The old expression “we’re not out of the woods yet” is a caution against early celebration and irrational exuberance. In the case of our monetary system, however, we’re out of the woods…or, at least, the Bretton Woods. Of course, I’m playing with words, but it serves our purpose here rather well. In the aftermath of World War II, as America was emerging as the world’s predominant economic and military power, the United Nations convened a meeting in Bretton Woods, New Hampshire, to ratify an accord that would stabilize world financial markets. It worked, because it was based on absolutes.
The concept of the Bretton Woods Accord was to establish the U.S. Dollar as the world’s primary reserve currency It made rational sense, as America’s economic and military might assured the strength of the nation’s credit. Nonetheless, the accord called for the U.S. Dollar to be pegged against the value of gold, as all other major world currencies would be pegged to the dollar. The world at that time understood the importance of having money that means something.
I write this post in response to feedback I’ve received from my recent post “Making Money Mean Something.” Some have wondered if I mean that we ought to purchase enough gold assets to fill Fort Knox to back every single American Dollar in circulation. I do not, for it is not feasible. I do, however, believe that another Bretton Woods style accord ought to be carefully considered by U.S. policy makers as we seek to stabilize the dollar. We don’t have to directly back U.S. Dollars with gold to have them measured by gold. For example, under Bretton Woods, gold was valued at being worth a certain denomination in dollars per ounce. This, naturally, provided a barometer for measuring the value of the dollar. When President Nixon floated the dollar in 1971, thus taking it off of the gold standard established by the Bretton Woods Accords, its devaluation began.
Frederick Nietzsche. who infamously declared God dead, also mused of the consequences from “unchaining the Earth from its sun.” Post-modern relativism has delivered the verdict: a diminished economy, a decomposing culture and the decline of the greatest Republic the world has ever known. I’m not sure about “unchaining the Earth from its sun,” but this Nation is quickly unchaining itself from the Maker of the sun, and the consequences could not be more dire.
Truth is not a concept, He is a person. Economic laws, like all of Natural Law, works because it was merely discovered by man, but is created by God. The longer we assume we can create values out of thin air, the faster we run head-first into economic calamity. Economic prosperity is built on the foundation of Truth. Silence truth…stifle the economy.