The Federal Reserve Open Market Committee is scheduled to vote tomorrow on whether to lower interest rates to prevent a housing market contagion from bringing down the rest of the economy, but it would be appropriate to start the meeting by renaming the greenback the Greenspan. This would be in honor — if that is the word — of the former Fed chairman, Alan Greenspan, who is out this morning with his long-awaited memoir.
It turns out, as our Nicholas Wapshott reports on page 6, He-of-the-Ever-Furrowed-Brow blames President Bush and Vice President Cheney for the ills of an economy the central measuring device of which is the dollar that it was Mr. Greenspan's job to maintain in sound condition. Yet Mr. Greenspan left the greenback very much weakened and worth but a fraction of what it was worth at the start of Mr. Bush's term of office. To which one can only say, wait until Mr. Bush sits down to write his assessment of Mr. Greenspan. The truth is that the collapse of the gold value of the dollar in recent years is a great scandal. We wrote about it in "The Bush Dollar," an editorial issued on December 5, 2005, pointing out that a dollar that was worth a 265th of an ounce of gold when Mr. Bush took office had plunged in value to less than a 500th of an ounce of gold. A year later, in an editorial issued on November 30, 2006, and called "The Pelosi," we remarked that a new nervousness seemed to be driving down the value of the greenback as the Democrats were preparing to accede to the leadership in the Congress.
At the time of "The Pelosi," the dollar was worth a 637th of an ounce of gold, not even close to half of its value when Mr. Bush took office. At the time we noted that some would insist that the blame attach to Chairman Greenspan & Co. We noted that the Founders of America made it clear that it was to the Congress that they were delegating the power to regulate the value of the dollar and fix the standard of the other weights and measures. We also noted that it was the Congress that created the Federal Reserve.
As we plowed through Mr. Greenspan's book blaming everyone else but the family dog for the problems of the economy, it began to dawn on us that "the Greenspan" has a nice ring to it. It's not a lurch away from "the greenback." It's just a subtle shift in phrasing. Mr. Greenspan admits that he has harbored a nostaglia for the gold standard, but tells us that the value of the dollar is protected by other arrangements. Just not, it seems, the gold value of the dollar, which is the measure of its soundness. Today the dollar is worth less than one 700th of an ounce of gold.
It's become the government's practice to decorate the dollar with pictures of the presidents, and we wouldn't want to push them aside to accommodate the visage of Mr. Greenspan on the currency that would carry his name. We would suggest redesigning the scrip to have two pyramids — one a large pyramid made of gold ingots and the other a tiny little pyramid, also made of gold ingots. And the famous eye atop the tiny pyramid could be glimpsed through an etching of Mr. Greenspan's spectacles. We'd like to think that in the conversations at the Fed about renaming the greenback "the Greenspan" there might be found the beginnings of, if not wisdom, at least humility.