Wednesday, August 24, 2011
Was Texas Governor Rick Perry out of line to suggest that bald, bearded Ben Bernanke would be almost treasonous to print more dollars? No. I don’t think so. His remarks got a rise out of President Obama right away. Even former President Bush’s advisor, Karl Rove, criticized him. Bush, after all, was first to appoint Bernanke as Chairman of the Federal Reserve, perhaps on the advice of Rove. Obama re-appointed him when he took office and it looks like Bernanke has been doing his bidding ever since.
Speaking in Iowa, apparently in response to an inquiry about the Federal Reserve, Perry said, “If this guy [Bernanke] prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas. I mean, printing more money to play politics at this particular time in American history, is almost treacherous, er, or treasonous in my opinion.”Perry at CPAC 2011
When I was born, pennies were made of copper. Dimes, quarters, and half-dollars were made of silver. Even if people were to lose faith in the government that minted their coins and whose images they bear, citizens could still depend on the copper and silver being worth something. Paper dollars could be redeemed for a certain amount of silver or gold back then too. The paper dollar was understood to be the same as the personal check, and they’re about the same size as checks too. When I write a check to someone, he or she must have confidence that there’s enough cash in my account to back it up. I’m instructing my bank to “pay to the order of” whomever, a certain amount of cash. Paper dollars back then were called “silver certificates” which were instructions for government to turn over a certain amount of silver maintained by the federal government for such purposes. People didn’t cash them in for silver as a rule, but were confident they could if they wanted because they trusted their government.None of that applies anymore. Pennies are made of zinc with copper paint. Dimes and quarters are made of copper with silver paint. The paper dollar cannot be redeemed for precious metal anymore either - in any amount - unless you choose to buy gold with it from a private dealer. Not too long ago, you could buy an ounce of gold for about $40. At this writing, it would cost over $1800 and by the time you read this in a newspaper in a few more days, an ounce of gold might cost over $2000. Why? Several reasons, but mostly it’s because people don’t trust the US Government as much as they used to. Why not? Because Ben Bernanke has been printing trillions more dollars without putting any more gold or silver in Fort Knox to back it up. Why is he doing that? Because he can. Why can he? Because President Nixon took us off the gold standard in 1973. The amount of dollars isn’t tied to the amount of gold in Fort Knox anymore. It “floats,” say the economists.
A February, 2011 article in the newsletter Imprimis compared “floating” the value of the dollar with “floating” the weight of a kilogram. Seth Lipsky wrote that “a global scramble is under way to define this most basic unit after it was discovered that the standard kilogram—a cylinder of platinum and iridium that is maintained by the International Bureau of Weights and Measures—has been losing mass.”
Then he asked why not just let the kilogram float like the dollar? “After all,” he wrote, “when you go into the grocery to buy a pound of hamburger, why should you worry about how much hamburger you get—so long as it’s a pound’s worth? A pound is supposed to be .45359237 of a kilogram. But if Congress can permit Mr. Bernanke to use his judgment in deciding what a dollar is worth, why shouldn’t he—or some other Ph.D. from M.I.T.—be able to decide from day to day what a kilogram is worth?”Lipsky described how the Second Congress “established the value of the dollar at 371 ¼ grains of pure silver. . . . [and] did not expect the value of the dollar to be changed any more than the persons who locked away that kilogram of platinum and iridium expected the cylinder to start losing mass. In fact, in this same 1792 law, they established the death penalty for debasing the dollar.”We should demand a rubber glove and KY jelly at least
The death penalty? Hmm. That was the punishment they established for anyone committing treason as well. That's how seriously the Founding Fathers (many of whom were in Congress at the time) took their constitutional power to coin money.
Tea Party conservatives know the US dollar isn’t floating. It’s sinking, because Bernanke is printing them wildly. Those of us who have saved up dollars are losing wealth with every dollar he prints - and all that hard-earned wealth is going down the black hole of the federal government. It’s a hidden tax. Bernanke calls his money-printing “quantitative easing,” but it could also be called counterfeiting. It’s linguistic legerdemain for theft by a federal government which is driving America into bankruptcy.Maybe Bernanke and the president who appointed him think printing money is good for the economy and will save America. If they do, they’re both fools. If they don’t believe it, they’re intentionally sinking our ship of state along with our dollars. Tea Party conservatives like Perry see the practice as foolish at best and treasonous at worst.
Governor Perry is entitled to his opinion that it’s the latter.