It’s the gold standard, stupid
You wonder what Nevada’s Napoleon would say about this not-so-great recession if he were alive today.
Nevada’s Napoleon was George Wingfield, whose grip on Nevada shaped it a century ago and into the 1930s. This rough-hewn cowhand/gambler became a mining magnate, banker, hotelier and farmer-rancher whose colleagues were national financiers.
Wingfield made a fortune in mining and consolidated it in finance, only to see it evaporate when his Nevada banks collapsed in the 1930s Depression. With the help of financier Bernard Baruch, he emerged from bankruptcy to rebuild a smaller fortune than in his pre-Depression days. He died in 1959, a half century ago next Christmas.
Wingfield sought money as some folks crave gambling, drink booze, take drugs or lust after others to fulfill desires. His knowledge of human nature, business acumen and risk appetite helped him scale financial heights, sink to depths and recover as few ever do.
It’s impossible to invade the mind of someone gone a half century, but I’ll bet Wingfield would be aghast that modern finance has put the United States on the brink of the same abyss into which he stared.
The man for whom Reno’s Wingfield Park was named made his millions in the gold standard era, when dollars were backed by the stuff his miners clawed from Nevada’s rocky ground. After banks failed, the gold standard faded.
These days our Federal Reserve note is backed by tapped-out taxpayers. I’m no gold bug, but I question the wisdom of replacing a commodity-backed hard currency with soft dollars backed by taxpayers of today and tomorrow.
The federal government now serves as pusher/dealer for the nation’s drug of choice: money. We’re all addicted to it. Alcohol, pills and illegal substances pale by comparison.
We kept mainlining money after World War II, the war that pulled us out of the long Great Depression (not, as the liberal litany claims, President Franklin D. Roosevelt’s alphabet soup agencies and deficit spending). Now we’re going through withdrawal pains.
It makes no sense for the pusher/dealer also to serve as doctor in fighting this addiction, but to steal a tagline from the late Walter Cronkite: “That’s the way it is.”
Take the Federal Reserve. William McChesney Martin, 1951-70 Fed chief and a predecessor of current Fed chairman Ben Bernanke, used to say it was the Fed’s job to take away the punch bowl just as the party got rolling.
His idea was to make the drug of more money less available, inhibiting party-goers from blowing asset bubbles that would burst. But now bubbles burst, plain folks get foreclosure and joblessness hangovers, and busted banks get bogus bucks.
With but occasional exceptions in modern times, the Fed threw bad soft money after good hard money in a hit-and-miss bid to manage the economy. Instead, Fed chairmen and governors gave us a yo-yo currency worth less each generation.
Let’s not forget elected officials. Republicans and Democrats in Washington, D.C., spend like besotted sailors on shore leave and never mind the tab. If you believe the Fed is trashing our money, what do you suppose the national debt does to it?
We are falling into a pit in which U.S. bucks are weaker than watered-down drinks in a cheap bar … or non-branded coke cut on the street beyond comprehension.
The Wingfields and Baruchs of a bygone era made mistakes but knew the cornerstone of good business and a sound economy was currency stability.
Federal monetary and fiscal policymakers speak of price stability and full employment, but once again central government is long on talk and short on delivery.