Shilling for Obama – by Vasko Kohlmayer


Eamon Javers of Politico recently wondered why Matt Drudge, the proprietor of the widely-read Drudge Report, so frequently links to stories detailing the decline of the dollar. In the first three weeks of October, he noted, Drudge linked to such stories eighteen times. Javers suggests that Drudge’s interest in the subject may be politically motivated:

“What Drudge is doing is relentlessly hammering the continuing point which is linking Barack Obama’s administration and what some see as their failures on spending and their agenda on the economy, linking that to the declining value of the dollar. And what we see is the dollar becoming extremely politicized in the debate over whether this is Obama’s fault.”

The quote is revealing in more ways than one. For one thing, it lays bare the mindset of the mainstream media. Javers is only one of a legion of mainstream journalists who automatically assume that any story that reflects badly on the president must be an act of political gamesmanship. It apparently does not occur to them that Matt Drudge may be highlighting those items, because they are intrinsically newsworthy. So intent are they on pushing Obama’s agenda that they have failed to notice one of the most important stories of our time – the ongoing disintegration of the US dollar.

The repercussions of this are immense. Once the dollar collapses, it will take down with it the world’s monetary regime, which has the dollar as its foundation. This will impact all of us in profound and life-changing ways. But rather than reflecting on this situation, the journalistic elite merely wonders whether those who bring this matter to public attention have a political ax to grind with the president.

They would do well to consider that the story of the falling dollar is decidedly not the invention of Matt Drudge or some right-wing attack machine. It is financial market’s verdict on the fiscal mismanagement in Washington, DC. Last week Bloomberg – one of world’s premier business news agencies – opened one of its wires with the revelation that “The dollar reached a 14-month low versus the euro.” On Monday yet another report opened with this: “The dollar slid against high-yielding currencies, led by the Australian dollar.”

In recent months, there has been a proliferation of such stories. The fact that they are almost completely ignored by the mainstream media is less an indictment of Matt Drudge than of the media’s failure to inform the public. Reuters, another premier news service, recently posted a story quoting a close aide to French President Nicolas Sarkozy who accused Washington of “risking global inflation by printing money and flooding the world with liquidity.” Even more ominously, a French government spokesman said that Sarkozy will propose “a new international monetary organization which better reflects today’s world when France holds the presidency of the Group of 20 wealthy nations in 2011.” Whether this particular scheme succeeds or not, the mainstream media should take the clue: The dollar’s rein as king may drawing to an end.

Ever eager to help out President Obama, Politico tries to make the best of the bad situation by suggesting that a weak dollar is actually a good thing. It quotes a New York Times reporter Nelson Schwartz who recently wrote that:

“A weak dollar could prove beneficial to the American economy by aiding long-suffering manufacturers, rebuilding a stronger industrial base and lifting exports even if it makes life harder for trading partners around the world, especially in Europe.”

The idea is that the falling dollar will make American products cheaper abroad and as such they will be bought in greater quantities by foreigners. This is true enough, but the idea that the Obama presidency will somehow benefit American manufacturers is ludicrous. This is because President Obama has no intention of helping American industry. If he had, he would not push so hard for the odious “cap and trade” legislation. By penalizing the use of energy deriving from fossil fuels – which makes up for 85 percent of all energy used in America – this legislation will hit the manufacturing sector especially hard, since manufacturing tends to be energy intensive. The result will be the loss of millions of jobs and the devastation of whatever manufacturing is still left in America today.

The main reason for the collapsing dollar is not the president’s desire to help business but his out-of-control spending. With exploding deficits, Obama has brought federal expenditures to levels unseen since the height of World War II. Injecting trillions into the economy, some of which has been created out of thin air by the Federal Reserve, has dramatically increased the money supply and resulted in the dollar’s inevitable depreciation. The falling of the dollar has not been orchestrated by Obama out of his concern for his country’s industrial sector; it is a consequence of his fiscal recklessness. That this is not a better understood in the country is not the fault of Matt Drudge.

  • The_Inquisitor

    The dollar most likely has hit bottom and will rise to new highs but for all the wrong reasons. The depression we are in is slower moving but an order of magnitude greater than that of 1929.When it asserts itself in full force all those fake dollars, those ones and zeros in the fed computers, will go to money heaven. As there are far fewer of them the remaining dollars will soar in value.

    Doesn’t sound so bad until you consider the possibility of unemployment reaching thirty percent or more. Thanks U.S. Treasury. Thanks Federal Reserve. Thanks congressional profligate spending.

