“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 blew 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 cellar 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
President Jimmy Carter Saves the Value of the U.S. Dollar
Don’t let 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. Indeed, the dollar had already lost its footing, 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 slipping 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 5 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 fall 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 shedding francs to buy dollars in volume. The question was who.”
Well, if Newsweek found that question a tough one to answer, the weekly newspaper Spotlight did not. According to an article by George Nicholas in that periodical’s November 27, 1978 issue, “a well placed confidential source” furnished the paper with an internal memo from the Asset and Liability Management Committee of New York City’s giant Citibank. And that memo — dated a full two weeks prior to Carter’s “surprise” move — neatly listed every major point that Little Jimmy ticked off in his “unexpected” announcement a fortnight later.
Or, to put It another way: How can you lose in a speculation against the dollar when you know — for months on end — that every time you sell that dollar short, it sure-nuff will be allowed to drop in value? And how can you then lose as you suddenly switch to buying dollars when you know that — within 24 hours of your purchase — the President of the United States is sure-nuff going to “unexpectedly” announce massive support actions that are certain to drive the value of those dollars up again?
“But our President,” you may say with some shock in your voice, “would never knowingly do something like that.” Maybe not. But whether he took part in this whole manipulation knowingly or not, the facts remain:
- the Carter administration stood idly by and refused to support the dollar for months while the biggest banks in this country actively rolled up billions in profits by speculating against the dollar
- “someone” then made additional hundreds of millions in profits by buying huge quantities of dollars less than 24 hours before Carter announced his “surprise” program of support for the dollar…a program guaranteed to drive the price of the dollar up, and
- that “someone” wasn’t the thousands of “little guys” in the currency trading business, it was a few big American banks.
And — oh, yes — again according to Spotlight’s November 27, 1978 article, there was at least one consortium of foreign bankers which also raked in millions during this whipsawing of the U.S. dollar: That was the group of Pakistani-Arab bankers now represented by and fronted for by a fellow name of Bert Lance. And we all know who Bert Lance is, and the “insider” relationship he enjoys with Little Jimmy Carter. But that’s probably just coincidence too.
Temporary Fix That Hurts the “Little Guy”
Of course (just to emphasize the fact that this column has nothing in particular against the peanut farmer from Georgia who now sits in the White House), it should be stated here that this isn’t the first time during this decade that a U.S. President — knowingly or unknowingly — has served a few big vested inside interests so well at the expense of hundreds of millions of the world’s “little people” (where do you think — sooner or later — all those billions of windfall profits that the insiders made are going to come from … in the form of higher taxes, lower social services, and increased inflation?).
Although most of us still tend to associate Tricky Dick Nixon’s administration with the corruption of Watergate, history will almost surely judge that scandal as small potatoes when compared to the billions that Slippery Richard’s economic “policies” reamed out of the masses and deposited in the vaults of the Russians, the Red Chinese, and the U.S-based multinational banks. The whole scam back in 1970, ’71, ’72 and ’73, and the resulting repercussions — such as quadrupled OPEC oil prices, which haunt us to this day (see, the little guy always pays and pays in the end) — was worked pretty much the same as the current shell game. Only the shills (the guys out in front who say “I’ll never lie to you” and “I am not a crook”) have been changed to confuse the crowd. Stand still, little sheep, and be sheared.
Unfortunately — as bad as all this may be — that’s only the half of it. Because, just as Nixon’s highly publicized actions to “save” the dollar (dropping all gold backing from our currency, slapping on wage and price controls, etc.) didn’t save the dollar at all, neither will Carter’s. And for the same reasons.
You can’t expect the world to accept worthless paper IOU’s In exchange for real goods and services forever. Not even when you make grandstand plays such as selling off dwindling U.S. reserves of gold and borrowing massive amounts of foreign “hard” currencies (German marks, Swiss francs, etc.) with which to buy up the mountains of your worthless IOU’s that the Germans and the Swiss have the good sense not to buy on their own.
Sooner or later your gold will all be gone. And sooner or later you’re going to have to repay those borrowed marks and francs. Carter may have temporarily reversed the dollar’s slide, in other words, but only temporarily. Until and unless the U.S. dollar is once again solidly backed by gold — real wealth that endures regardless of the vapid promises, grandstand plays, and other gyrations of whatever politician happens to be in office at any given time — all these “solutions,” all these actions to “save” the dollar, are going to continue working about as well as they’ve been working ever since Nixon severed the dollar’s last official ties to gold in 1971. This is to say that economic conditions will continue going from bad to worse.
Which also is to say that if you put your faith in paper money and stocks and bonds and pension plans and social security and annuities and politicians’ promises or anything else that has a value determined by arbitrary government, social, or business actions … you’re a sheep (just like the “good” German son) and you’re going to get sheared. Correction: You’re already getting sheared.
(Example: You have some paper dollars on deposit in a bank or invested in something that’s paying you five, six, seven, maybe even eight percent interest. At least you’re that much ahead of the game, right? Wrong! With inflation now running at an “official” 10 percent which — at least according to internationally famous economic pollster Albert E. Sindlinger — really means over 14 percent, you’re actually losing six percent -14 percent minus 8 percent — or more, not even counting the bite taken by taxes, each year in which you draw that “big” interest!)
Paper Economy Versus Real Wealth
So what are you gonna do about It? What can you do about it? Well, sir (or madam), you can lift yourself out of the paper economy and plunk yourself down over there in the economy of real wealth Oust like the “bad” German son who cornered the wine bottle market by mistake). As Stephen Gaskin — leader of The Farm in Summerville, Tennessee — sagely noted a previous issue of MOTHER EARTH NEWS, you can:
“Get outside ‘The System.’ If you’re living in an economy that always has you holding a lot of paper, and everything comes apart, you’re going to be stuck with paper. Paper is highly inedible. But if you’re working at a level where you’re holding beans when things break down, it doesn’t really matter. You can always eat the beans. Put your money into used farm equipment and some land.”
