Economic Outlook

"A German father back In the early 1900's was being quite rational when he left his two sons a large sum of money and cautioned them to spend it wisely. The good son, a sensible young man, invested his Inheritance In safe German government bonds. The other son promptly went out and blow his share on wine, woman, and song. When the terrible German inflation of the '20's struck and it took wheelbarrows full of paper marks to buy a loaf of broad, the prudent son found that his bonds were worthless. The prodigal son, on the other hand-discovering that glass was In short supply-sold his collar full of empty champagne bottles for a very tidy sum.

"If the Lord did not mean for them to be sheared, he would not have made them sheep."

Eli Wallach as the Mexican bandit In The Magnificent Seven

Don't lot It upset you. But you-and all the other decent, honorable, prudent, hardworking people who still think that Little Jimmy Carter "saved" the American dollar for you last November (in other words, all you "sheep")-have just been sheared again.

In the first place, Little Jimmy's "bold and decisive" move wasn't really bold or decisive at all. Carter was forced to make that abrupt about-face. He and his administration's (up to that time) "do nothing" policy had backed the U.S. dollar as close to the brink of economic disaster as It could be pushed without going over. In. deed, the dollar had already lost its tooting, was hanging onto the edge by Its fingernails, and-by losing value against gold and every major foreign currency on a rapidly Increasing daily basis-was slip. ping Into the abyss at an alarming rate.

In short: A "free fall" ... a "crash" of the dollar was only weeks-some currency traders say days-away. None of the world's money markets wanted to hold U.S. paper IOU's any more ... especially when the value of those IOU's was visibly shrinking minute by minute (at one point, the American dollar actually lost five percent of its value against the Swiss franc In a single day!) ... and especially while Little Jim and his economic "advisors" airily continued to tell the world that they weren't concerned by the dollar's plunge.

Which brings up a very Interesting second point: Why had the Carter administration so nonchalantly allowed the U.S. dollar to slide for months before Little Jimmy's abrupt grandstand play last November 1? Was It really—as the cynical currency traders In Zurich, London, and Tokyo say-all done for the benefit of a few large American-based International banking Interests ... which-as a matter of record-had reaped billions in profits by speculating against (selling short) the American dollar almost from the day that Carter took office?

And-Point Number Three-if it wasn't for these Interests, and If Little Jimmy's "surprise" move to "save" the dollar really was "totally unexpected" as the TV news programs solemnly told us It was ... then why did the Swiss franc "inexplicably" begin to fail sharply against the dollar a full 24 hours before Carter's formal announcement? As Newsweek shrewdly noted (see page 96 of the November 20, 1978 Issue), "That meant that some currency dealers were shed. ding francs to buy dollars In volume. The question was who."