by Ralph Benko
Best guess: Follow the Money.
Americans feel their dollars shrinking. We don’t like it.
And we are groping for a way to stop it.
The left is reported shamelessly cheerleading for a bout of inflation in no less than the lead story of the October 27 Sunday New York Times: “In Fed And Out, Many Now Think Inflation Helps.” The story states, for example, that Harvard economist Kenneth S. Rogoff is championing inflation of 6% a year for “a few years.”
High inflation is a terrible thing, period. Three years of 6% inflation represents a 20% pay cut for those on fixed incomes, a 20% wealth tax for those in dollar-denominated assets that won’t inflate. This is a call for an aggressive devaluation — and, implicitly, a rolling default. The last frolic with inflation led to a skyrocketing “misery index.” The next one will too.
This shift in stance by progressive economic elites, which the Times subheadlines “A Break From The Past,” gives the GOP a political opening to reunite … and conquer.
The Civil War in the GOP, now, is a manifestation of a struggle between populism and elitism. Public intellectual Jeffrey Bell (with whom this columnist is professionally associated) nailed this in 1992 in his influential Populism and Elitism: Politics in the Age of Equality. Events uncannily have followed his predictions.
The yawning gap between the popular and elite opinion streams shows up now as the Tea Party vs. the Republican Party. The sooner the leaders of the Republican regulars recognize the nature of the radical populist discontent the better. Mitch McConnell and John Boehner both are capable of addressing the Tea Party’s discontents and reuniting the Grand Old Party.
What can reunite the GOP with its populist base? Addressing the shrinking dollar, that’s what. The tension between populism and elitism, as well as the issue of the quality of the dollar, goes back to the very beginnings of America. It has re-emerged in a big way.
The American Revolution was precipitated by a girdle maker named Tom Paine. Paine wrote a pamphlet entitled Common Sense. He became the prophet of (small l) liberal (small r) republicanism. And, not incidentally, Paine passionately championed honest money.
Paine transmuted the citizen discontent — our inchoate rage — into an irresistible force. His ideals, and their inspired activists, are alive in the Tea Party today. They are, to their core, a force for good.
Paine, himself, was widely detested by some of his contemporaries. John Adams, in an 1805 letter to Benjamin Waterhouse, wrote “There can be no severer satyr on the age. For such a mongrel between pig and puppy, begotten by a wild boar on a bitch wolf, never before in any age of the world was suffered by the poltroonery of mankind, to run through such a career of mischief.”
Notwithstanding Paine’s (sometimes gratuitous) irksomeness, Common Sense defined, and defines, the American Way:
Society in every state is a blessing, but government even in its best state is but a necessary evil; in its worst state an intolerable one; for when we suffer, or are exposed to the same miseries BY A GOVERNMENT, which we might expect in a country WITHOUT GOVERNMENT, our calamity is heightened by reflecting that we furnish the means by which we suffer. Government, like dress, is the badge of lost innocence; the palaces of kings are built on the ruins of the bowers of paradise.
Common Sense aroused the citizens of America. We previously were befuddled as to how to redress the indignities to which they were subject. The colonists quickly declared for Independence. They decided they no longer wished to be subjects, declaring war on King George III. And won. Then they united to create a liberal republic out of 13 separate former colonies.
Paine, beginning with Common Sense, effectively stripped the bark off the “Divine Right of Kings.” By doing this Paine trumped the glory of royalty with the dignity of citizenship. The dignity of us plain folks, in the end, prevailed. And prevails.
Paine inspired us to see — no kidding — that the office of Citizen is higher than that of any official.
America’s citizens remain vigilant that despotism — including its milder version, officious elitism — not take root here. The forces of radical liberal republicanism are alive and well in America.
This columnist believes that the next trigger for a populist uprising most likely will be over America’s increasingly unhealthy dollar. This columnist has predicted a “Money Revolt” on the cover of Time Magazine as the eventual signal for the next Big Thing.
Now William Tucker, news editor of RealClearEnergy.org. drawing on and citing the work of Lewis E. Lehrman (founder and chairman of the Lehrman Institute, with which this writer has a professional association), poses in the October 23 American Spectator the question How the Dollar Could Eventually Collapse:
At any one time, up to 35 percent of the dollar’s value comes from its role in international trade. This is what differentiates us from Japan, which may have twice our national debt but does not have the same exposure in international markets. If the dollar were to be toppled from its role as the world’s reserve currency, it would set off a run on the dollar in which every American could lose up to a third of his net worth.
At that point, people might start paying attention to what the Tea Party is saying. [Emphasis added.]
Tucker’s views (along with Lehrman’s) are consistent with a recent, widely noted and widely reported, critique by American Principles In Action (with which this columnist is professionally associated) of the RNC’s “autopsy” of why it so badly lost 2012.
APIA forcefully concludes, among other things, that the GOP should pick up “the forgotten part of the Reagan economic agenda: sound money. Conservatives need to explore monetary reform as a way of both containing debt and responding to voters’ concerns about the decline of the dollar’s value.” It calls for the GOP to “Endorse the Centennial Monetary Commission Act, sponsored by the Joint Economic Committee Chairman Kevin Brady (R-TX), to undertake a formal study of the Federal Reserve and evaluate various rules-based monetary reforms.”
Spot on. And very Paine.
The year before the Constitutional Convention, Paine wrote the now rather neglected Dissertations on Government, the Affairs of the Bank, and Paper Money.
[T]he evils of paper money have no end. Its uncertain and fluctuating value is continually awakening or creating new schemes of deceit. Every principle of justice is put to the rack, and the bond of society dissolved: the suppression, therefore, of paper money might very properly have been put into the act for preventing vice and immorality.
As to the assumed authority of any assembly in making paper money, or paper of any kind, a legal tender, or in other language, a compulsive payment, it is a most presumptuous attempt at arbitrary power. There can be no such power in a republican government: the people have no freedom, and property no security where this practice can be acted: and the committee who shall bring in a report for this purpose, or the member who moves for it, and he who seconds it merit impeachment, and sooner or later may expect it.
Nobody wants to see over a third of their life’s savings abruptly extinguished (or even, as the left now is loudly cheering on, rather quickly eroded, via inflation). The fear — and the indignity — of the “shrinking dollar” may well underlie much of the Tea Party discontent.
Mitch McConnell and John Boehner have, dramatically, reined in federal spending.
This is exactly what the Tea Party originally demanded. The left is screaming bloody murder about it. Yet the Tea Party discontent with the Hill Republican leadership persists.
If GOP leadership drills down to the underlying cause of that discontent — dismay over the shrinking dollar — rather than exclusively treating the symptoms (by staunching the orgy of spending) — it is likely to find a pathway to rapprochement with the Tea Party. A way to reunite, on principle and in practice, is much closer than leadership may recognize.
As “Deep Throat” famously said to Woodward and Bernstein: follow the money. “Following the money” promises to reunite the GOP. A GOP reunited around the imperative of a healthy dollar — and against the threats now made explicit by the left — could find itself a politically irresistible force.
Follow the Money … to victory. And to a new era of prosperity.
Republished with permission from Forbes.com