Fiddling with currency designs while the U.S. dollar burns and China buys gold
The verdict is in: Alexander Hamilton stays, Andrew Jackson goes.
On April 20, Treasury Secretary Jack Lew announced some major design overhauls to the $20 Federal Reserve note and other bills that are scheduled to take effect by 2020. African-American abolitionist Harriet Tubman (1822-1913), who famously freed numerous slaves via the Underground Railroad and later became active in the womens suffrage movement, will be replacing Jackson on the front of the $20 bill. Jackson will henceforth adorn the back of the bill.
Meanwhile, Hamilton, the nations first Treasury secretary, will remain on the front of the $10 bill, as will Abraham Lincoln on the $5 bill. However, the reverse sides of those bills will henceforth feature Martin Luther King Jr., Eleanor Roosevelt, and opera singer Marian Anderson; will depict civil-rights marches at the Treasury building and the Lincoln Memorial; and will salute other suffrage activists such as Lucretia Mott, Sojourner Truth, Susan B. Anthony, Elizabeth Cady Stanton, and Alice Paul.
Worth its weight in gold?: Numerous organizations and publications such as The Washington Post hailed the plans, as did the Professional Numismatists Guild. Money is history you can hold in your hands, and the Professional Numismatists Guild welcomes the planned changes to our circulating money to help educate the public about important people, places and events in U.S. history, said PNG Secretary James Simek.
Stop right there. Though honoring these heroes and heroines of American history is laudable, the fact that Tubman and the others will adorn U.S. currency does not change the fact that todays dollar has nothing to do with gold. When push comes to shove, these are cosmetic changes only. The new symbols are highly important, but no matter whose picture is on the greenback, nothing will change the fact that the U.S. dollar has lost more than 90% of its purchasing power in the past hundred years or so since the creation of the Federal Reserve.
Its no surprise either that the Treasury Department chose to retain Hamiltons portrait while dispensing with Jacksons. President Jackson, after all, was a fierce opponent of the establishment of a U.S. central bank, while Hamilton set the template for the flawed Fed-dominated system we have today.
Den of vipers blasted: In fighting against the creation of the second Bank of the United States, Jackson reportedly said, I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.
When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin!
Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, I will rout you out.
Hamilton set stage for Fed: No wonder Jackson is being tossed from his pedestal. In contrast, in addition to being lionized in a popular Broadway play, Hamilton has a 21st-century champion in the form of ex-Fed chief Ben Bernanke, who noted in a 2015 blog post that Hamilton oversaw the chartering in 1791 of the First Bank of the United States, which was to serve as a central bank and would be a precursor of the Federal Reserve System. In other words, Helicopter Ben owes his primary career achievement to Hamilton.
And according to historian Thomas DiLorenzo, Hamilton was a compulsive statist who wanted to bring the corrupt British mercantilist system the very system the American Revolution was fought to escape from to America. He fought fiercely for his program of corporate welfare, protectionist tariffs, public debt, pervasive taxation, and a central bank run by politicians and their appointees out of the nations capital.
With the Treasury Department and the Fed joined at the hip in numerous ways, the demotion of Jackson is not unexpected. Moreover, no one can be happy about his bloody campaigns against the American Indians despite his patriotic service in the American Revolution and as the chief hero of the Battle of New Orleans.
Distraction from looming debt disaster: Yes, its high time that we honor the women and African-Americans who have contributed to U.S. history, and Lew has determined that Jackson is expendable. But in many ways, the debate over whose face is going on Americas fiat currency is a distraction from arguably more serious issues that many of our leaders would prefer we not think about, such as our mushrooming $19 trillion debt enabled by the highly secretive Federal Reserves electronic printing presses, the rising debt-to-GDP ratio, a currency backed only by the full faith and credit of the U.S. government, and the fact that five of our largest banks recently failed their crisis-planning evaluations.
Meanwhile, as we argue about currency designs, the Chinese are designing a future that is focused on elevating its yuan currency to dollar-level reserve status and amassing gold is a key part of its strategy.
Hopefully, once the dust settles over these design controversies, our nation can start focusing less on the appearance of its paper currency and more on the dollars missing precious-metal backing.