Chapter 18. THE DEMISE OF THE DOLLAR?

This brings us to the final question, the most important for us all: Will the United States survive this crisis? Can it thrive in the years that follow?

My answer is yes, but with one unambiguous admonition: Our strength as a nation is ultimately predicated on the viability of the U.S. dollar. To the degree that we let inflation return and fail to protect its value, our survival will be less certain and our recovery more elusive. This is not a new revelation for me. I have fought for a stable dollar all my life, and my father did the same before me. So before I tell you what we can do about this today, let me defer to him—to tell you what his vision was, how he acted upon it, and why he ultimately failed.

Despite the Great Depression, there was one all-important investment that not only survived, but actually thrived: The U.S. dollar. Thanks to deflation, prices fell on virtually everything. And because of fear, investors shunned risk and sought the safety of cash. Result: The dollar's purchasing power and value surged.

That was the saving grace of hard times. A strong dollar gave people something to work for. It was the essential foundation for a recovery.

But after World War II, I saw signs that the dollar was weakening. Corporate America was starting to build up debts. So was the federal government. I was not against debt per se, but I felt debts should be added in moderation, with plenty of capital and cash to back it up.

When President Eisenhower ...

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