Remember 'The Greening of America'?

Monday, 7 March 2016

Hugo Salinas Price

The United States took over five empires in the course of World War II: The British, French and Dutch empires, and the empires of Germany and Japan.

In 1944, when American victory was plainly in sight in that war, the US called its allies and friendly nations to an International Conference to be held at Bretton Woods, NH, where the US would in effect dictate the characteristics of the world’s new monetary order.

The new monetary order would be based on gold as the international money, supplemented by the American Dollar, which was to be considered as good as gold, given the large gold reserves held by the US.

Swollen with pride at the new and unquestionable pre-eminence of the US as the world’s super-power, the American Deep State was unable and unwilling to consider the future pernicious consequences of the new monetary order it had installed upon the world.

As things turned out, the US ran out of gold in 1971, and from then on, the monetary system began to run exclusively on the un-redeemable dollar.

What then happened is that the US continued to purchase everything it desired, in any amount, in any place in the world in exchange for dollars which it created out of nothing, but which the world had to have at all costs, because the lack of dollar reserves in national treasuries of other countries in the rest of the world meant monetary collapse for such countries.

So exports from the rest of the world flooded into the US, and payment for them in freshly created dollars flowed the other way, in so-called payment.

In those days of long ago, we saw pictured in the American magazines illustrations of how industrial installations were being turned into sites for restaurants, cafés and shops, amid green paths for those wishing to take their exercise in these trendy places. It was “the greening of America” and everyone was so happy about the lovely changes taking place - green landscapes, pure air to breathe and pretty cafés as good places to chat.

Exports to the US by foreign industrial firms were carrying US dollars to foreign countries that needed those dollars to survive as nations. The very competitively priced exports coming into the US were closing down Industrial America, but nobody seemed to notice.

Unlimited imports, the destructive consequence of America’s proud creation of the new monetary order at Bretton Woods in 1944, have finally brought America to its knees as an industrial nation.

The creation of jobs in the US now takes place at the level of service as waiters and waitresses in bars and restaurants.

The US will remain on its knees until Bretton Woods is totally forgotten and the role of the dollar as world reserve currency is terminated.

There is no reason why the US should not be a wealthy, prosperous and contented nation. All it would take is to declare that gold is the only money accepted by the whole world. All it would take is to step down from that high pillar, standing upon which the US continues to insist that the world’s money has to be the dollar - an undefined currency which represents nothing at all.

That’s a very bitter pill to swallow. The alternative is for the US to become a huge “Third World” nation, with attendant political instability and constant economic decline, marked by periodic revolutions and perhaps an eventual "balcanization" of the US as it breaks-up into several independent political entities.

A return to gold as money would force Americans to begin to produce locally the goods they now purchase from foreigners with endless amounts of dollars.

The difference between what the US imported and what it exported in 2015, amounted to at least $600 billion dollars sent abroad to "pay" for the export deficit. That’s $600 billion worth of goods that the US could have produced locally, if it were on the gold standard. (I have seen a figure as high as $975 billion; a search for the exact figure reveals that the total yearly figure is embarrassing and only figures for monthly trade deficits are presented.)

With gold as money, Americans would only be able to purchase foreign goods by offering their excess of American goods in exchange. American production of goods would immediately jump sky-high, and employment would boom. Very importantly, being productive is conducive to self-esteem and a happy and fulfilling life: the basis for a politically stable country.

This is the only way that the US can recover from the deadly situation in which it finds itself. No amount of monetary tinkering by the Fed will revive the American economy. Tariffs on imports will not produce prosperity: they are only isolated measures to protect specific industries, and tariffs produce counter-tariffs around the world. The only satisfactory and broad economic answer is to match production skills with production skills in free trade, with gold as the intermediary. Nothing else will do.

Production must be revived, not by the Fed’s monetary measures, nor by tariff duties on imports, but by the imperious need to manufacture in the US what cannot any longer be obtained by tendering the dollar in “payment”. Only a return to gold as money can do the job.