The Good President and the Almighty Dollar

I submitted my piece for this Thursday's column at the Partial Observer, "Why I Hate Bush." I'm kind of embarrassed by it because I have only sixty-nine reasons, and I know I'm missing several obvious things.

But writing about a bad President causes me to think: what would a President have to do to make me like him? That's the problem: politics is always so ugly and anger-inducing, that it is hard to appreciate the good times while they last.

Fiscal Responsibility
We should give credit where credit is due. Even though it has endorsed the Conservatives, the Globe and Mail in Canada looks back on over twelve years of Liberal rule in Canada:

Despite what the opposition parties would have us believe, it has not been all scandal and nest-feathering.

Ask yourself a simple multiple of Ronald Reagan's famous electoral question: Are you better off today than you were 12 years ago? Unemployment then stood at 11.2 per cent. Today, it is 6.5 per cent. An average mortgage rate was 8.78 per cent. Now it is 5.99 per cent, making home ownership affordable for hundreds of thousands more Canadians. The national debt has fallen from 66.5 per cent of gross domestic product to 38.7 per cent. Taxes are down; our standard of living is up.[emphasis added]

Much of that is due to Paul Martin, who under Prime Minister Jean Chretien was the "the most successful finance minister in the history of the country." Too bad for him that no one likes him as Prime Minister. I haven't seen Canada since before Chretien was first elected, and haven't followed the politics. I know there was and is a lot of compaints against the Liberals, many of them probably valid. But whatever the Liberals did or didn't do, those problems would have been so much the worse without that falling debt burden, and without those lower taxes. The USA was on its way to accomplishing a similar feat with a Democratic President and a Republican Congress. That quickly came to an end five years ago.

The Almighty Dollar
Like individuals, countries can't borrow and borrow forever. Individuals get overwhelemed just paying the interest on their debts. Banks stop lending to them. Whereas, countries that go into debt just print more money and become reliant on foreign investment. But if the debt gets too large, reasonable doubts increase about the very value of the nation's currency and the soundness of the economy. And this is fatal. A nation's economy essentially runs on faith. The dollar is both the essence and the symbol of that faith. In today's America, it is neither gold nor silver, but the paper dollar that creates and sustains our wealth. If we lose faith in the dollar, the wealth sinks, drowned by inflation. A nation that goes into debt is basically asking "too much" of the dollar. The solution to everything is to print more dollars. But the Almighty Dollar is a jealous Dollar and a just Dollar; the more we rely on the Dollar to generate wealth even as we consume more than we produce, the sooner we will lose even the wealth we have.

The funny thing is, even those of us who believe that the paper dollar is a farce, still depend on it. It's like what the agnostic comedian (I don't remember whom) said a long time ago: I don't believe in God, but I blame him for all my problems. I do believe we'd be better off if our currency was based on something of intrinsic worth, like gold. You can't just create more gold as easily as you can print up dollars. Prices of goods and services would fall, and therefore available to more and more people over time. The economy would be different than it is today, but it would be equally prosperous and far more sound. The State would be limited for the very reason that it could not just print up more money. Its presence in our lives would be small and its debts even less.

What made me think about the dollar was Tracy Twyman's article "The Magic and Mystery of America's Money" which I mentioned two posts ago. Twyman writes:

It is my belief that the Freemasons and other occultists who have been responsible for creating the United States, designing the dollar bill, and engineering our economy have understood the principles of alchemy, and have purposely chosen to construct our economy upon these principles: the principles of creating worth from worthlessness, and for creating a large volume from a small one, using the power of faith.
[...]
The dollar is “fiat currency”, declared into existence by the central bank in a manner similar to the creation of the universe by the divine words “Fiat Lux!” - “Let there be light!” Fiat money (best exemplified by the American dollar) is perhaps the only thing that truly means nothing, and has no independent existence, except in relation to something else (i.e., what it can buy, or be converted into), and yet it is the most powerful force within the human sphere of life – like the “Azoth”, or secret essence of life spoken of in alchemical texts.

Use Your Illusion
I have very little hope for a smooth transition to a gold standard in my lifetime, no more than I do for the abolition of the income tax or the restoration of federalism -- let alone the abolition of the State. It is worthy to promote these things, that they may prevail sometime later on. Today, however, we have this paper money, and we all depend on it no matter how much we wish we didn't. The faith that a Federal Reserve Note has value, is what makes it have value. "The faith makes it real" sounds mystical, but it is also common sense. Value is always in the eye of the beholder, and even if the faith is an illusion, it is better to retain this faith in the dollar, then to undermine it and see civilization collapse around us. If that happens, I wouldn't be surprised if civilization is rebuilt with gold filling the void that paper currency left behind. But just because I believe that the theoretical world with a gold standard would be superior to the world we live in now, doesn't mean I'd want to suffer through the events that would lead to it. The world as it is might not be any good, but it's mine. I'd like to take care of it.

The Good President
Which brings us back to the question of what I would like in a President. Restoring fiscal responsibility in D.C. would be a major plus. Deficits should fall to zero, and the the proportion (burdern) of the National Debt relative to the Gross Domestic Product should continuously fall, as it did in Canada. I will also recognize that, unlike a Prime Minister, a President does not initiate legislative reforms -- he's an executive, not a legislator. But he can write budgets, and he can veto unjust and irresponsible bills. He can keep the nation out of war.

Here's what I'd like to see:

1. Peace: America avoids military conflicts.
2. Deep cuts in American troop presence throughout the world, and the military budget substantially reduced.
3. Overall federal spending substantially lower than population growth and inflation would project, with the ax falling hardest on corporate welfare.
4. The burdens of regulation on business, of mandates on states, and of laws on individuals substantially reduced by executive orders mandating that officers in the executive branch enforce laws only in ways consistent with the Constitution and its Bill of Rights.
5. A significantly reduced federal prison population, through pardons of nonviolent "criminals" who were convicted of unconstitutional laws.

These would go a long way toward reinvigorating a genuinely productive economy. Americans would "feel" free again. The President would use his power of the veto to check Congress's urge to spend. And confidence in the dollar would be renewed and restored. In a far from ideal world, spending cuts, balanced budgets, and greater economic and personal freedom are still the way to go. They are not just the most just things to do in the abstract, they are the best policies on pragmatic grounds.

And that would be true whether the paper dollar was the work of supreme genius, or supreme foolishness. Either way, I'd rather not see civilization fall apart because the government's reckless borrowing and spending.