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Giants in the earth

By Owen Paine on Tuesday November 3, 2009 04:53 PM

Let us all now praise this gruesome titan of boobitude statesmanship.

Though he'd rather fence with red giants like Mao and Helen Gahagan Douglas, and he'd readily admit he found ordinary marketplace economics "boring as hell", nevertheless he could strike and strike decisively when a consummate opportunity for a moment of "crisis" arose.

Say what you will -- the man had balls, and when it fitted into his agenda the 5 o'clock shadow man could take bold measures and swallow bold risks.

Let's travel back to the "Nixon shock" of August '71. The Nambo-war pumped domestic economy, after years of flabby macro steerage, faced a perilous crossroads. A "too mild" Fed-induced recession back in '69 had turned itself spontaneously into a nasty grossly imbalanced recovery. Trade and payment gaps yawned wide. Everyone who knew anything knew a frightful return to dismal policy choices lay ahead.

In fact this coming cataract was but the latest and by far the worst installment of a 16-year-long drama that stretched back past the very early days of the Kennedy Camelot to the era of grey feelings, AKA the Ike 50's, and it was a drama that had become ever more pseudo-climactic in moments of high uncertainty. And of course needless to say it a very public mortification for the metropole of all earthly freedoms.

At its heart the crisis had one big shameful horror -- uncle Samson's de facto imperial currency couldn't play financial Atlas anymore. It was pretty obvious Uncle couldn't continue to be the linchpin of global commerce and investment -- under Bretton Woods rules, at any rate. That is, Uncle couldn't sustain by brute force alone the golden postwar handshake between 35 dollars American and a troy ounce of gold.

The wobbling under the load, at least at first, in the last years of Ike, had seemed only a matter for "future concern"; but by '71 America's gold reserve ratio had long since become a bitter clownish joke to all parties inside and outside. It was clear "something's gotta give here".

So we come to August '71 and Dick's decider moment: he could play it safe and once more, like his predecessors pull the same old same old stunt -- induce another recession, or better yet, a protracted stagnation(*) and let the rest of the trading world use America's time in the breakdown lane to catch up and close the trade gap -- but of course it would need to be bigger and more painful than previous exercises of the kind.


Nixon could be brazen -- take the devil's option suddenly and preferably without warning. Announce "ahh, there's gonna be a change to the rules, gang" -- yes the great money game itself! He could unilaterally bust up the postwar system, perfidiously cut the dollar loose from its golden harness, close the gold window and thereby welch on a long-standing promise. Trigger first and foremost a gold soar against all currencies, and a concomitant earth-wide inflation surge of Biblical proportions -- including of course ultimately both a dollar devaluation against our trading partners' money, and a wave of domestic asset price convulsions able to leap tall buildings in a single bound.

But Dick had more in mind than just doing the bold thing here. He wanted to get re-elected, after all, so in addition he brashly defied "ahh -- all those blue-suit Republican verities -- ahh -- fuck 'em!" He'd go pinko if it was necessary -- and it was.

So -- bang! -- simultaneously with slamming the gold window shut, he clamped on a wage and price freeze and slapped an emergency import surcharge of 10% on all imports. "Ahh, not even Harold Wilson dared pull moves this big, Bob. I guess we're ALL Keynesian pixies now."

And did the Great Satan of Yorba Linda bother to consult the Congress or Uncle's major trade partners or the IMF? Hell, no, madame, he did not. Wall Street? Prolly a Rockefeller or two, but that's another story.

God bless him, President Nosferatu simply and quickly got his program ready and acted decisively, radically, massively, and in prime time on the idiot box, using that hokey punchbowl mix of preemptive petty spite and doomsday gravitas. That had a tang, brothers and sisters, when drunk live, that has seen no equal since. I recall rolling on the floor of the tele-communications center of my fleabag Soviet in ecstatic delight.

Why can't Obama be our Nixon?


(*)By a vicious Fed chop to credit flows, sending the real rate of interest through the roof -- the old tried and true Eisenhower/Martin turkey-rope way.

Comments (2)

Tricky D never did Harvard.

Zerobama is Harvard to the core.


no one into the nixon cult
'round here
besides the father and me ???

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