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The end of King Dollar?
Will nations at an upcoming conference dump the dollar?
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Robert Wright’s review of my book captures the essence of my journey in America.
“There is a right way and a wrong way, always choose the right way.” Abraham Sabrin (1914-2001)
In June representatives from 81 countries are meeting in St. Petersburg, Russia to discuss backing their currencies with gold. If these nations decide to make their currencies “as good as gold,” the US dollar would most likely be dethroned as the world’s reserve currency. That would mean that the demand for US dollars would decline precipitously and import prices would skyrocket. The Consumer Price Index would go through the roof and most American families would see their living standards drop sharply. Economic, social, and political chaos would ensue.
This is not hyperbole, but the inevitable result of endless money printing by the Federal Reserve, especially since 2020. The M2 money supply—cash, checking accounts, savings deposits, etc.--has more than doubled since the Great Recession/housing bubble bust of 2007-2009. And the geniuses at the Fed have wondered why price inflation accelerated sharply since the Fed flooded the economy with dollars to “stimulate” the economy during the Covid lockdowns.
We may be witnessing the end of the monetary experiment of fluctuating fiat currencies that began in March 1973, nearly two years after the collapse of the post war Bretton Woods system. Which was predicted by journalist Henry Hazlitt at the time of the adoption of international monetary regime in 1944. Hazlitt warned that the Bretton Woods agreement would not be sustainable. He was 100% on the money.
Murray Rothbard provides an overview of the international monetary system since the early 19th century and why gold was abandoned by the US and other nations. The politics of money is indispensable to understanding why governments want to control the supply of money rather than leaving it to the market.
It is time to have a national discussion about money and banking. The Fed, fractional reserve banking, fiat currencies, have caused inflation, cycles of boom and bust, and trade wars, among other anti-consumer and anti-worker effects.
The solution to many, if not all, issues facing the country is to separate the government from economic decision making. That means backing the dollar with gold if the Fed is to continue as the country’s central banking. By the way, in the early days of the republic, the dollar was defined as 1/20 of an ounce of gold with the passage of the Coinage Act of 1792. It is time to return to our monetary roots.
The fiat money chickens are coming home to roost. After more than five decades of money printing and interest rate manipulation by the Fed since the last link between gold and dollar was severed by President Nixon, the fallout from monetary socialism is evident all around us. Income inequality has increased markedly. Does Bernie Sanders realize what is causing the wealth gap to expand decade after decade?
My latest piece on the economy was published in Fortune, https://fortune.com/2023/03/27/recession-2023-layoffs-tech-finance-unemployment-outlook-fed-rates-murray-sabrin/ This is an update of my 2021 forecast, https://fortune.com/2021/12/09/next-recession-heres-everything-bubble-markets-2021-2022-covid-murray-sabrin/
Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin's autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.