As many continue to panic over the potential for greater global uncertainty and chaos, based upon Brexit and the upcoming US elections in November one must recognize that chaos and new public policy coming completely out of left field is nothing new and should not be considered special or unique during this, our time in history (irrespective of how the mainstream media attempts to frame things).
The current ongoing panic and concern over the trivial day to day can best be chalked up as the result of our age, our collective ignorance of history, our desperate need to blame someone or something for our present miserable lots in life, our general desire for daily drama, or a little bit of all of these.
Case in point, on Sunday, August 15, 1971, President Richard Nixon pre-empted the most popular show in America, Bonanza, to present a live television announcement of what he called his New Economic Policy, consisting of immediate wage and price controls, a 10 percent surtax on imports and the closing of the gold window. Henceforth, US dollars would no longer be convertible into gold by foreign central banks; the conversion privilege for all other holders had been ended years before. Nixon wrapped his actions in the American flag, going so far as to say, “I am determined that the American dollar must never again be a hostage in the hands of international speculators.” Of course, it was US deficits and monetary easing, not speculators, that had brought the dollar to this pass, but, as with Franklin D Roosevelt, Nixon was not deterred by the facts (sounds familiar?…and here you thought this is a new behaviour acted out only by todays political leaders). The last vestige of the 1944 Bretton Woods gold standard and the 1922 Genoa Conference gold exchange standard was suddenly gone.
There you have it, an event of importance. Overnight money suddenly was really only worth the “confidence” held in the issuer and the value of the paper that it was printed on. All of a sudden money no longer contained any type of real value. How’s that for a Sunday night surprise? Meanwhile the masses of today bemoan, whine and preach about the coming world Armageddon in the event that “what’s her face” or “what’s his futz” wins office, depending of course on what candidate best fits your personal narrative and agenda. My how trivial we have become as a society while our armchair philosophers of today propound their brilliance in 140 characters or less on all things not really important.
As a collection agency with offices in Edmonton, Calgary and the GTA we are watching with keen interest the unfolding of events with respect to these phenomenon and their impact (or lack thereof) on Canadian credit markets.