Ah, yes. As every “ignorant” peasant in the world (but far too few “sophisticated” modern-day citizens of the U.S.) knows, that’s the beauty of real wealth (a garden patch, a shovel, a shotgun, one of those old beat-up ’40’s tractors that’ll probably run forever, a flock of chickens, unbroken bottles of good liquor, some gold and silver coins, etc.).
Real wealth tends to hold its value through good times and bad, no matter what political party is in power, no matter what convoluted economic theory is in or out of fashion, no matter how high or low the stock market soars or plunges, no matter how much or how little general opinion says an unbacked printing-press dollar is worth.
It doesn’t matter if Democrats or Republicans are in office: Your garden patch can feed you (the rain, and the sun, and the Good Lord willin’) … if you have a garden patch.
It doesn’t matter If Keynes or Friedman or Samuelson’s economic ideas are all the current rage: Your shotgun can still put a few rabbits on the table and protect you and your family from society’s criminal elements … if you have a shotgun and a few shells.
It doesn’t matter if our politicians and our economists screw things up so bad that eggs sell for $800 a dozen on the black market or eight cents a dozen (and, if history tells us anything, it tells us that — sooner or later — politicians and economists always screw things up that bad both ways!): Your little backyard flock of chickens can still supply your family with all the eggs that Mary and Johnny and Susie care to eat … if you have that backyard flock of chickens.
And that, of course, is what real economic and real social freedom is all about. It’s not about shouting slogans in the street or strident speeches made at endless meetings held by one or another of the sad little “liberation movements” that have afflicted this country and others during the past decade. It’s not about letting some “big daddy” in Washington “save” our currency from his own inflationary programs. It’s not about Gross Domestic Product or rates of employment or labor strikes or import quotas or minimum wages or the balance of payments or any of the other things that the TV news programs pretend that it’s all about every weekday evening.
Real freedom is about prying a little or a lot of your life out of the paper/credit card/computer economy (or “system” or “society”) and just walking away. It’s about turning the asylum over to the lunatics. It’s about trading your paper IOU’s and your paper social security card and your paper stocks and your paper bonds and your paper annuities and your paper this, that, and those for some real wealth.
Things like a little piece of land and an earth-sheltered, solar-heated house that you can build yourself for about 1/100th the cost that your friendly neighborhood contractor and mortgage bank would charge you if you had it built and financed by them.
Things like a little garden and, maybe, a built-in greenhouse on that new earth-sheltered home. And a flock of chickens in the back yard, a pig or two beyond that, and a couple of goats or miniature Dexter cows to pasture the three or four green acres across the back of your place.
Things like how-to books, a good stock of hand tools, the development of a few skills (gardening, masonry, appliance repair, recycling, house cleaning, haying, livestock husbandry, basic equipment operation, canning, caning, weaving, remodeling, etc.) that will always be in demand no matter what happens.
Things like the cultivation of some good bartering contacts. And a stockpile of trade goods (soap, liquor, fishhooks, extra clothing, light bulbs, automobile spare parts, firearms, ammunition, gold and silver coins, buttons, toilet paper, etc.) that someone — maybe even you — will always be glad to have no matter how good or how bad times ever get.
Things like a lifetime wood stove and a few replacement panes of glass for your solar collectors.
Talk about freedom! Talk about independence! Talk about being able to take satisfaction in just plain living and coming and going whenever you please without fear of getting sheared any more!
Let others — if they don’t know any better — worry about shrinking dollars, rising taxes, and expanding prices. Let their lives rise and fall on whether or not some oil sheik wants to export petroleum. Let them wonder if beef prices will increase by 10 or 40 or 75 percent next year. Allow them to wallow in the frustrations of escalating mortgage payments and rental bills. You’ll be too busy with your own “problems” to notice:
Let’s see now. Should you trade those extra eggs off for some of your neighbor’s new crop of strawberries, or should you just try to eat ’em up yourself? Then again, it might be best to put a few dozen under some “sitty” hens and let ’em hatch out a few batches of Sunday chicken dinners for this coming summer, or just store the extra hen fruit away in the freezer for next winter.
Ain’t it awful how complicated — and delightfully simple! — life can get when you arrange it, as Stephen Gaskin says, so that “you can always eat the beans”?
Last Minute Updates
As this report went to press, it seemed a certainty that — just as MOTHER EARTH NEWS predicted in this column in her May/June 1978 issue — the paper economy will start to slide into a recession (hope for a small one) sometime in the first few months of 1979.
At the same time, you can expect continued inflation and erosion of the purchasing power of the U.S. dollar. Plus renewed attacks on the dollar (frequently, once again, by American-based multinational banks) on the world money markets. You’ll also see another big move by a block of European countries — including Germany, France, and Italy — to establish a new reserve currency that, eventually, will be indexed in gold (very bad news for the dollar, especially if Russia and the OPEC nations recognize the new currency).
Beef prices will be up sharply in 1979 and housing starts, automobile sales, and the stock market substantially down. New York City — once again — will be embroiled in terrible financial difficulties, and several other big cities, including Cleveland, won’t be far behind. You also can look for Carter’s voluntary wage and price guidelines to be challenged quite vigorously, especially by labor, which — sooner or later — will force the President to ask Congress for the authority to institute mandatory controls.
In short: You may not like your economic situation in the paper economy as it currently stands, but a year from now you’re probably going to look back on now as the “Good Old Days.” This is an opportune time to start converting yourself to the real wealth economy, if you haven’t already done so.