Monday, October 06, 2008

The Dollar's Last Minutes

The Bulletin of the Atomic Scientists is known for its Atomic Clock that shows how many "minutes" before nuclear catastrophe. In 1984 their clock showed 3 minutes to "midnight." After the fall of the Soviet Union, the clock showed a gain of 15 minutes.

Since the formation of the Federal Reserve on Christmas Eve, 1913, 95 years ago, the dollar has lost at least 95% of its value. Some say 98%. 96% in 95 years means that the dollar will lose its remaining value and the economic clock will strike "midnight" during the term of the next President, regardless of who wins the election.

But it could also be next week.

"No one can believe in the omniscience of central bankers anymore."

That's the subtitle of a recent opinion piece in the Wall Street Journal, which begins with a 1925 poem called "The Hollow Men" by T.S. Eliot:

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.

The author opines:

The world is not ending. Despite the wrenching turmoil in global financial markets and morbid allusions to the death throes of capitalism, it ain't over. Not until people quit believing in themselves, not until people quit believing in a better future.

Actually, the "world" of the dollar ends when people stop believing in the dollar. Human beings don't need more pieces of paper called "money." They need the goods and services money can buy. When people are afraid that pieces of paper called "dollars" will not buy the things they need, the dollar dies.

(Of course, the "dollar" died years ago, as defined by the Constitution and the Coinage Act passed by America's Founding Fathers. Our pieces of paper are merely "Federal Reserve Notes.")

Our capitalist civilization depends on honest money. Without a reliable medium of exchange, our economy collapses into barter, with the butcher, the baker and the candlestick maker unable to do business because the candlestick maker needs meat and bread, but neither the butcher nor the baker needs candles. The failure of a medium of exchange is a recipe for conflict, even international war.

The enjoyment of goods and services in a world without war is a Biblical definition of the word "salvation." Americans have been trusting in the omniscience of central bankers for too long. Politicians and bankers are counterfeit saviors. America's Founding Fathers warned us against "False Religions." Washington D.C. is a dangerous cult.

Better to trust in "the Invisible Hand" of a Free Market.

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