Perhaps because their own financial needs are so well taken care of, most professors seldom explore a topic of consuming interest to those of us outside campus walls. Insular as they are, it may never occur to them that we mere plebians find the worth, or lack thereof, of the money, or lack thereof, in our pockets an enduring object of fascination.
Fortunately, Judy Shelton, an economist not on a university payroll, has sought to satiate this widespread curiosity in her book, Fixing The Dollar Now: Why U. S. Money Lost Its Integrity And How We Can Restore It. The compact tome is published by the Atlas Network, where Shelton toils.
“Like most instances of moral decline, the loss of virtue associated with our nation’s currency took place slowly, over a long period of time,” Shelton writes. “The steps delinking the U. S. dollar from its original purpose as an unchanging standard of value occurred incrementally at distinct points in our history.”
“In every case, there was a pragmatic reason for doing so; that is, practical people could justify making some adjustment to the Constitutional authority granted to Congress in order to deal with an exigency.”
Here it is useful to note, as Shelton does, the thoughts on the subject of our first Secretary of the Treasury, Alexander Hamilton—widely thought to be, with some justification, an advocate of a strong, central government. “To emit an unfunded paper as the sign of value ought not to continue a formal part of the constitution, nor ever hereafter to be employed; being, in its nature, pregnant with abuses, and liable to be made the engine of imposition and fraud; holding out temptations equally pernicious to the integrity of government and the to morals of the people,” Hamilton stated.
Thereafter, some key points at which we moved toward just that sort of currency included, as Shelton shows, various wars and depressions, the creation of the Federal Reserve Bank and the last, fatal executive fiat—the August 15, 1971 closing of the gold window in which, as Shelton puts it, “the United States would no longer permit foreign governments or central banks to redeem U. S. dollars in gold.”
“Meanwhile,” Shelton notes. “ the value of the dollar would deteriorate markedly in terms of its domestic purchasing power, declining more than 82 per cent during the 40-year period of floating exchange rates from 1971 to the present.”
Postscript: A few years ago, at an Atlas Foundation meeting in Philadelphia, Shelton disclosed that columns she wrote in The Wall Street Journal drew an interested reader—former President Richard Nixon. The only president to resign, so far, signed off on the 1971 decree that arguably precipitated the decline of the dollar that occurred ever after.
In one of his notes, Nixon admitted that he did not understand monetary policy. Well, he sure proved that.
Malcolm A. Kline is the Executive Director of Accuracy in Academia.
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