24A036 World Money by Jim Davies, 9/17/2024  

Just up the road from here is a beautifully located hotel at Bretton Woods, to which in 1944 the world's governments sent representatives to agree on what should be used as money for trade among nations after WW2 was over. No enemies were invited.

By that time each of them was using "fiat" tokens instead of real money, which they could print more or less at will; in the US case it was the paper dollar. To encourage the delegates to comply, the FedGov promised that 35 of them could be exchanged at any time for one ounce of gold. So the deed was done, and the UK Pound lost its position as the world's currency; after the folly of waging two wars, that country had too little gold to "back" its paper.

The promise of keeping the $ as good as gold was bogus from the get-go, and was formally broken in 1971. Today it is worth only 1/2500 of an ounce, or 71 times less than the Feds promised the world at Bretton Woods. Yet still, they expect everyone else to keep using it.

The term used is "Reserve Currency" but what it means is that if a ship load of timber is sold by a Norwegian forester to an Italian builder, payment is made in US Dollars. This is quite handy for the FedGov, for it means it can print and sell bits of paper in exchange for real stuff. For the last 80 years, our living standards have been boosted accordingly. Such are the fruits of the WW2 victory.

In its vicious attempt to make Russia conform to its wishes it has imposed a raft of restrictions on trade, called "sanctions" in a foolish use of that strange word (to sanction can mean either to permit or to forbid) Russians have been obliged to find other currencies with which to trade internationally, and have done quite well so far. Happily China has a thirst for oil, of which Russia has plenty, while Russians need cars now that European makers are unable to market theirs and China is busy building them. So the two can trade readily in either Yuan or Rubles, almost on a barter basis.

Even so, the Ruble isn't too useful in other countries so the RusGov is busy trying to enlarge the trading group called BRICS, eventually to have its own reserve currency, replacing the US Dollar. Oops.

So our high living standards, partly supported by the dollar's status as world money, are under threat. Blame Biden; it was his government that peppered Russia with sanctions after 2022. But the story is not yet over.

Last week candidate Donald Trump, in a Wisconsin speech, threatened hostility to any country that stopped using the dollar for international trade:

“You leave the dollar and you’re not doing business with the US, because we are going to put a 100% tariff on your goods.”

Now, if anyone here plans to v*te in November, pick Trump; he is vastly preferable to Harris because (a) he intends to end the terribly dangerous war in Ukraine and (b) he has promised to free Ross Ulbricht. Additionally and unlike her, he is not a Communist. But these quoted words are arrogant and repulsive and they show that even a partly enlightened politician is a deadly enemy of freedom.

Doubling the price of imports directly hurts buyers of the goods imported, and that means you and me - just so he can preside over a world currency that has not been backed by gold for half a century and which an increasing number of users do not want. Yet Trump has had a lifetime in business! It's sobering evidence that even a few years in politics are deeply corrosive.

There is no acceptable alternative: all government must go, 100%. What will then serve as a worldwide currency? - the obvious choice is gold, which did the job nicely until the 19th Century. Bitcoin would also be a strong candidate. Whatever is chosen, real people will do the choosing.