This is the first in an eight-part series about America's awesomeness.
The United States of America is the most awesome country in the world – even when I was a child. I was grateful to live in America and not in some impoverished Third World country. But it is really my experiences living abroad and traveling across the globe that have utterly convinced me that America is a uniquely great country.
Democracy and liberty are clearly the two most important birthrights of Americans. But today I want to write about the U.S. dollar. A stable national currency and low inflation are fundamental to a prosperous society as well as to democracy and liberty. But it is easy to take the dollar for granted. (And for as long as I can remember, Nervous Nellies and hucksters alike have been predicting the dollar’s imminent collapse, even as it has continued to reign as the dominant global currency.)
People in foreign countries often appreciate the virtues of the greenback more than Americans, because they know what it is to not have money worthy of the name. In Saturday’s NY Times there is a fascinating story about how in Cambodia even the dead prefer U.S. dollars to their own country’s currency, the riel.
Qingming is the annual festival to honor one’s deceased ancestors. After a family feast, Cambodians show their respect to the departed with burnt offerings. They buy specially made paper houses and cars and facsimile currency and set them afire, whereupon their deceased relatives can benefit from these gifts in the afterlife.
And apparently even these Cambodians no longer with us prefer dollars. Replica one hundred dollar bills are considered a more dignified tribute, and more convenient.
As one retired Army officer explained, the riel (which trades around 4,000 to the dollar) is “too small. If we give the big note ($100) the ancestors can get a lot of money. If we give them small money, they will need so many notes that they’ll go crazy carrying them around.”
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I know that feeling. Ten years ago I was in Turkmenistan, where the dollar rate was 24,000 manat, and the biggest banknote was 1000. Down at the local bazaar, moneychangers had paper bags already stuffed with 2.4 million of notes adorned with the picture of the President-for-life to exchange for a single Ben Franklin. Paying for dinner required tediously counting out a hundred or more “Turkmenbashis.”
In most countries around the world, every man, woman and child knows the daily exchange rate for American dollars. That’s because ultimately the real price of most goods are in dollars. And in most countries, the only way to protect whatever savings you have accumulated is to keep them in dollars.
I live in Russia, and today’s USD rate is 67. A pair of jeans costs about 2,800 rubles, or about 40 bucks. Two years ago the dollar rate was 32, those same jeans cost 1300 rubles (or about 40 dollars). And 20 years ago, when the ruble was 6 to the dollar, they cost 240 rubles (you guessed it, about 40 dollars). And by the way, those same jeans cost about 15 dollars at Wal-Mart (they cost more than two times as much in Moscow because of the added costs of corruption and economic inefficiency).
A constantly declining and instable ruble harm Russians in ways more than just constantly increasing ruble prices. Russians are notoriously profligate spenders. There is a deeply ingrained reluctance to save for the future when you know your currency will likely be worth less next year than this year. And since it became an independent country in 1991, Russia has endured not only severe devaluations of the ruble but also several waves of bank failures where depositors lost their savings (but the bank owners themselves typically absconded with millions of dollars).
Since 1996 the ruble has lost more than 90% of its value versus the dollar. But between year-end 1991 and early 1992 it lost 99% of it value. And then it proceeded to lose 99% of its value all over again by 1996. (The Soviet ruble was officially worth $1.40. In 1997 the ruble was redenominated, 1000 new rubles for each old one. To put this in perspective, if you had converted one million USD for 714,000 rubles, after 1997 you had just 714 new rubles, or just a bit more than ten bucks today.)
People who had saved all their lives saw their savings absolutely incinerated as thoroughly as if they had burned them like firewood.
It was heartbreaking to see. The parents of one friend of mine had set aside part of their salaries every month for eighteen years in a special account for children, expecting it to be enough on her 18th birthday to buy a car, or perhaps be a start on a down payment for an apartment. By the time she could withdraw the money, it was exactly enough for a pack of chewing gum.
In contrast with Russia and Cambodia (and most all other countries) America has been blessed with a remarkably stable currency and low inflation. And many other things we sometimes take for granted, like the rule of law and social stability, depend in no small part on a reliable currency.
America is not a perfect place, and we regularly argue among ourselves how to make her better. Since our first forbearers arrived at Jamestown in 1607 America has been a work in progress, never perfected but continually striving for betterment. The more I see of the human condition in other nations around the globe, the prouder I am of America, and the more grateful to be a citizen of such an awesome country.
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