When you think about it, we have only been on a fiat dollar standard for 40 years. During that 40 years, the United States consolidated its position as the most powerful country on earth. For the last 20 years the United States has been allowed to borrow without limit from other countries.
20 years and 40 years seem like a long time to a human being who can only expect to live at most about 80 years, and often much less. So to a lot of people, the paper dollar seems like a permanent feature of the financial landscape.
But if you look only a hundred years back--only 60 years earlier than 1971--you see numerous examples of important currencies that have lost much of their value or even disappeared. If you look back only 150 years, you see an entire section of the United States (the Confederacy) where the currency became totally worthless.
If you extend the horizon back 300 years, to 1711, you see the greatest European power at that date (France) introducing a paper currency twice in the same century, and both times it became worthless.
If you go back a thousand years and study the currency history of China, you see more examples of paper money supply being expanded until it became worthless.
But because most of us run around in our lives like ants under a picnic table, unable to see very far in any direction and focussed on our immediate needs and plans, the 40 years since 1971 seems like an eternity. Furthermore, in the midst of that eternity, a very great man, Paul Volcker, did what was necessary to rescue the fiat money system so that it could continue to operate another 30 years.
I see absolutely no possibility that there is any intelligence, courage, or political will that can rescue the fiat dollar a second time. |
