The Bernanke
On the same day that the approval rating for the Congress was reported to be stuck at a record low of 11% the International Monetary Fund piped up with the pronouncement that the American dollar is being over-valued by the markets. This, the Financial Times reports, is a contradiction from the remarks last week of the outgoing managing director of the IMF, Rodrigo Rato, who, the FT reported, had just finished saying that "right now the dollar is undervalued." Meantime, the New York Times has just rushed out a story under the headline "Core Inflation Remains Steady, Presenting a Puzzle to the Fed."
Could it be the confusion stems from the fact that none of the news stories on this contretemps, at least none that we could see, included the word gold? One day the dollar is said to be too high. The next day it is said to be too low. One day it is being compared with European scrip. The next day it is being compared with scrip issued by the Chinese communists. It's as if all these writers and analysts looking at the greenback were taken up in one of those airplanes that simulates zero gravity and left to float around upside down and sideways as confetti is blown past them.
We have written about this tragedy in several editorials now. Shortly after Mr. Bush tapped Ben Bernanke as the new chairman of the Federal Reserve Board, we ran, on December 5, 2005, an editorial called "The Bush Dollar," which was accompanied by a chart showing the plunge in the value of the greenback. It was plenty dramatic. At the start of Mr. Bush's presidency a dollar could buy a 256th of an ounce of gold. By December of 2005, its value had fallen to barely a 500th of an ounce of gold. Our editorial concluded by saying, "We'd like to think at some point he will want to, or have to, pay attention to the gold price."
A year later, in an editorial called "The Pelosi," we stressed that under the constitution responsibility for the dollar lies with the Congress and warned that the markets greeted the prospect of the Democrats' accession by devaluing the dollar further. And in "The Greenspan," issued in mid-September of this year, we greeted the famed ex-Fed-chairman's new book about the turbulence of his times by sketching the evaporation of value from the dollar on his watch. We suggested putting his picture on the tattered scrip, then worth not even a 700th of an ounce of gold.
By now we are well into the period when the blame for the dollar's decline will belong to Mr. Bernanke and his colleagues at the Fed and the Congress to which he explains his policies. In the month since Bernanke & Co. decided to greet the credit crisis by devaluing the dollar, it has been losing value at a scandalous clip — and our taxpayers are being forced to help underwrite the salaries of a staff at the International Monetary Fund to tell us that it's overvalued as it is and to pay another staff at the Federal Reserve to puzzle over the fact that the "core inflation" rate is remains steady.
It is a sad fact that the only one of the presidential candidates who has been talking sense about the collapsing dollar, Ron Paul, is so flawed on other issues. "Economic law dictates reform at some point," he wrote in respect of the collapsing value of the dollar. "But should we wait until the dollar is 1/1,000 of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become." He warned that "runaway inflation inevitably leads to political chaos" and declared that the time for action is now.
Mr. Paul wrote that a year ago. Today the currency that we might as well call The Bernanke has plummeted to the point where it is worth only a 762nd of an ounce of gold, and the IMF can't agree with itself and the Fed is puzzled and Congress is at 11% in the polls. And while all this was happening, the Cable News Network was reporting on a CNN-Opinion Research Corporation poll that found that nearly half of Americans — 46% — think that the American economy is in a recession. Could it be that their dollars and the consumer goods they buy just don't seem to have value against something real?
