-->(selbst noch nicht gelesen, also Vorsicht ;-))
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<font color="#002864" size="1" face="Verdana">http://www.mises.org/fullstory.asp?control=1217</font>
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<font face="Verdana" size="2"><font color="#002864" size="5"><strong>Dollar or Dinar?</strong></font>
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<font size="4">by William L. Anderson</font>
<font size="2">[Posted April 29, 2003]</font>
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<font size="2">To suspicious minds, at least one of the reasons for the
hostilities in Iraq was the fact that the U.S. dollar has become a
second-fiddle currency to the Euro, at least when it comes to oil-producing
countries accepting payment for petroleum. A stronger U.S. military presence
in the Middle East supposedly would put a stop to that nonsense. But unlike
the mid-and-late 1980s and 1990s, when the dollar was the de facto world
currency, the dollar seems to have run out of steam.</font>
<font size="2">American authorities, not surprisingly, have tried to put
the best spin on this turn of events. Iraqis are patriotic, we hear, tending
to gravitate toward national pride. Perhaps so, but it would seem that the
reasons are deeper and more complex than just Iraqi patriotism. After all, if
Iraqis truly believed that the dollar was the better deal for them, they would
be more likely to swallow hard and accept the greenback. Devotion to a dead
tyrant does not seem to be reason enough for people to risk their life savings.</font>
<font size="2">The dinar rose because it still worked to facilitate
exchange, and, without a central bank, it was suddenly protected from
inflationary pressures. The dollar, meanwhile, was circulating in ever growing
quantities, and the Federal Reserve always stands ready to print more. </font>
<font size="2">And there's a larger issue too: the dollar's decline in
Iraq is a microcosm of a larger but more troubling issue, one that the White
House and the Federal Reserve System cannot spin away with its political happy
talk or pretend does not exist. Both the U.S. economy and the dollar are in
trouble, and their difficulties are intertwined with each other.</font>
<font size="2">During the early 1980s, the U.S. economy was in its worst
downturn since the end of World War II, yet the dollar was strong relative to
other world currencies, many of which were mired in an inflationary morass, a
holdover from the creepy decade of the 1970s. Although the U.S. Government had
begun to incur massive budget deficits, the dollar was still the favored world
paper, as producers of oil and manufactured goods overseas were more than
willing to take dollars as payment.</font>
<font size="2">In return, dollars flowed back here to purchase U.S.
securities to finance the deficits, build manufacturing plants, and Japanese
investors even went on a real-estate buying binge in this country, purchasing
landmarks such as the Rockefeller Center in New York City. Even though the
bottom dropped out of the real estate market in the early 1990s, foreigners
holding U.S. dollars still had not had enough as money found its way into the
stock market boom.</font>
<font size="2">As we so well know, the party is over, and it has been over
for a long time, except that few people here want to believe it, especially
those who hold political power, at least for now. The dollar has been taking a
beating for some time on overseas markets, and seen in that context, it is not
surprising that Iraqis are making the same decisions that so many others have
already made: dump your dollars.</font>
<font size="2">It would be nice to say that this is a temporary problem,
but the facts speak otherwise. For one, the U.S.A. is not such a great place
to invest. Sure, there are the U.S. securities to finance what is going to be
another round of massive budget deficits, although one wonders if there are
enough people out there willing and able to purchase at least $400-$500
billion of U.S. paper each year. After all, the Japanese"economic
miracle" ended more than a decade ago and oil-producing states like Saudi
Arabia have seen oil prices fall by more than 50 percent in real terms since
the heady days of OPEC in the late 1970s and early 1980s.</font>
<font size="2">Moreover, the prospect of profitable investing in something
like manufacturing here is at its lowest point in many decades. Savvy
investors from overseas take note of things like the tobacco"settlements,"
and the asbestos quagmire that has bankrupted numerous firms and seemingly has
a healthier appetite than a Great White Shark. From environmental regulations
to the rigged civil court system, investors understand that the litigation
explosion here presents a risk they would rather not undertake. Furthermore,
we have seen assault after assault of governments at all levels upon private
property rights, and no one wants to be played for a sucker if such actions
are avoidable.</font>
<font size="2">That is why places like China—a supposed"communist"
country—have become hot property for investors. For all of its ideology, at
least investors believe the Chinese Government will be more likely to protect
their property rights than the U.S. Government. This is nothing less than a
searing indictment against the legal climate in this country, and nothing
currently demonstrates that change for the better is coming.</font>
<font size="2">Ultimately, these things are—for lack of a better term—capitalized
in the currency. Once upon a time, people overseas would have swallowed hard
and bought dollars. Today, there is competition from the Euro, which goes in
hand with the sad fact that the United States through thousands of
self-inflicted wounds is losing its economic edge. The seller may be
running out of suckers.</font><br clear="all">
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<font size="2">William Anderson, an adjunct scholar of the Mises
Institute, teaches economics at Frostburg State University. Send him <font color="#000080" size="2">MAIL</font>.
See his Mises.org <font color="#000080" size="2">Articles
Archive</font>. </font>
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<a title href="http://www.mises.org/fullstory.asp?control=1217#_ednref1" name="_edn1"><font size="2"></font></a><font size="2">
Yaroslav Trofimov,"War Stories: Saddam Hussein is Scarce, but not the
Saddam Dinar," [i]Wall Street Journal, April 24, 2003.
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