"How safe are our savings? How reliable
are our pensions? When such questions fill the atmosphere over kitchen
tables, something is seriously wrong: today, confidence in the currency;
tomorrow, in the political parties; and the day after
that,
in democracy. That is when the social contract,
upon which faith in the currency is based, falters."
America's debt crisis leads to one conclusion: money is only printed paper. The loss of
confidence threatens our social order.
The new head of the International Monetary Fund, Christine
Lagarde, won't have her hundred days of
peace to settle in and develop a program. She warns that the very strong confidence historically enjoyed by the American
dollar is being chipped away. And in fact there can beno doubt that the
last-minute agreement to by Senate Democrats
and Congressional Republicans only delays the
underlying conflict.
Posted by WORLDMEETS.US
Because it is not just about trillions of
dollars on debt. It's about the fate of the long-time largest national economy, as well as the shape and role of the United States in the World: Social
Democracy à la Obama, who on the American spectrum stands
on the left, or the
patriarchal austerity of the Tea Party. Republicans of course dismiss the fact that George W. Bush inherited a solid budget from
Bill Clinton in 2001, waged a war without end in
Afghanistan and an unnecessary war in Iraq, and on top of
that lowered top tax rates.
This is about the role of the last remaining
superpower for peace and balance in the world. That doesn't happen on its own. Confidence is the
keyword, even in Europe. Because every
currency, whether the deutsche mark or the euro, is ultimately based on a contract between the state
and economic actors: The state promises that a euro tomorrow will be (almost) as good as a euro yesterday or today. And citizens adjust their behavior
accordingly, either saving or going on spending sprees.
So how safe are
savings, bonds and pensions?
At present, apologists for the euro point out
that the single currency was
conceived as a hedge against the dollar's rise. They are
less eager to recall that since the start of the euro crisis, the tiny Swiss franc has become a safe haven currency and has been continuously on the rise. Gold has long
since passed the milestone of $1,500 per troy ounce -
even though the yellow metal has no rate of return and could slip the moment central banks begin selling.
A visual representation of a trillion
dollars in $100 bills
People are now
recalling that money -when the central
bank's reputation is suffering - is only printed paper. How safe are our savings?
How reliable are our pensions? When such questions fill the atmosphere over
kitchen tables, something is seriously wrong: today, confidence in the
currency; tomorrow, in the political parties; and the day after that, in democracy. That is when the social
contract, upon which faith in the currency is based, falters.
*Michael Stürmer author
is an historian and chief correspondent of the Welt Group and writes in alternately with Lord
Weidenfeld.
