David Hines
Export-import bunk
FacebookTwitterGoogle+
By David Hines
June 24, 2009

A major US export is being threatened. When we can no longer export it, it will not be just a certain segment of workers who are affected, but all of us.

This major export is the Federal Reserve Note.

FDR and Churchill brought together delegates from all forty-four allied nations at Bretton Woods, NH, to make the dollar the world's reserve currency. Other currencies were explicitly pegged to it. This permitted us to export our inflation. We could print money without immediate repercussion. Foreign holders of dollars sopped up the excess.

A few decades later Nixon abrogated the agreement, declaring the dollar no longer exchangeable for gold. To maintain some reason to hold dollars, Kissinger jetted to the Middle East to broker a deal whereby oil would be denominated in dollars. Since nearly everyone buys oil, purchasers of the black goo need to convert whatever currencies they have into dollars. Oil became the de facto backing of the buck. We could still export some of our inflation.

Threatening this arrangement has met with the wrath of Washington. Iran and Iraq both threatened to sell oil in euros. They were branded axles of evil. Hugo Chavez has considered a similar move; even shaking his hand is deemed unacceptable.

Why, then, is Obama promoting energy independence, and the value of creating exportable alternative energy technology? He would be undercutting the backing of the dollar, at a time when he wants to borrow more than ever. Abandoning the dollar's status as world reserve currency by cutting its link, however tenuous, to a backing commodity would mean that the inflation stays here at home.

Perhaps that linkage is why, despite lip service to alternative energy by virtually every recent president, there has been little progress on that front.

Already China has expressed concern about the dollar's viability because of the increasingly heavy borrowing. Our military, tied up in a couple wars already, will not be able to dissuade all oil producers who would sell in euros, yuan, or rupees.

If energy independence is a priority, one would think that the ramifications of the decision would be considered. It would be wise to prepare for the uncoupling of the dollar from oil by reducing spending and working toward some other backing for the currency that links it with the real world.

Instead, deficits are projected far into the future. Without the ability to export the resultant inflation, the US dollar shall come to resemble the Zimbabwe dollar.

Zimbabwe's economy had no choice but to operate on foreign currencies. When we are paying for inflation of the peso and the loonie if Mexico and Canada choose to inflate, some foreigners may think that turnabout is fair pay.

© David Hines

 

The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)

Click to enlarge

David Hines

Born in a mill town, David Hines has seen work as a furniture mover, computer programmer/analyst, and professional musician... (more)

Subscribe

Receive future articles by David Hines: Click here

More by this author

 

Stephen Stone
The most egregious lies Evan McMullin and the media have told about Sen. Mike Lee

Siena Hoefling
Protect the Children: Update with VIDEO

Stephen Stone
Flashback: Dems' fake claim that Trump and Utah congressional hopeful Burgess Owens want 'renewed nuclear testing' blows up when examined

Cliff Kincaid
Saving America by saving Ukraine

Jerry Newcombe
Cancelling the “most wonderful time of the year?”

Judi Caler
Bluffing their way to an Article V Convention

Paul Cameron
The Marriage Equality Act in light of gay sex rings and molestations in group homes

Michael Bresciani
Why Libs, Dems, LGBT and Trans activists can’t identify the source of their own deep confusion

Rev. Mark H. Creech
Rev. Mark Creech issues statement on Senate passage of ‘Respect for Marriage Act’

Tom DeWeese
What we can learn from a red tide

Selwyn Duke
The new voting system that gave Dems a GOP House seat is dangerous. Here’s why.

Pete Riehm
Wiping out an entire generation of American youth

Peter Lemiska
How can woke warriors command an unsurpassed fighting force?

Tom DeWeese
Where have all the flowers gone? Long time passing.

Cliff Kincaid
How Trump saved the world
  More columns

Cartoons


Click for full cartoon
More cartoons

RSS feeds

News:
Columns:

Columnists

Matt C. Abbott
Chris Adamo
Russ J. Alan
Bonnie Alba
Chuck Baldwin
Kevin J. Banet
J. Matt Barber
Fr. Tom Bartolomeo
. . .
[See more]

Sister sites