Jeb v. Donald on How To Save the Dollar
‘ IT’S the dollar, stupid.” That’s the thought that struck me listening this week to Donald Trump announce his candidacy for president. Between The Donald and Jeb Bush, we just might have the beginnings of a Republican primary debate worth having.
Trump brought up the topic right after he declared that he would be the “greatest jobs president that God ever created” ( though God did create FDR, Harding and Coolidge). Trump said he’d bring back not only our jobs but our money.
“Think of this,” he said, “we owe China $ 1.3 trillion. We owe Japan more than that. So they come in, they take our jobs, they take our money and then they loan us back the money and we pay them in interest. And then the dollar goes up. So their deal’s even better.”
“How stupid are our leaders?” Trump asked. “How stupid are these politicians to allow this to happen? How stupid are they?”
Or, dast one ask, is it The Donald who’s daft? Does he really want to run for president on a campaign to lower the value of the dollars in which Americans get paid and keep their savings? The last president to try was Jimmy Carter. Compare Trump with Jeb Bush. He was appearing on television the other day in New Hampshire when he was asked whether American manufacturers had been put at a disadvantage by foreigncurrency manipulation.
Bush acknowledged that there might be some manipulation by foreigners. But, he added, “you can make a case that in the last few years, given our monetary policy, that we’ve been manipulating our currency. We’ve never had a time where our central bank is just printing money like nobody’s business.”
That, Bush warned ( making the opposite point of Trump), “lowers our interest rates and depreciates our currency.” Mr. Bush noted that some protections against foreign manipulation already exist and suggested that a trade pact could add more.
If they’re coming at the dollar question from the opposite ends of the telescope, I’m not sure either of them has really nailed it. It may not be, after all, that the dollar is too high or too low. Itmay be simply that nobody today knows what a dollar is supposed to be.
A $ 1 Federal Reserve note presented to an office of the United States Treasury can be redeemed only in another paper dollar— or four base metal slugs that the United States Mint presumes to call quarters.
It wasn’t always like that. It used to be that a dollar meant something. For the first generation in the lives of New Yorkers Donald Trump’s age ( and mine), it meant a 35th of an ounce of gold. America promised to redeem, at that price, dollars presented to it by foreign governments. That was called the BrettonWoods monetary system. It was set up toward the end of World War II, and it created a steady business environment. That’s what created jobs on the scale that Trump’s talking about.
During the BrettonWoods years— fromthe end of World War II until 1971 — unemployment averaged 4.7 percent. Then America ended its promise to redeem the dollar in gold, and Congress went to a system of fiat money, where the dollar isn’t defined as anything real.
Unemployment started soaring, averaging something like 6.4 percent between 1971 and today. Through much of President Obama’s years in office, itwas above 7 or 8 percent. It’s only recently come down below 6 percent, and millions remain unemployed, too discouraged to look, or in parttime jobs.
How great it would be if Donald Trump and Jeb Bush— and the rest of the GOP field — really went after the question of fiat money and its role in creating the great recession. Thiswas a feature of the Republican primaries four years ago, when Rep. Ron Paul kept pressing the issue.
It resulted in a Republican Party platform plank calling for the establishment of a monetary commission to start work on repairing the dollar, making it steady and predictable, an accurate measure for prices and value.
Yet no sooner did Mitt Romney win the nomination than he abandoned the issue. It’s tempting to say he deserved to lose, but let’s look ahead. Donald Trump and Jeb Bush have framed the most important question of the campaign. Let hammering out the platform begin.