Well, it’s official. The Trump Dollar is now the weakest in our history. The value of the greenback collapsed over the weekend to less than a 1,940th of an ounce of gold, where, as we write, it lurks. “Gold Rips Up Record Book as $2,000 Test Looms...” says the headline on Drudge. We ourselves are not making predictions. It’s amazing enough that 100 days from the election, neither candidate has addressed the dollar crisis.
Particularly because it was an issue in 2016. That’s when President Trump suggested that the Federal Reserve had created a “false economy.” The stock market had begun its climb to 20,000. At the onset of the Great Recession, the Fed’s balance sheet was under a trillion dollars. By the end of the Obama years, the federal government alone owed the Fed something like $2.2 trillion. It was astounding.
Yet no sooner did Mr. Trump accede to the presidency than he stopped talking about a false economy. Instead, he started jawboning his own Fed chairman to boost lending and keep interest rates down. Then came the plague. Today the Fed’s balance sheet is, at $6.9 trillion, at a level that was once hard to imagine. Congress may parlay several more trillion into a rescue program that could well tap the Fed.
The thing that strikes us about all this is that, save for the Wall Street Journal, no one — not Mr. Trump, nor Chairman Powell, nor Speaker Pelosi, nor Senator McConnell, nor Paul Krugman, nor Vice President Biden — has addressed the collapse of the dollar against the kind of money that can’t just be whistled into existence. Nor has any of these worthies outlined a road forward in any coherent way. The entire debate seems focused on strategies against, on the one hand, the coronavirus and, on the other hand, the riots.
We’re aware that during the years when Mr. Trump was jawboning his own Fed, he was also cutting taxes and deregulating the economy and, inimitably, declaring that America was open for business. It produced an employment boom that has been the envy of the world. Nor do we blame Mr. Trump for the turmoil of the coronavirus crisis; could the Democrats have done better?
We see the monetary crisis as an opportunity for Mr. Trump. He has the chance to find a venue to deliver the monetary equivalent of his Mount Rushmore speech. He ran on a platform calling for an annual audit of the Federal Reserve’s “activities” — meaning not its books but its management of the dollar. His platform also called for a monetary commission to investigate “ways to set a fixed value to the dollar.”
Those reforms, declared GOP aims, will die if the Democrats hold the House, as they seem nigh certain to do, and more so if they take the Senate. If they take the presidency, it will be entirely a wilderness campaign. All the more reason for Mr. Trump not to dally in laying down a vision for the future. Better to have tried to do his best for the principles on which he ran.
Better still to fight for sound money while in power, and we are entering a period where this issue will once again be alive. We understand the dollar may be doing fine against competing paper or electronic scrip mass-produced by foreign governments. Yet today’s record low of the dollar against gold means that so far in Mr. Trump's presidency, the greenback has plunged 38%, a third again more than the 28% the dollar fell during Mr. Obama’s entire presidency. What is the President’s answer?