Fortunately for all Americans, an extra 130,000 votes in Ohio last week spared us from post-election chaos and, potentially, the greatest domestic divisions since the Civil War.
But it did nothing to stop the nearly non-stop plunge in the U.S. dollar.
As I told you last week, even before the election, the dollar had been falling steadily against the euro, busting to the lowest levels of the year.
Then, on the day after the election, the decline accelerated.
The dollar nosedived by a dizzying 1.01% on Wednesday, by another 0.33% on Thursday, and by 0.66% on Friday ... busting to the lowest level against the euro in history ... driving international investors into panic ... and catapulting gold to 16-year highs.
This is a frightening downward spiral for our currency. In addition to the euro, the dollar is falling against the yen, the pound, the Swiss franc, and even some third-world currencies. It's falling in terms of how much corn, wheat, soybeans, beef, copper, silver, and gold it can buy. And in one way or another, it will affect just about every American alive today:
It will bring higher prices for gas, imported goods, and American goods that compete with them.
It implies a looming danger to bonds, stocks, and virtually all other traditional investments.
It could reduce American economic power, political power, and even military power.
Yet, most people don't understand it, and among those that do, few seem to care. But it wasn't always this way.
The Great Budget Battle of '59
I take you back 45 years and 10 months — to January 3, 1959.
The federal budget looked as if it was going haywire. The estimates for the deficit were running close to $13 billion, and in those days, that was huge.
In response, President Eisenhower gave one of the most important — and least remembered — state of the union speeches in American history. Reading in a monotone from a device on his podium that scrolled the text a few lines at a time, he warned:
"We must avoid extremes ... of waste and inflation which could reduce job opportunities, price us out of world markets, and shrink the value of savings. To keep our economy sound and expanding, I shall ... present to the Congress a balanced budget."
Eisenhower's big-picture view was simple: To compete with other countries, the U.S. had to keep its costs down; and to control costs consistently over time, the federal government had to maintain a balance in our federal budget and in our trade with foreign nations.
Eisenhower didn't have to wait two decades to learn that budget and trade deficits would lead to a falling dollar. Nor did he have to wait until November 2004, when the dollar plunged to all-time lows against a currency that didn't even exist in his time — the euro. He knew it all too well back in 1959.
But today, even after all the debates of a heated presidential election, it is neither understood nor accepted in Washington.
Actually, it wasn't immediately accepted back then, either: The most conspicuous reaction to Eisenhower's speech came in the form of a rude but unspoken interruption from the second row of the House chambers — an unrestrained yawn by the Senate Democratic leader, Lyndon B. Johnson. It was the first warning of a major battle over the budget.
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--- From Martin Weiss
Special note: the federal government's accounting is in such a mess, the Comptroller General of the United States has refused to certify it for the past six years. |
