Mystery solved: I nominated Barack Obama for the Nobel Peace Prize shortly after his election victory last November. The act was as much an act of hope for his imminent reign as president of the United States as hope for myself. Technically speaking, I am not eligible to make nominations to the Nobel Prize committee but someday I hope to be.
In the meantime, I’ll stick to my metier as journalist. And informed sources tell me that on hearing the good news about her husband, Michelle Obama exclaimed: “Until now, I was never proud of the Nobel Peace Prize.”
But I digress. I’m anxious to share with you my chart of the week, delayed due to unexpected developments at home. I found one that I think truly fits this moment: A chart on the dollar, a favorite topic of mine (see here and here). The Wall Street Journal decided that it was time to alert the masses that the dollar is falling — steadily — and that the Administration doesn’t seem all that concerned. It hit a 14-month low last week.
I think about this now because the Nobel Peace Prize committee is betting its prestige on the ability of Obama to use the US muscle to slow the proliferation of nuclear arms. The dollar seems to be betting otherwise. And not so quietly, our friends and foes are plotting ways to ditch the dollar as the currency supreme by replacing it possibly with a basket of currencies. So what difference does that make to the US and to Obama?
Currency is not just a symbol, it’s a muscle both in the political and economic arenas. Ask Great Britain about this lesson on political economy. Or better yet, check in with the first emperor of China, Qin Shi Huang. Qin Shi Huang was no nice guy. He’d never be a candidate for a Nobel of any sort. But the man who brought us the Great Wall of China was a brilliant powermonger. And one of the keys to his success was the standardization of the currency in early China. It was a great unifying force of disparate peoples and cultures. He also was a master warrior, improving the wheels on chariots so his soldiers were faster and fiercer; in addition, he standardized the spokes on the chariot wheels so they could be replaced more easily. He also was a master roadbuilder.
As a result of those key changes in money, military technology and infrastructure, Qin shi Huang unified a country as diverse and full of conflict as the former Soviet Union.
In the short-run, dollar weakness is arguably good for our debt problem. Our lenders — China for example– borrow expensive dollars and we repay in cheaper ones. What a plan! Only problem is that our creditors have begun to figure this out. That means that either they won’t want to lend us money for much longer or will demand higher interest rates or some combination thereof. Or worse, we may find that some of our creditors will start asking for political favors that would in other circumstances make us cringe.
So I want to thank the Nobel committee for taking me up on my suggestion and hope that Obama realizes he had better get moving on the dollar if he wants the muscle to get anything else done before the next primary season — or the next nominations for the Nobel in economics. In the meantime, I’d like to make a couple of other suggestions to the Nobel committee to help fulfill their expectations for our President: Pay the prize in Euros and invest the Nobel endowment in US Treasury securities, which newspapers like the Wall Street Journal like to refer to as “safe” — you know, for the “risk averse” investor. I’d take that as another vote for hope.
And Mr. President, don’t give your prize to charity. Invest it here as President Lincoln did during the Civil War. Buy US Treasury bonds.
By the way, next year I’m planning on another nomination, this time for Iran’s president, Mahmoud Ahmadinejad. Maybe that way he might not blow us all up.