World Economic Outlook: Money and the Economy

The world economic outlook news this issue includes topics of the value of the U.S. dollar and borrowing money for years that doesn't really exist, bringing on a possible economic collapse.

| May/June 1978

  • The world economic outlook column shares information on economic news, this issue covers money and the world economy.
    The world economic outlook column shares information on economic news, this issue covers money and the world economy.
    Illustration By Fotolia/michelangelus

  • The world economic outlook column shares information on economic news, this issue covers money and the world economy.

The world economic outlook news this issue shares information on how the value of the U.S. dollar has weakened worldwide due excessive borrowing over the years.

World Economic Outlook

It seemed like a good idea at the time . . . back there in July of 1944, at the Bretton Woods Economic Summit. After all: Hadn't the United States just proven itself to be the "Arsenal of Democracy"? Hadn't the U.S. just saved the world from the Axis powers? Didn't the United States have an almost invincible hammerlock on the world's supply of gold? Wasn't the U.S. — even then — pumping millions of dollars' worth of equipment, food, and other goods into the reconstruction of almost all the war-torn nations — friend and foe alike — on earth?

Of course! Everyone knew that the U.S. of A. — for many reasons — had emerged at the end of the war as the richest and most powerful country in the world. Besides that, ole Uncle Sugar was a Good Guy too. A little naive, to be true ("The U.S. has never lost a war or won a conference," said the negotiation-wise Europeans with a wink) . . . but certainly thoughtful, generous, kind, clean, and reverent to a fault.

So what could be more natural than to make the U.S. dollar — which, at the time, most certainly seemed "as good as gold" — really as good as gold. Shucks! Everybody knew that Uncle Sam's word was his bond anyway. And that Fort Knox was literally bulging with the yellow metal. And that when the leaders of the United States said that the dollar would always be freely convertible into gold (at the rate of $35 per ounce) . . . well — by gum! — they meant it.

And so — with the stroke of a pen — the U.S. dollar was officially declared to be As Good As Gold . . . and ail the other nations in the world were encouraged to use our Treasury's promise to cough up one ounce of .999 fine (or thereabouts) gold in exchange for thirty-five one-dollar bills . . . as the basis for their own currencies.

That is: If you were in charge of the money supply for Lower Slobbovia, you could salt away an ounce of gold in your nation's central bank vaults . . . and then — since people generally found it more convenient to carry a few pieces of paper around instead of a pocketful of heavy, clunky metal — you could issue one ounce worth of IOU's (paper money) against it.

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