The Third Political Disorder

3.  The world dollar standard creates international animus toward the holder of the "exorbitant privilege."

Everyone resents welfare abuses.  One of President Clinton’s best legacies is having signed welfare reform, reducing the welfare rolls by half.  The use of the dollar as an international reserve currency, however, turns the federal government into the world’s “welfare queen.”   One of the reasons that the federal government can spend so wildly?   International central banks take their trade-surplus dollars and re-lend them to the U.S. Treasury, which they consider a safe investment.

Valéry Giscard d'Estaing, while France’s minister of finance, echoing the sentiments of de Gaulle and Rueff called the use of the dollar as a reserve currency, allowing us to consume without first producing, the “exorbitant privilege.”  It is bad for America and bad for the world.

Other nations properly resent the ability of America to consume without producing.  Congress has become the world's "welfare queen."  While “easy credit” may seem like a luxurious privilege to America, Congress routinely squanders these funds on bailouts and boondoggles.  And these funds will need to be repaid.  The White House projects that the cost of paying the interest on the federal debt will rise to $700 billion by 2019 -- up from $200 billion today.  $700 billion is as much as all federal civilian agencies together spend today.  Only by retiring the dollar as the world’s international reserve currency can what Jacques Rueff called “the monetary sins of the West” be absolved.  Then, and only then, will America begin to organically create new jobs, more jobs, and better jobs and put itself back on a path of vibrant long term economic growth.

Next we turn our attention to the economic infirmities of the world dollar system, which:

1.  Causes a persistent trade deficit, hollowing out our industrial base.

2.  Enables a persistent and alarmingly high federal budget deficit.

3.  Destabilizes the value of the dollar, fomenting euphorias and panics.


Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

In Memoriam
Professor Jacques Rueff

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