Our Beloved Yankee Dollar

Worship the dollar, it’s mondo cool. I don’t mean be lustful for dough; I mean be grateful for the fact that the Commonwealth is built on the world’s most respected currency.

A few countries that have nothing to do with the United States have come to their senses and use the greenback. Equador made the headlines for making such a leap. And why not? Latin America never divorced the subject of economics from populist politics, and currency soon became as soft as the toilet paper was hard. Call it the
Mob Effect on Monetary Policy. If you’re too messed up to provide a stable currency, then your economy is too pathetic to deserve any degree of success.

But don’t just take my word for it. Here’s the opening sentence in a piece, “How to abolish currency crises,” published in Forbes (February 21, 2000) by economist Steve Hanke:

“Cental banks in emerging economies generate inflation, instability, corruption, and poverty.”

The article goes on to cite how some small economies have dodged that bullet, and use foreign currencies (including, in many cases, the dollar) as their coin of the realm.

And, hey, the CNMI is listed in the article as one of 31 governments that have “adopted a foreign currency.” So’s Guam. This seems to sort of stretch the “foreign” designation a bit, but, well…there we are, on the list.

A stable currency doesn’t guarantee economic success, of course, but it takes a lot of the risk and sting out of investing in such an economy. Anyone hapless enough to have been exposed to the Philippine Peso or Thai Baht learned that lesson the hard way.

So why wouldn’t companies in the Phillippines and Thailand borrow money in dollars, and repay it in dollars? Oh, they can do that, but it would put THEM at risk for currency shifts. If they earn their money in local currency, and have to pay their debt in dollars, then they ride out the risk of shifting exchange rates. Gotcha’.

Money is a darned slippery subject, and is not as widely studied as the Geraldo show is. Monetary policy is best left to the experts, then, and not to the village idiot. Fed boss Alan Greenspan isn’t popular because he’s popular, he’s popular because he’s an outstanding economist who has kept the world’s top currency on an even keel. I can’t imagine him making a stump speech, running for office, trying to convince the trailer trash and urban scum and the rest of the dull-witted American electorate that he’s worthy of a vote. He wouldn’t even get elected dog catcher.

Which is, in the final analysis, utterly un-democratic. The masses can’t vote directly on monetary policy, it’s been taken out of their hands.

Alas, Mr. Greenspan can’t last forever, and the sun will someday set on his era. In the meantime, though, much of the world enjoys the benefits of his expertise and the stability of the Yankee Dollar. The CNMI is in that camp, so if you want to count a few blessings, make sure you put the almighty greenback at the top of your list.