The Dollar Doesn’t Have to Collapse

The dollar’s destroyer is inflation.

A currency can collapse in a dramatic break. A government can default on its bonds.

Or inflation can preserve the appearance of stability and the interests of power while quietly transferring the cost of the collapse onto people with the least power to stop it.

Wages and savings lose purchasing power. The number of dollars needed to fill a gas tank, stock a refrigerator, buy or rent a home or educate a child can explode higher. Meanwhile, people who own hard assets are positioned to benefit—or at least to neutralize the consequences. It is the same architecture as the bank bailouts: losses spread across the public, protection concentrated at the top.

I began to understand that in 2008, when Bruce Wasserstein described the bailouts as the world’s largest theft and cover-up: using “balance-sheet contamination,” or money printing, to cover up the losses.

Two and a half years later, I lost my temper on live television. I was at home finishing the banking chapter of my first book, Greedy Bastards. I was late. Simon & Schuster had given me a deadline. MSNBC had given me time away from the show, and one chapter remained.

I had started the book believing I was writing about banking. I finished it understanding that institutions intended to serve us had become institutions that used us for their own enrichment.

That afternoon, I went on television and lost my temper.

The anger was about what I saw as a choice made by Bush, Paulson, Geithner and Obama: rescue the financial system by hiding the losses inside the U.S. dollar, enriching the people who created the risks as trillions flowed into the system.

Families lost homes. The political energy for real bank reform was squandered on healthcare legislation that was nothing more than a massive giveaway to the insurance industry dressed up as reform.

But the original sin was not only the bailout. It was the cover-up: treating the crisis as solved while leaving the public to absorb its costs and telling people, in effect, that the system had been repaired.

Officials had set a time-delayed inflation bomb inside the dollar. It has taken 15 years to play out, distancing those who set the bomb from the inflation explosion we are experiencing now.

Compounding matters the decisions made by President Obama created a gaping political chasm. People could see that something had been done to them, even when the official story said the emergency was over. Their anger had no credible place to go.

Donald Trump saw that opening and exploited it to maximum effect. He turned justified distrust into a political weapon. Then he used our government brazenly for his own benefit.

Fifteen years later, his willingness to initiate global conflict—whether strategic or impulsive—and his reckless tax policy add pressure to an economy already carrying the consequences of earlier choices.

For years, people have predicted that the United States will default on its bonds or that the dollar will collapse against other currencies. Neither has happened. I think neither is likely.

In Ghostbusters, you had to imagine the form your destroyer would take. Inflation is the form that preserves the machinery and protects the elite while repeating the injustice.

When prices rise faster than wages, people who depend on each paycheck lose ground. When assets rise, people who own them have a buffer.

The government stabilized the financial system in 2008 and 2009. It did not make the consequences equal. Then it concealed the bargain it had made—and left a political chasm for Trump to exploit.

The dollar may never collapse. The transfer continues anyway

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