning of the Dollar

If you believe this nation does not have its roots in religious beliefs then you should think again.   Our modern mania with “diversity” and political correctness has turned into revisionist history; that mania would have you believe that there is no religious  foundation to our American mores and culture and that all religion or mention of religion should be banished from public notice in any form.   We are at the core of our history a Christian nation  founded on the principle of religious tolerance for those who views things differently–which by the  way is a very Southern Baptist mindset.  But more on the Southern Baptist another day.

Take out a dollar bill and examine it closely.  On the reverse side you will notice the motto “In God We Trust”.  That is not there by accident.   That was a deliberate statement to proclaim our most fundamental tenets as a nation.  It doesn’t mean there can be no dissent but our collective wisdom leads us to accept that concept of trusting in God.    (That was the slogan on the German soldier’s belt buckle during WWII).   Now look to the left of the Great Seal and you will see the words “annuit coeptis” floating around the all seeing eye.   The translation is God has favored our undertakings.  We have been indeed blessed as a nation like no other in the history of the world and we should all pray that we will be worthy of those blessing in the future.   The all seeing eye is a Masonic symbol.  Yes, those Masons.   They were extremely influential in the early days of our nation and more US Presidents have been Masons than any other affliation  I.e., religion, school, statehood, etc.   For those who are completely in the dark about the Masons it should be noted that both Christians and Jews could be members.  A religious belief was required but not a specific religious doctrine.   There was the York rite for those who wanted a specific Christian experience and the Scottish Rite for those of either Jewish or Christian belief.  Both rites were Masons.

Now let’s look at  the other aspects of the dollar.  Below the great seal you will see “novus ordo seclorum” which means a new order for the ages.   We thought we were the bringing of something new and that turned out to be correct.  We were the first true republican democracy with no hint of nobility or privilege based upon birth.  We became the first meritocracy.   Oh, yes, it is true that in times past people could rise up through the ranks as it were but that was not the usual rule.  Even in ancient Greece it was possible to rise from slave to senator or general.  We were the first nation to look to what you accomplished or could accomplish and your personal integrity as the mark of the man.   Yes, I know the phrase has a similar ring to the Nazi New Order and the Third Riech but there is no relationship at all.  Ours came first by a long shot.   The  all seeing eye is interesting in its own right because of the implication that a higher power is watching over us and also that as a group we can conquer any challenge.

The other side of the great seal has the eagle.  Notice what it holds in its talons.  An olive branch in one but arrows in the other.   We seek peace in all things but will wage war to protect the ideals we hold dear and our nation.  The motto there is one you all know, e pluribus unum–one among many.   That is to emphasis our uniqueness among nations.   Of course the thirteen stars are for the original colonies.   I am sure the Navy has changed uniforms recently but for decades the pants worn by Bluejackets (ordinary seamen in the Navy) had thirteen buttons also for the colonies.   Many a sailor cussed up a storm undoing those when a call of nature came upon him suddenly.

Now for the value of the dollar we can make another close examination.  First realize that the dollar is really a note.  Just read what it says.  Up at the top there it says “Federal Reserve Note”.  A note is a promise to pay.   It is a real note not only because it says so but because it is a bearer note if you will and it carries the signature of the then sitting Secretary of the Treasurer; look down in the bottom right corner and you will see the signature.   It wouldn’t be a valid note without some signature.    Also see the comment to the left of Washington that says “This note is legal tender for all debts, public and private”.   The issuer of the note I am looking at is from the Federal Reserve Bank of Atlanta Georgia.  There are 12 reserve banks around the country.  They issue the notes as the agent of the US.  The Constitution talks about “coin” in Article One under the powers of Congress.  Congress can also set the value of it and of foreign money.   In times past, like merry old England say of a couple of centuries ago, it was quite common for people, banks and companies to issue notes as a means of payment and they would become negotiable by endorsement.  These notes were treated like currency that we think of because real printed money was  pretty rare and expensive for the Government to print.   Think of our dollars as a sophisticated update to that old practice. 

Now the real question is what is that promise worth?  We are no longer on the gold standard like we were for such a long time when you could go to the bank if you wanted to and actually get gold for you dollar bills.   So why do we and others around the world accept this note for payment for lunch, toothpaste, a car payment and all those other thousands of transactions we each make every year?   What am I going to get from the Federal Reserve if I present my note for payment?

Come back tomorrow for an exploration of that thought with me.  You might find it interesting.   I only want us all to think about our institutions, our body politic and economy so we can reach intelligent and informed decisions about our future courses of action.   Intelligence doesn’t necessarily equate to being informed.   Disagreement I can handle it is ignorant and ideological positions that annoy me.

Quo Vadis.

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Filed under Economics, history, Politics

Echos of the Past

The Good Book teaches there is nothing new under the Sun. Is that true? Some are concerned about our current economic circumstances and act like we have never faced anything like this before. We, referring not just to the United States. The concern is about a recession and the drop in the value of the dollar and the inevitable inflation that produces.

Well, in the early 1920’s Germany was faced with a devastating inflation problem. It literally took a wheelbarrow of money to buy a loaf of bread. How did they stop that rampaging inflation and restore some confidence in the mark? They was one thing in abundance and vital to the grime existence prevailing in Germany at that moment–potatoes! So the Germans pegged the value of the mark to potatoes. For a mark you could redeem a specific amount of potatoes if you wished rather than hold the paper money. The effects were immediate, the runaway inflation halted and stabilized. The mark now a “value” that you could hold in your hand and even eat. Confidence was restored in the mark and as the people saw they really could get the potatoes they fears were abated that the mark had no meaning or worth.

The US went off the gold standard in the early 30’s at Roosevelt’s demand. The lack of a standard has no doubt served us well for many decades as our economy for most of those years was the envy of the world and we lead the world in production of and the value of our goods and services. Will the full faith and credit of the US be sufficient to attract demand and create capital for the future? Ah, dear reader, read your own history, draw your own conclusion, make your own analysis. But consider as you do, that we can’t amass debt indefinitely, have our dollar decline in perceive value by the world community, and lastly, not produce the goods and services demanded by the world consumers.

 

OlCranky

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