Lessons Unlearned In The Middle East
dailyreckoning.com
...the British occupation of Mesopotamia-Iraq in
the early 1920's was very expensive. (Well, duh. Taking
over distant lands tends to be expensive, particularly if
you cannot afford it, as Casey Stengel would say.) My take
on it is...
"It was not just Britain's World War I war debts, almost
all of which were owed to the U.S., but the tipping-force
of its Iraq war bills of the 1920's, that caused a run on
the Pound Sterling in the early-mid 1920's.
"And then it was Britain's ill-fated effort to support a
falling Pound that caused U.S. Treasury Secretary Mellon to
OK the 'loan' of U.S. gold reserves to London, followed by
an increased use of the U.S. Dollar (then worth $20/oz of
gold) as a world trade-settlement currency. More and more
U.S. gold left the country (as in the expression
'boatloads'), which prompted the Fed, which had only been
around since 1913 and did not know what the hell it was
doing, to increase the money supply (actually, it was the
paper currency supply because the Fed has never operated a
gold mine.) This additional Fed-created credit funded the
'Bubble That Broke The World,' as the great economic writer
Garet Garrett called it, or 'the Roaring '20's' as it is
affectionately known.
"This FED-induced credit bubble, coupled with massive
corporate and Wall Street shenanigans that make Enron &
Worldcom look tame by comparison, led to the 1929 Panic in
FDR's New York state. FDR's Wall Street Panic spread across
the land of President Hoover, who in turn raised taxes
during a recession 'to balance the budget,' and funded
'relief' and public works projects to get people back to
working. This led to the successful candidacy in 1932 of
one FDR, who campaigned against Hoover deficits and tax
increases and wasteful 'make-work' programs (hey, it
doesn't have to make sense... ). And FDR's November 1932
election precipitated a run on gold at America's banks,
such that over 4,000 banks failed between election day in
1932 and inauguration day in March of 1933. So that the
first thing FDR did upon becoming President was to close
the banks and, upon reopening them a week later, order all
Americans to turn in their gold to the U.S. Govt. And some
might argue that it has been downhill ever since. |
