Creature From Jekyll Island by G. Edward полностью

The third option, the selling of assets, also is not available for most countries. By assets, we mean tangible items other than merchandise which is normally for sale. Although these, too, are assets in the broad meaning, in accounting methodology, they are classified as inventory. The only government asset that is readily marketable is gold, and few countries today have a stockpile from which to draw. Even in those cases, what little they have is already 1. It is the author's opinion that it's time to get the politicians wearing Uncle-Sam suits off our backs. Which is easier said than done, because Americans still like their protectionist subsidies: tariffs to protect the business man, minimum wages and compulsory unionism to protect the worker, ethnic quotas in hiring to protect the underdog, cradle-to-the-grave insurance programs, unemployment benefits, dis-ability compensation, extreme environmental and safety measures—regardless of cost. Free enterprise can and will produce all of these benefits in order to compete for buyers and employees alike. But, as long as these measures are compulsory and chosen on the basis of political popularity without regard to economic consequences, American industry will never be able to recover. And then none of 'he illusory benefits will remain.

NEARER TO THE HEART'S DESIRE

93

owed to another government or a bank. As for private assets, nations can, for a while, sell these to foreign buyers and offset their negative trade balances. That is what has been happening in the United States for many years as office buildings, stocks, factories, and entire companies have been sold to foreign investors. But the fact remains that the nation is still spending more than it earns, and that process cannot continue indefinitely. Foreign ownership and control over industry and commerce also create sociological and political problems. Underdeveloped countries do not have to worry about any of that, however, because they have few private assets to sell.

THE COUNTERFEIT OPTION

The counterfeit option is available only if a country happens to be in the unique position of having its currency accepted as the medium of international trade, as has been the case for the United States. In that event, it is possible to create money out of nothing, and other nations have no choice but to accept it. Thus, for years, the United States has been able to spend more money than it earned in trade by having the Federal Reserve create whatever it needed.

When the dollar was separated entirely from gold in 1971, it ceased being the official IMF world currency and finally had to compete with other currencies—primarily the mark and the yen—

on the basis of its relative merit. From that point forward, its value increasingly became discounted. Nevertheless, it was still the preferred medium of exchange. Also, the U.S. was one of the safest places in the world to invest one's money. But, to do so, one first had to convert his native currency into dollars. These facts gave the U.S. dollar greater value on international markets than it otherwise would have merited. So, in spite of the fact that the Federal Reserve was creating huge amounts of money during this time, the demand for it by foreigners was seemingly limitless. The result is that America has continued to finance its trade deficit with fiat money—

counterfeit, if you will—a feat which no other nation in the world could hope to accomplish.

We have been told that our nation's trade deficit is a terrible and that it would be better to "weaken the dollar" to bring it an end. Weakening the dollar is a euphemism for increasing n lation. In truth, America is not hurt by a trade deficit at all. In

' We are the benefactors while our trading partners are the 1

94 THE CREATURE FROM JEKYLL ISLAND

victims. We get the cars and TV sets while they get the funny money. We get the hardware. They get the paperware.

There is a dark side to the exchange, however. As long as the dollar remains in high esteem as a trade currency, America can continue to spend more than it earns. But when the day arrives—as it certainly must—when the dollar tumbles and foreigners no longer want it, the free ride will be over. When that happens, hundreds of billions of dollars that are now resting in foreign countries will quickly come back to our shores as people everywhere in the world attempt to convert them into yet more real estate, factories, and tangible products, and to do so as quickly as possible before they become even more worthless. As this flood of dollars bids up prices, we will finally experience the inflation that should have been caused in years past but which was postponed because foreigners were kind enough to take the dollars out of our economy in exchange for their products.