Logan Flatt

Treasury Bailout of GSEs: Laissez-Faire In Serious Jeopardy

"It is NOW time for congress to use their constitutional authority to manage the US dollar."

Setting "weights and measures" for the U.S. Dollar would be even better. Remember when the U.S. Dollar was fixed by federal law at 1/35th of an ounce of fine gold? That was as recent as 1971. When Nixon took the U.S. off the Bretton Woods system on August 15 of that year, the value of the dollar was allowed to float in relation to gold (and most major currencies around the world then became unpegged and floated in relation to the U.S. Dollar). Now, in 2008, we have a dollar fluctuating around 1/1,000th of an ounce of fine gold. That's a -96.5% change in the value of the U.S. Dollar since 1971 largely because We the People have allowed career federal politicians and their handmaidens (i.e., the Fed, the Treasury) to go hog wild with printing, spending, and borrowing the U.S. Dollar like drunken sailors on shore leave over the past 37 years -- all at our request or indifference.

It all has to stop some day - either we can revamp the entire system before our personal incomes and wealth buys us ever less and less food, shelter and clothing, or the system will finally collapse in on itself forcing us to start all over when the dust clears with a new monetary system (the "New Dollar"?) probably based on a gold and/or silver standard with no fractional reserve banking, just to keep the politicians from printing more currency than the country has in gold and/or silver reserves and getting out of control again. Besides, after a total collapse of the old (today's) Dollar system, what other countries would want to hold or trade in our new currency if it wasn't backed by some fixed universal value like a fixed number of ounces of gold or silver? The U.S. government's "full faith and credit" would stand for nothing at that point and Fort Knox in Kentucky and the Federal Reserve Bank of New York (where our 8,000+ tons of gold are stored) would be our country's only saving grace as a foundation for a new monetary system.

Or, we can just sit idly by and possibly witness the U.S. over the next 50 to 100 years become the new Zimbabwe where the (fiat) paper currency is now most valuable as a toilet paper substitute. Let's hope we as a country come to our senses about our current monetary system and our profligate printing, spending, and borrowing long before we reach the "T.P." breaking point.