  • USMCSniper

    Obama is only the latest statist. It started when the gold standard was abandoned. Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

    In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

    This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

  • bubba4

    Instead of focusing on what media knats are buzzing about, why not compare contrast the value of the dollar from 2000 to today. Hmm…doing that without mentioning Bush's name would be tough…

  • bubba4

    I don't know if there is enough physical gold on the planet to represent all the “money” in the economy. It's not the 50's man…

  • LindaRivera

    Obama Says U.S. Long-Term Debt Load ‘Unsustainable’By Roger Runningen and Hans NicholsMay 14 (Bloomberg) — President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”…<a href="…..<br />Obama admits the terrible financial destruction wrought against Americans. WHY THEN DOES OBAMA NOT IMMEDIATELY REVERSE THIS TRAGEDY?A major investor states America is going to reach Zimbabwe hyperinflation.<a href="<br />Billions of dollars urgently needed for America's defense is instead gifted to Islam. Nuclear Iran and nuclear North Korea both state they intend to destroy America. They are not idle threats. The same venomous hate for the U.S. is shared by other nations and Muslim terrorist organizations. The treasonous response of the U.S. government to America's increasing danger, is to drastically reduce our defenses facilitating America's annihilation.See: Aloha, "Star Wars" By: Washington Times EditorialWashington Times | Monday, June 29, 2009<a href="” target=”_blank”>

  • Robert Wargas

    There doesn't have to be “enough” gold to represent all the paper money on Earth. The whole point of a gold standard is to limit the amound of paper money. Any amount of gold is sufficient for any number of transactions in an economy. What will happen is that prices will adjust accordingly: if there is a lot of gold, prices will be relatively high and vice-versa. As the supply of goods and the number of transactions rise relative to a fixed gold supply, prices fall and purchasing power increases.

    The idea that there's not enough gold to create enough money to run a modern economy is a fallacy that was destroyed years ago by David Ricardo.

  • Robert Wargas

    The idea that the supply of money must increase as output increases is a lie put forth by central bankers and Keynesians looking to maintain a “stable price level,” i.e., inflation.

  • USMCSniper

    You were a dumbell yesterday, and you are a dumbell tonight, and I've got a feelin', you will be a dumbell the rest of your life!

    bubba4, let’s look at John Maynard Keynes, the man who was first embraced by and since has beemthe patron saint of all liberal and leftist economists in the United States.

    An economist by the name of John Maynard Keynes wrote The General Theory Of Employment, Interest And Money in 1936. His book was well received, to say the least, and, as stated previously, Keynesian economics reached mainstream acceptance among economists in the United States.

    Keynes was a member of the Cambridge Apostles, a secret society, during his college years. Later, he was part of the Bloomsbury group, a collection of English artists and scholars, who regularly had homosexual relations with more than one partner of the same sex.

    “By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some….The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.” – John Maynard Keynes Economic Consequences of the Peace, 1920

    Why would this process be important to a man like John Maynard Keynes?

    When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many pseudo-moral principles which have hagridden us for two hundred years….” John Maynard Keynes

    It appears that this ill conceived economic principle which has been embraced by modern economists was for the purpose of bankrupting a moral society.

    How would they accomplish this? By inflating the money supply! Keynes vehemently opposed the gold standard, opting for the questionable value of fiat currency.

  • USMCSniper

    Thou art most feeble of intellect, an be a white trash ruffian of redneck name.

  • 080

    While the falling dollar makes our exports cheaper (it used to be called “beggar thy neighbor policy) it makes our imports more expensive. That makes our production costs higher. Where is the benefit?

  • Wayne

    John Maynard Keynes was an economic adviser to the Weimar Republic, so it is understandable that it experienced run away inflation as his economic theories have shown elsewhere. It becomes easier to understand when it is understood that Keynes was also a prominent Fabian socialist. One could say his economic theories are Fabian socialist, so it wouldn't be surprising they have destructive effects when applied to countries that socialism tries to conquer. The most subtle and least understood way is to destroy the economy and its currency. Seems there is plenty of that in evidence today …

  • coyote3

    Please don't insult my Anglo friends by putting them in the same category.

  • stockexplotion12

    Thank you for sharing keep up the good work!Penny Stock list

  • Citations matter

    While I appreciate the need to abandon deficit spending and the Federal Reserve banking system, you are right that the tanking dollar is not a new phenomenon that we can thank Obama for. It was about the dollar value in the eight years that Bush was in office. Between 2000 and 2008, the buying power of a dollar decreased by 25%…in other words, $1 then had the same buying power as $1.25 eight years later. By 2006, the dollar had already fallen to a 20 month low against the euro, and a 16 month low against the British pound. These were a result of the spending on the Iraq war, expanded social spending, and an insistence to keep interest rates far too low for too long.

    Liberals are not the only ones with a penchant for cheap money.

  • LenPowder

    The Leftists are as fanatical about protecting and spreading their ideology as Muslim jihadists are about accomplishing the same for radical Islam. Anything with detracts from their exalted position or threatens the ideologies with criticism is attacked swiftly and ferociously. We are talking about ideologues who have surrendered the reason and common sense to promote the cause at all costs. I say again, they suffer from a mental disorder which is rarely cured. Like the alcoholic who blames his drinking on society, they blame their anomaly on capitalism. They are sick and getting sicker.

