In the daily lives of small town Americans, we have learned to live with some aspects of our economy that would have been quite abnormal 50 years ago. For example, what goes on in Asia and Europe has a significant impact on what we can buy and for how much in Bourbon County. Increasing the price of energy seems to be the agenda of an international consortium. Many nations, including the United States of America (“USA”), are racking up huge national debts, while government retirement programs have become an IOU instead of providing us the intended security. We are woefully behind on infrastructure maintenance and repair, not only in our community, but nationwide. What has happened?
In my view, much of it began with a small group of elites led by Richard Nixon in 1971. In response to some short-term problems, including a rising trade deficit and inflation, this small group of men decided to unilaterally execute some radical economic strategies, including eliminating the gold standard as a backing for the American dollar. I believe that move has had the biggest impact on our economic lives today.
How so? When the USA adopted the Gold Standard after World War II, it ushered in a protracted time of economic prosperity for our nation. The USA become a world leader and our currency became the standard for international exchange.
What was the Gold Standard? Simply put, every dollar issued by the USA was back by actual gold reserves at a price of $35 per ounce. No new dollars could be printed without the mandatory amount of gold stored at facilities like Fort Knox, Kentucky. After we came off the standard in 1971, every world currency was valued at what people perceived that it was worth, rather than a sure measure. This decision gave us 10 years of economic chaos, including “stagflation”, unemployment, and gasoline shortages. Gold went from $35 per ounce to $800 in short order. Anyone remember waiting in a line to get gas in the 1970’s? It influenced politicians to think from a short-term, defensive posture.
The long-term impact that affects us all today is the national debt, which has also given rise to state and local obligations; the large debt payments require higher taxes. There was no way to accumulate $30 trillion dollars of national debt while we were on the Gold Standard. Politicians have used this leverage in order to pursue short-term projects that have in immediate impact on voter sentiments, rather than planning for the long-term. Infrastructure maintenance and fully-funded pensions are not effective campaign slogans.
Bourbon County does not have to follow the national trend. We can be a jurisdiction which breaks the mold by creating administrative efficiencies in the many government entities in our county such that we can invest in infrastructure, housing, education, health care and the other critical services that impact quality of life. We can become a low tax, high standard of living haven.