Save the dollar? "Make the dollar great again"

 FORCE WILL NOT SAVE THE DOLLAR

POLICIES THAT MAKE THE DOLLAR DESIRABLE WILL

The latest in the dilemma on how to ensure that the dollar remains the reserve currency is enacting large tariffs on any country that does not use the dollar. Not only will such policies not save the dollar but will hasten its demise. 

Whether Donald Trump is playing to the neocon crowd or sincerely believes this is a right strategy is anyone's guess. If elected, I would hope he would reanalysis this approach. Power politics and fiscal irresponsibility is what has weakened the allure of the dollar, more of the same will be its ultimate demise.

In the 1960's with the introduction of many new social programs and the VietNam war, the US. government embarked on a policy of deficit spending, spending more money than they take in taxes. Many love that policy, especially speculators and those who deal in paper assets. Savers and the financial responsible pay for these policies with lost purchasing power.

In the mid 1960s the U.S. removed silver from coins and in 1971 refused to redeem dollars with gold. It was the end of fiscal restraint in Washington. Not only do these polices weaken the buying power of savers and financially responsible citizens, but also is an attempt to defraud international partners by giving them dollars that are constantly losing value.

The first push back came from oil exporting countries whose oil is priced in dollars and the price of oil was at $3.25 a barrel. At the same time the U.S. had inflation of as high as 17%. They then formed OPEC, "Organization of the oil exporting countries", in an effort to control production and keep the price of oil at price that accounted for the U.S. inflation of it dollar.

Many exporters to the U.S. began to realize as the U.S. lost its manufacturing capacity that all those inflated dollars could only be used to invest in U.S. debt or purchase U.S assets as a hedge against that lose of purchasing power. This soon became a political weapon, first with Japan that was buying buildings, golf courses etc. Pressure was places on Japan with sanctions and ended with their 1987 stock market crash, and has not yet recovered.

China then became the major exporter and also buyer of debt, as soon as it sought to purchase U.S. assets it was time to attempt to curtail the wealth of China. At the same time the U.S. has engaged in one war after another creating more deficits that has resulted in a $35 trillion and growing debt. In last few years the dollar had been used a weapon to force the submission of anyone who should not accept U.S. rules. It has now reached a point were an alternative system is being created other than the dollar system. This came about by the U.S. lack of fiscal responsibility and its use of the dollar as a weapon.

Historically the dollar was praised as "as good as gold". It is no longer applicable and the inistance and the attempt to force its acceptance will fail. 

Only "Making the dollar great again" will accomplish the sought result. Sadly that will require a long term and painful policy that Washington is not ready to accept. Only historic suffering can wash out the delusions and fantasies of the past.