All eyes will be on President Obama tomorrow when he fulfills his constitutional obligation to “give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient.” All sorts of topics are in the advance headlines, from jobs, to the budget crisis, to gay rights, to the war. All of them are worthy of attention by the President and the Congress.
Yet we haven’t seen in the headlines about the pending presidential palaver even one mention of the topic that, by our lights, rises above all the others. This is the state of the dollar. Particularly in an age of fiat money, where there is no gold or silver backing for our national currency and the only basis of it is the economic good fortune of the nation, well, particularly in such an age, the state of the dollar can be seen as a proxy for the state of the union itself.
If so, the state of the union is at a historic low. We have rehearsed this point so often in these columns that we fear our loyal readers are in danger of becoming afflicted with monetary monotony. We run the risk because of the aphorism of the Robert L. Bartley, now sadly deceased. “It takes 75 editorials to pass a law,” he said. He was speaking of a newspaper that had a daily circulation of 2 million copies. Imagine how many editorials it will take from us more modest sized newspapers.
This topic happens to be getting hotter by the week. The biggest development of late, in our book, was the decision of the Wall Street Journal to issue the op-ed piece by John Taylor warning that the supposedly stimulative monetary policy that Chairman Bernanke and his colleagues have been running is actually a drag on the recovery. That would be like a fire department discovering that the water with which it is hosing down a blaze is flammable.