Dead Presidents and a Dying Economy

Within a year of the John F. Kennedy assassination -- the murder that conspiracy theorists still allege was committed by either the Central Intelligence Agency or Federal Bureau of Investigation or both -- a scheming group of government employees targeted another well-known and beloved American president.  Unlike the 1963 JFK assassination, where secrecy was paramount, these 1964 plotters, sensing no danger, ignored stealth, planned their actions in the open, and announced those plans to the public on May 24 of that year.

Unthinkable?  Surely...but only if one believes that this plot involved the murder of a living president.  The plan hatched by U.S. Treasury employees was created not to assassinate a sitting president, but to change America's relationship with one who is already dead.

Before May 24, 1964, when Americans saw the face of George Washington, our first president, on the one-dollar bill, they knew that that piece of paper could be exchanged for silver, a hard asset -- one with extrinsic, inherent, and defined value.  But on May 24, 1964, six months after that fateful day in Dallas, the U.S. Treasury marked another fateful day with its announcement that American one-dollar bills, then known as silver certificates, would no longer be eligible for such redemption.  Our sense of trust in the symbolic George Washington was terminated just as our faith in an idealistic young president was disposed of a year earlier.

As it did on the day Kennedy was killed, American history changed the day George Washington became a "deader" dead president.  It was on that May 24 that the U.S. government realized that its currency could be permanently decoupled from hard assets.  Since the people did not resist, there would be more "killing" to come.

Seven years later, on August 15, 1971, Richard Nixon (who ran against Kennedy in 1960) declared the gold standard dead.  No longer was American currency tied to U.S. gold reserves or any other hard asset.  The rest of the dead presidents -- Jefferson, Lincoln, Jackson, Grant, McKinley, and Cleveland (along with some historic statesmen such as Hamilton and Franklin) -- then became a little more dead.  Again the people acquiesced, and as a result, the American economy itself began to die a little more each year, thanks to the federal debt enabled by these killings.

If there were a better illustration of the law of unintended consequences, I don't know what it would be.  The intent of killing these dead presidents, decoupling the currency from hard assets and diluting our faith in what those dead presidents represented, was to create conditions amenable to economic growth.  But as in all things, there is always an opposite reaction, a yin for every yang.  Because the U.S. government no longer needed to put up hard assets as collateral for its debt, the folks in Washington could borrow on a "promise" to pay.  The level of debt became virtually unlimited, unencumbered by the value of hard-asset collateral.  These unsecured loans, much like risky personal loans and very much unlike secured loans such as mortgages, grew on the backs of the American taxpayers, whose labors and wages became the "full faith and credit" of the U.S. government, a credit which extends no farther than its peoples' ability, or ultimately their willingness, to pay.

True, that ever-multiplying pile of debt did enable economic growth.  But sadly, the economic growth was disproportionate to the increase in debt which now looms in the future as not merely a killer of our faith in dead presidents but ultimately as a potential assassin of the national economy.

I wish I could give you a happy ending to this story.  But the story continues to unfold.  There is no certainty as to how it will end at last.

Of course, there was no nefarious intent behind the decisions to "kill" those dead presidents.  Yet, as with many things borne of government initiative, nefarious intent notwithstanding, the effect could very well be the same as if there were.

Richard Telofski is a competitive strategy and intelligence analyst studying the business effects of non-traditional competition.  He blogs about "The Other Side of Business" at www.Telofski.com.

Within a year of the John F. Kennedy assassination -- the murder that conspiracy theorists still allege was committed by either the Central Intelligence Agency or Federal Bureau of Investigation or both -- a scheming group of government employees targeted another well-known and beloved American president.  Unlike the 1963 JFK assassination, where secrecy was paramount, these 1964 plotters, sensing no danger, ignored stealth, planned their actions in the open, and announced those plans to the public on May 24 of that year.

Unthinkable?  Surely...but only if one believes that this plot involved the murder of a living president.  The plan hatched by U.S. Treasury employees was created not to assassinate a sitting president, but to change America's relationship with one who is already dead.

Before May 24, 1964, when Americans saw the face of George Washington, our first president, on the one-dollar bill, they knew that that piece of paper could be exchanged for silver, a hard asset -- one with extrinsic, inherent, and defined value.  But on May 24, 1964, six months after that fateful day in Dallas, the U.S. Treasury marked another fateful day with its announcement that American one-dollar bills, then known as silver certificates, would no longer be eligible for such redemption.  Our sense of trust in the symbolic George Washington was terminated just as our faith in an idealistic young president was disposed of a year earlier.

As it did on the day Kennedy was killed, American history changed the day George Washington became a "deader" dead president.  It was on that May 24 that the U.S. government realized that its currency could be permanently decoupled from hard assets.  Since the people did not resist, there would be more "killing" to come.

Seven years later, on August 15, 1971, Richard Nixon (who ran against Kennedy in 1960) declared the gold standard dead.  No longer was American currency tied to U.S. gold reserves or any other hard asset.  The rest of the dead presidents -- Jefferson, Lincoln, Jackson, Grant, McKinley, and Cleveland (along with some historic statesmen such as Hamilton and Franklin) -- then became a little more dead.  Again the people acquiesced, and as a result, the American economy itself began to die a little more each year, thanks to the federal debt enabled by these killings.

If there were a better illustration of the law of unintended consequences, I don't know what it would be.  The intent of killing these dead presidents, decoupling the currency from hard assets and diluting our faith in what those dead presidents represented, was to create conditions amenable to economic growth.  But as in all things, there is always an opposite reaction, a yin for every yang.  Because the U.S. government no longer needed to put up hard assets as collateral for its debt, the folks in Washington could borrow on a "promise" to pay.  The level of debt became virtually unlimited, unencumbered by the value of hard-asset collateral.  These unsecured loans, much like risky personal loans and very much unlike secured loans such as mortgages, grew on the backs of the American taxpayers, whose labors and wages became the "full faith and credit" of the U.S. government, a credit which extends no farther than its peoples' ability, or ultimately their willingness, to pay.

True, that ever-multiplying pile of debt did enable economic growth.  But sadly, the economic growth was disproportionate to the increase in debt which now looms in the future as not merely a killer of our faith in dead presidents but ultimately as a potential assassin of the national economy.

I wish I could give you a happy ending to this story.  But the story continues to unfold.  There is no certainty as to how it will end at last.

Of course, there was no nefarious intent behind the decisions to "kill" those dead presidents.  Yet, as with many things borne of government initiative, nefarious intent notwithstanding, the effect could very well be the same as if there were.

Richard Telofski is a competitive strategy and intelligence analyst studying the business effects of non-traditional competition.  He blogs about "The Other Side of Business" at www.Telofski.com.