Dennis Prager Show - John Tamney on the devaluation of our currency
Aired: 2021-05-04
Duration: 03:38


=== Dollar Devaluation's Impact (03:29) ===

[00:00:00]  So do you foresee a devastating inflation?
[00:00:04]  Well, I think we already saw it.
[00:00:06]  I think we saw it in the 21st century.
[00:00:11]  When the year 2000 dawned, a dollar bought 1 260th of an ounce of gold.
[00:00:18]  And let's never forget that even though we left the gold standard in 1971, it never stopped existing as a measure, as a market signal of government's mismanagement of money.
[00:00:30]  And so $266 in the year 2000, roughly.
[00:00:35]  By the time George W. Bush left office in 2009, gold was up to roughly $1,000.
[00:00:42]  During President Obama's presidency, the price of gold rose all the way to $1,900.
[00:00:47]  Now it's at $1,700.
[00:00:49]  That's a fairly substantial devaluation of the dollar.
[00:00:53]  We didn't register and quote inflation in CPI because they've stripped out most of the market goods that Signal the inflation the most.
[00:01:04]  If they'd measured it the way they did in the 1970s, we would have registered a major inflation in the 21st century.
[00:01:14]  Are Republicans fighting this?
[00:01:18]  Not enough.
[00:01:19]  Republicans buy into it too.
[00:01:21]  I don't want to be the bearer of bad news, but it's stuff you already know.
[00:01:26]  Let's never forget that Donald Trump routinely said that other countries were beating us because their currencies were cheaper than ours.
[00:01:32]  Nothing could be further from the truth.
[00:01:34]  Implicit there is that Mexico is rich and has gotten rich by devaluing the peso.
[00:01:39]  That so is Argentina by devaluing their peso.
[00:01:43]  No, rich countries protect the value of their money simply because in protecting the value of their money, they're protecting the wealth of their citizenry.
[00:01:52]  The worth of their work.
[00:01:54]  They're also protecting the investors who commit capital to new ideas.
[00:01:59]  When you devalue money, what you're saying to the investors who drive all economic growth is that if you commit capital to a new idea and you actually get a return, you succeed, you create a new Google or a Microsoft or an Amazon, any money you get back will come back and devalue dollars.
[00:02:16]  So currency devaluation is anti-progress.
[00:02:18]  It's a tax on growth, yet it's hard to find a politician who understands this nowadays.
[00:02:24]  Well, it seems it's hard to find a businessman who understands this.
[00:02:28]  Every big business sides with the left.
[00:02:32]  Yep, yes, certainly some do.
[00:02:35]  Certainly some make that statement as a way of just making nice with the other side.
[00:02:42]  But I think businessmen, in a sense, broadly understand it.
[00:02:46]  Phil Knight of Nike, in his wonderful book Shoe Dog, made the point that when the U.S. left the stability of the dollar as 1 35th of an ounce of gold in the 1970s, suddenly his ability to run Nike became extraordinarily difficult because he was importing most of his shoes from Japan.
[00:03:04]  And so these floating exchange rates that no one had ever seen before.
[00:03:08]  It made the ability to do business a much more difficult concept because it rewrote contracts overnight.

=== When Politicians Panic (00:24) ===

[00:03:16]  It's the robbing of people who want certainty.
[00:03:21]  Yeah, Nike.
[00:03:22]  And then look at what it ended up doing.
[00:03:26]  Well, listen, you wrote a very important book.
[00:03:30]  When Politicians Panic, folks, is up at the DennisPrager.com.
[00:03:33]  John, I look forward to talking to you again.
[00:03:36]  Dennis, thank you so much for having me on.
[00:03:38]  I appreciate it.