Monday, November 28, 2011

Wall Street Journal :: Greenback Planet

Greenback Planet
By H. W. Brands
Buy It Now
How the Dollar Rules by Fiat
How did the dollar become the world's principal currency and what is its future?

The Founders defined the dollar as a weight of gold or silver. We moderns have undefined and disembodied it. The 21st-century greenback is neither connected to nor—as they say on Wall Street—collateralized by anything tangible. You can materialize it on a computer, like a tweet.

"Greenback Planet" is the story of this amazing monetary transformation. The narrative begins in the 18th century and races to the present, pausing to catch its breath at some of the great American monetary landmarks: Andrew Jackson's veto, in 1832, of legislation rechartering a predecessor to the Federal Reserve; Abraham Lincoln's recourse to greenbacks, or fiat currency, to finance the Civil War; resumption of the gold standard in 1879, with which it once more became possible to exchange gold for paper and vice-versa at a fixed and statutory rate; J.P. Morgan quelling the Panic of 1907; the Federal Reserve not quelling, never mind preventing, the Great Depression; the crazy-quilt monetary improvisations of the 1930s; the halfway gold dollar of the post-World War II era; and the creation, in 1971, of the pure paper (later digital) model of today.

Mr. Brands is a paper-money man, though the subtitle of his book—"How the Dollar Conquered the World and Threatened Civilization as We Know It"—seems to betray some reservations. It betrays, as well, the author's zest for provocation. The American currency, he extravagantly claims, has "made America rich," "defeated communism" and "knitted the planet into a single economy more fully than any currency before." I would say that enterprise made America rich and that communism, rotten from the start, defeated itself, with a timely push from Ronald Reagan. And I would say that the British pound "knit" the world economy together long before the birth of Ben Bernanke, while the golden solidus of ancient Byzantium circulated as global money ages before the reign of Queen Victoria. Without an over-scrupulous regard for history, the historical narrative zips along.

Mr. Brands has written biographies of Benjamin Franklin, Andrew Jackson, Theodore Roosevelt, Woodrow Wilson and Franklin D. Roosevelt. He has written diplomatic history, political history and business history. Some academics—"one book men," as Samuel Flagg Bemis, the prolific Yale diplomatic historian, contemptuously called them—write hardly at all. Mr. Brands, a history professor at the University of Texas, seems to do nothing but.

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