A Late, Great Interview

Last night Gaby and I did something we thought was fun, even though we also realized that it probably makes us either serious intellectuals, or nerds – or both. We happily sat in bed with my laptop on a Saturday night and watched a Mike Wallace interview from 1959. It was just him and my favorite author Ayn Rand. The video is so basic that I called it high schoolish. Which, by today's standards, it is. There's no scrolling info at the top or bottom of the screen; the camera jumps and wavers; the CG is primitive, and it's shot in black and white. The sound is even bad. But having said that, it's also totally engrossing. I can't remember ever being so drawn into an interview. His questions are tough; and she answers every, single one of them with the practice and fearlessness I would expect from her caliber of intellect. There are so many people who are, after all these years, still misunderstanding what she had to say, and why. But I'm happy to share it anyway.

Is It Still Just A Conspiracy?

In one of my previous posts, I focused on an article published by the British newspaper The Independent, in which the authors stated there are now widespread attempts by many central bankers all over the world to divest their countries of US dollars. The swirl associated with their story is more in regard to public reactions to the information than to the info itself. But ultimately denial will get us nowhere. And, for the second time in three weeks, I'm happy to say that I'm in good company with my concerns about the decline of the dollar. In an article posted on Yahoo Finance titled “Wake Up Washington! China Is Already Dumping the Dollar...” Harvard professor Niall Ferguson shares his view, and states that Washington is too dismissive, and that anyone who thinks the Chinese will be left with no or few alternatives to the American consumer is “slightly naïve.”

The crux of the issue is this: if the Chinese sell dollars, or in this case, trillions worth of US treasuries, the greenback will be devalued enormously. A side effect, however, will be the concurrent inflation of the renminbi (a.k.a. Yuan), China's official currency. But our oriental trading partners have more motivation and less to lose than you might think. First, their trade surplus is down nearly 60% from last year. And second, they have much less loose currency in the marketplace as a percentage of their GDP than the US does. This essentially means that if they are ever going to make a major transition away from American consumers and the dollar, the best possible and least painful time is right now. Couple this with the fact that China's leadership has in recent years been purchasing commodities of all kinds in every corner of the planet, and you can see that any likely increase in commodities will result in a major windfall for China's economy.

So Washington can poo poo this idea all they like. But I'm reminded of the words of my favorite author who said: “There's no denial of reality that can change reality.” It looks to me as though China has much to gain and little to lose in transitioning away from the United States.

And I'm already wondering about one of my future posts, when the dreaded term “economic warfare” will undoubtedly make its way back into common English parlance. That should make for some interesting news.

An Interesting Event From Reason Magazine

I just found a nice link to a program I'll be sure to watch this November. I'm always eager to share my love for laissez-faire capitalism – and for the writings of Ayn Rand – so I thought I would pass it along.

Currency and Conspiratorial Currents

A story published this morning by The Independent has columnists, pundits, economists and die hard politicos frothing over its grandiose doom and gloom implications. The publication stated that, according to its sources, a group of central bankers, mainly those from Russia, China, France, Brazil, Japan and several gulf states, are in the earliest stages of banding together to divest their countries of U.S. dollars.

According to sources, high-level meetings have been taking place in secret, though every statement made since by officials has been one of denial. So far, however, The Independent has not retracted any part of its story, and apparently hasn't been asked to do so. So the fuel on this newest and largest of conspiracies is receiving plenty of time and space to burn – at least in the minds of those who like to worry.

Reaction to the news has been surprise. Reserved surprise. Most pundits are taking the news in stride, even while expressing disappointment with countries like Japan (an American ally) and China (a huge trading partner). Virtually all of the most prominent talking heads have said that any divestiture will take a minimum of “nine years.” Others are stating ten to fifteen is most likely. This is wrong, wrong, wrong. And I can explain why.

Most politicos aren't economists. Nor are they criminally-minded. They don't understand the mentalities of those who deliberately meet in cabal-fashion behind closed doors. When we venture into this deliberate secrecy territory we have to reevaluate our standards. We need the standards of the crime syndicate: protect the family, protect yourself. We come first.

This is where the policy analysts are going astray.

Any group of individuals that would meet secretly in order to overturn a world currency, and throw the world's most prosperous nations into upheaval and bankruptcy, can only be counted on to do one thing predictably – the unpredictable. They are not likely to divest in any way that's orderly. Nor are they likely to respect the economic wishes of any country, even the ones with which they've already made agreements. Rather, they can be counted on to protect themselves. There isn't any leadership in existence that will sit idly by and watch, while other countries purge their unwanted monies. Once the en mass sale of dollars begins, the last country holding any currency will be the country with the least valuable dollars. This is what economists call “the time value of money.” If you have a dollar now, it's worth a dollar. But if you have a dollar one year from now, while all of your “friends” sell four trillion or more as fast as they can, your dollar will be worth a fraction of its current value. The proverbial rush to the door is already evident.

So nine years is rubbish. And so is ten or fifteen. If The Independent is correct, this scenario is probably going to play out more like an ugly mudslide. It will be a solid, unstoppable race to the bottom, with nothing but debris and shocked survivors left in the end. So brace yourselves. If this story is true, we're in for a very fast reversal of fortune, and one nasty and prolonged clean up.

Just For Fun

Go ahead. I dare you. Go ahead. Listen to this song just once, and tell me you don't have it stuck in your head three days from now. I dare you.



I just wanted to let anyone who's interested know that this video is part of a promotion for a game called "Plants vs. Zombies."