Kerby Anderson

Ed Price writes about global economics and recently wrote to explain a mystery. After World War II, we assumed we would have a vibrant international economy. When the Cold War ended, that seemed even more likely. Globalization would lead to a peaceful world and a stable economy.

Instead, he says, “we are seeing the stuff of diplomatic nightmares: international tensions and competing territorial claims. There is an arms race in the South China Sea. There is a ground war in Europe.” He asks, what explains this mystery?

In the 1970s, President Nixon was forced by economic circumstances to no longer peg the dollar to gold. Thus, the US adopted a fiat dollar, and this country had an unlimited money supply. He talks about the inflation of the 1970s all the way to the 2008 financial crisis and fiat-financed wars in the Middle East.

He does credit President Trump with “one instinctive argument: If Uncle Sam buys foreign goods with his credit card, he will slowly destroy his credit score, erode his manufacturing base, and, presumably, lose his ability to fight a major war. This assessment is correct.”

For the last 50 years, this country has issued and exported paper currency. He notes that the “French famously complained that this was an exorbitant privilege. But they and other nations know there is a burden to owning and operating the international financial system.” He explains that the current system is undermining America.

Ed Price ends his essay with this observation: “There is no murder mystery at work here. It was Mr. Fiat, in the drawing room, with the printing press.”

We have solved the mystery. Now it’s time to solve the problem.