The Second Economic Disorder

  1. The world dollar standard enables a persistent and alarmingly high federal budget deficit.

The world dollar system causes a truly vicious cycle in deficit spending.  It gives the Congress a huge line of credit.  History demonstrates that Congress will spend every penny it can get its hands on.   The extravagance of federal spending has grown to a point almost impossible for the mind to imagine.

The sum total of federal spending for the nation’s first 120 some years was $15 billion dollars. The Congress spends every day or two more than it spent in well over a century

Adjusting for inflation would increase the real sum by some twenty-fold.  Even that means spending at a rate well over 100X faster than that averaged in the America of Washington, Jefferson, or Lincoln.

How is this possible? The federal government has only three substantial sources of money:  taxation; borrowing; and the printing press.  The federal government has been fought to a standstill, for now, on its ability to tax harder.  But under the world dollar standard  world central banks re-lend, to Congress, our trade deficit dollars.  And if borrowing fails… there is printing:  QEs as far as the eye can see.

The world dollar system

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

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

Next: how the world dollar standard destabilizes the value of the dollar.


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

In Memoriam
Professor Jacques Rueff

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