Yellen and De Gaulle

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

“Yellen Snubs emerging nation pleas” is the headline that catches our eye in the wake of the first testimony before Congress of the new chairman of the Federal Reserve. It was streamed across the top of the Financial Times. The pleas Mrs. Yellen was snubbing were over “effects of ‘taper,’” meaning over the slowdown in the pace at which the Fed is pursuing its quantitative easing. The FT quotes India’s central bank governor, Raghuram Rajan, as saying the Americans are “washing their hands” of emerging markets.

Far be it from us to worry about the rest of the world (we’d be happy, we sometimes joke, to see it run by an American colonel), but we happen to be sympathetic to this complaint. It’s bad enough that we Americans have to make our economic decisions by triangulating off the “forward guidance” of a pyramid of Ph.D.s at the Federal Reserve. Imagine how galling it must be to the editors of the Financial Times and the rest of the Europeans, Africans, Asians, and South Americans.

This is a moment to remember Charles de Gaulle. In February 1965, at the height of his stature, the president of the French Fifth Republic held a famous press conference in the Elysee Palace. He gathered 1,000 journalists in a room and sat them in gilded chairs. He himself sat, we noted when we first wrote about this moment, at a cloth-covered table in front of the newspapermen and women and warned that the dollar had lost its transcendent value and called for a return to the gold standard.

The virtue of the gold standard, in the eyes of De Gaulle, was that the system was not particular to any one country but imposed the same measure of value and thus of discipline on all of them. Time (magazine) stood still in amazement: “Perhaps never before had a chief of state launched such an open assault on the monetary power of a friendly nation,” it said. Less than half a year later, President Lyndon Johnson signed the 1965 coinage act, beginning the formal debasement of American money.

Janet Yellen doesn’t want to talk about De Gaulle’s point. The political wise men and women fail to reference it (the FT itself often mocks the gold standard even though its editors front the very phenomenon that galled De Gaulle). Chairman Bernanke didn’t want to talk about it. Congress is all too happy to delegate the power it was granted in the Constitution to regulate the value of our coin (and foreign coin). So the emerging nations are the losers, for now. When they finish emerging, though, watch out.


The New York Sun

© 2024 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

By continuing you agree to our Privacy Policy and Terms of Use