  • fporretto

    One of the longest enduring economic fallacies is that exports are a good thing, in and of themselves and isolated from all other considerations. There is only one reason to export goods: to earn foreign exchange with which to pay for imports. With the dollar weakening against the currencies of all other major nations, our exports, paid for with dollars held by foreigners, will earn less and less.

    Could it possibly be any clearer?

  • rolling thunder

    The Republicans hope to rescue the economy, assuming they get into power, but with a collapsed dollar, and huge deficits, some built into programs the public really wants, like Medicare, they won't do it. In fact, the public will blame them when they fail.

  • flan59

    “For years the United States has been running an unsustainable trade deficit. What “unsustainable” means is that it’s not possible for it to be sustained. And the way you would stop sustaining it would be for the dollar to fall in value. American consumers will buy fewer imports if imports become more expensive. And American exporters will sell more to markets abroad if US-produced goods get cheaper. Foreigners will become more inclined to visit the United States, and Americans will become less inclined to travel abroad. That will even out the flows, and stabilize the currency markets.”

    “Asian central banks are trying to prop the dollar up but this is like trying to roll a gigantic boulder uphill. The level of global demand for US-made goods at the dollar’s current price simply isn’t high enough to justify the current value of the dollar.

    Meanwhile, the interests of American tourists aside, a falling dollar is exactly what the American economy needs. It’s a way of, in effect, driving wage levels down to a level at which increasing employment is economical and getting us out of current sky-high unemployment. Of course for the same reason foreign central banks will want to bolster the value of the dollar in order to prevent unemployment from rising in Europe and Asia. I think the real risk here, however, is that foreigners will go too far in terms of trying to sustain an unsustainable situation and ultimately prompt a bigger breakdown. “

    I agree with this statement from Mathew Yglasias

  • bubba4

    Sniper you just see everything through the prism of this world wide communist conspiracy. that is supposedly trying to take over the world.

    Since that is always where you depart from and lead back to, you will never see the reality of modern times. It's not that the people or books you cite don't exist…it's just they aren't as relevant as you want to make them.

    Just skip me…when you want to rant about your crazy beliefs…just skip me.

  • bubba4

    Wouldn't the price of gold be astronimical?

    Maybe we can have the government sieze it again like we did it the first time around. How do you think they stocked out fort knox? That would go over well on FPM.

    What you are experiencing is called nostalgia. Our economic problems aren't because we aren't on the gold standard. Reversing all the damage done under Bush will take some time…but once the wars stop and things get straightened out, we might be able to stat turning around the debt. We were there once before you might remember…just before the election in 2000

  • Robert Wargas

    It doesn't matter what the price of gold would be. The key is not absolute prices but *relative* prices. Another way to put it is: how much can someone buy with a given amount of currency?

    Actually, what I am experiencing is called intelligence. Our economic problems are in large part precisely because the Fed has absolutely no restraint on how much money it creates through bond purchases and, in turn, through fractional reserve banking. Why do you think foreign central banks are ditching the dollar and buying gold?

    Your standard reversing-the-damage-done-by-Bush line is illiterate and therefore unworthy of a full response. Wars definitely add to our problems but how are they financed? By printing money. All major wars in our history were financed by abrogating the gold standard.

  • Robert Wargas

    To add: Yes, the stock of gold were suddenly reduced to, say, ten ounces, then the price of gold would be astronomical–priced in our printed money. The essence of a gold standard is that currency units represent fixed amounts of gold, and the prices of transactions adjust according to those bills in circulation.

  • bubba4

    Bush did quite a number on our economy and the value of the dollar. If you can't even see that, then you should ask yourself why you can't admit simple things to yourself.

    As for the gold standard…someone has been reading a book on returning to the gold standard and is all high on the subject. I will let you go educate yourself as to why we don't and can't go back. There are plenty of views and theories on both sides of issue, but I don't feel like arguing either of them.

  • Robert Wargas

    “I will let you go educate yourself as to why we don't [sic] and can't go back. There are plenty of views and theories on both sides of the issue, but I don't feel like arguing either of them.”

    This is funny coming from someone who, a few posts ago, made amateurish statements like: “I don't know if there is enough physical gold on the planet to represent all the 'money' in the economy.” This proves how little you know about a gold standard, so don't sit there and then say you're going to “let” me go and educate myself.

    You're right, there are plenty of views on a gold standard. Most of the counter-arguments are a variant of the statement I quoted from you above. Mostly, anti-gold people are worried about how the U.S. government is going to continue being the biggest left-wing activist in the world without being able to counterfeit currency.