Letter to the Editor - September 8, 2016
I am compelled to write in response to the opinion piece from Mr. Dimitri Cherny published in The Daniel Island News in the August 11 edition. Evidently Mr. Cherny is running for a seat in the U.S. Congress representing Congressional District 1, currently held by Mark Sanford.
While I am no major fan of Mr. Sanford on many levels, still Mr. Sanford’s advocacy for fiscal restraint on the national stage is his major strength. Recognition of the financial house-of-cards upon which the national and international community currently relies is critically important to this nation’s security and for the well-being of generations to come. Mr. Cherny seems to believe that prudence on the national stage is completely unnecessary, and that financial doomsday hasn’t arrived, so it never will. Mr. Cherny could learn from history: it took even powerful Rome more than two hundred years to completely collapse.
Mr. Cherny’s piece contains so many misstatements of fact and exposes such fuzzy thinking that it is difficult to know where to begin in responding. It is clear that Mr. Cherny has no understanding of the concept of “money”, equating money as he does to “currency”.
“Currency” is only printed paper, and has value as money only as long as others accept it as such, unless backed by other hard assets (remember German deutschmark after WWI?) He also has the standard Keynesian economic response that has put our nation in jeopardy: “debt is good” and “inflation is good”, neither of which is true unless you are a government acting to achieve short-term gains at long-term expense. “ Tax-more and spend-more” cannot be the answer when every dollar spent has to be borrowed from Chinese and other international US Treasury bond purchasers, to be re-payed by future American taxes.
Mr. Cherny states: “If the payments on the debt were really a problem...” In response, I suggest the reader look at the cost of debt service to the U.S., now and in the near future, and how this alone will soon consume a significant percentage of our GDP.
“...if a decrease in the value of the dollar were really going to happen...” In response, over my forty year professional career, I have personally seen the value of the dollar fall substantially, as it does every year with government-sponsored inflation and wildly increasing money supply. This is simply not an “IF” proposition, it is a reality. Do you, the reader, think that the value of the dollar has remained steady over time?
“...if an economic collapse were really imminent...” Doesn’t Mr. Cherny remember 2008, and how the entire modern world financial system came within a wisp of total collapse? Doesn’t he recognize that nothing fundamental has changed since then, as big banks become even larger and the Federal Reserve becomes progressively less able to affect positive change (How long have interest rates been near zero? How much lower can they go?).
“...the stock market is stronger than ever...” I will agree that the markets have reached new heights, but I do not agree that there is increased strength in our markets, as the current market valuations bear less and less true relationship to actual value created by companies, setting the stage for major downward adjustments at any time.
“...unemployment is about as low as ever...” This statement is demonstrably false. Just consider the large number of individuals who are not counted in these statistics because they have given up even looking for employment, in a “recovery” that seems to go on forever. This is pure government-sponsored propaganda.
Mr. Cherny’s “explanation” for the insignificance of our $19 Billion national debt is nonsensical. Every currency ever created by man and his governments has ultimately been debased and devalued into oblivion. The U.S. dollar appears to be no exception, and through government policies that encourage inflation and the wide-spread creation of more and more dollars, the value of the dollar continues to fall. Creation of more currency by a government does nothing to increase the overall value in the economy; printing sheets of $100 bills or making accounting entries into a database is not the same as manufacturing steel, growing wheat, or cleaning hotel rooms, activities which do add value and true wealth to the economy.
Instead of asking us if we have been to India, I would suggest that perhaps Mr. Cherny make a visit to Cuba, where he can see first-hand the disastrous effects of two generations of socialism, where equality is the norm: everyone is equally destitute, unhappy, and desperate to escape to a capitalistic society. I have been there, and it is an education in itself.
I would also suggest that it is not Mr. Sanford who is peddling ignorance, but instead Mr. Cherny. Virtually all the economists upon whom Mr. Cherny relies failed to anticipate any of the stock market crashes and financial upheaval in recent decades, and have failed to suggest remedies for a rickety financial system teetering on collapse again, yet somehow it is Mr.
Sanford who is the “economic ignoramus”? Not in my book! I will do my best to assure that Mr. Cherny does not have an opportunity to spread his brand of head-in-the-sand ignorance on a national stage, to the detriment of generations of future Americans who will be tasked with paying the bills.
Keith F. Kraemer,
M.D., J.D., FCLM