June 2, 2010 Reading Time: 3 minutes

On Thursday, May 20, the Committee for Monetary Research & Education (CMRE) held a meeting on the state and future of the dollar. The focus of the meeting was to shed light on the question: “Is the Dollar a Zombie?”

The admirable James Grant recently wrote the editorial Requiem for the Dollar which prompts the question for our meeting. Some economists say there are indeed segments of the economy – banks and institutions known as Zombies – and on the net one finds commentary on the Zombie stimulus attempting to revive the economy with an artificial recovery. Given that the Dollar has required a Requiem, it seems to fit as a Zombie, functioning without substance, only more debt, failing to restore the economy. Our meeting will present a study of the condition of the Dollar and the nation. – CMRE

The meeting opened with the distribution of a reprinted article based on a CMRE conference held in 1974. Professor G. C. Wiegand of Southern Illinois University published in two parts in The Commercial and Financial Chronicle in New York, appearing in the December 16 and 23 issues in 1974.

In his wide ranging presentation Wiegand noted that between 1922 and 1930 more than 400 foreign bond issues were floated in New York (not counting Canadian issues). Close to 70 per cent eventually fell into default, wholly or in part. In 1960s more than 300 foreign bond issues were issued in Germany and by 1974 they were selling at more than 12 per cent yield. During 1970s under a socialist government in Germany, the Bundesbank permitted the Herstatt bank, the largest private bank, to go under with heavy losses putting all banks on noticed that the tax payers would not save them from bad decisions. However, Treasury Secretary William Simon implied US would assist any major Eurodollar bank which fell into trouble.

The 2010 CMRE meeting featured a talk by James Grant of Grant’s Interest Rate Observer on his aforementioned Requiem for the Dollar which appeared in the Wall Street Journal. After being introduced by David Tice, Chairman of the May 20 session, Grant reviewed the current dismal world monetary situation. While the focus is on Europe, he examined the failures in US government decisions. He continues to view gold as a necessary solution to the bad monetary policies.

Following Grant, Jack Willoughby, senior editor at Barron’s weekly, expanded on his speech to CMRE two years ago: “The Mess in Europe and Why Will it Likely Get Even Messier”. He was doubtful that Europe had found an answer to its problems.

Walker Todd,former Federal Reserve staffer and currently a scholar at the American Institute for Economic Research, discussed the legality and practicality of the recent actions of the US Federal Reserve Bank.

Sean Fieler discussed his chairing of the American Principles Project and his recent Wall Street Journal article: “The Gold Standard: the Case for Another Look”.

Ambassador to the former European Community William Middendorf, chairman of CMRE and trustee of Heritage Foundation (and participant in the annual monetary conference of Robert Mundell in Tuscany) introduced David M. Walker and William Beach.

David M. Walker is now president of the Peter G. Peterson Foundation and former US Comptroller of the Currency. He concentrated on the need for drastic cuts in US government spending in order to gain economic stability.

Bill Beach is the director of Heritage Foundation’s Center for Data Analysis. Beach gave an excellent examination of the many failures and wrong turns of the Congress and the Administration creating the current crisis. A full text of Beach’s information is available on the Heritage website.

Leonard Liggio
Atlas Economic Research Foundation

Leonard Liggio

Get notified of new articles from Leonard Liggio and AIER.