Understanding March 1989

March, 1989

THE PROBLEMS OF PEACE

The United States and the Soviet Union are, at last, completely at peace with each other. There can be no question of that. Countries that are at war with each other, whether the war be hot or cold, seldom ask their opponents for loans of a few billions of dollars, on terms that make the loan essentially a gift, and that is precisely what the Soviet Union is asking from the United States, at this moment. Loans that have no security of any kind, require no payments for six years or more, can be extended at the sole decision of the borrower! Sounds silly doesn’t it? What bank would loan money on terms like that? The fact is that U.S. banks have made, and are now making such loans of sums that run into many billions of dollars, mostly to the Soviet Union which is now spending between 19 and 40% of its Gross National Product for war supplies, while the U.S. is spending less than 6% of its G.N.P. for the same purpose. This fact infuriates U.S. citizens who do not realize that 19% of the soviet G.N.P. may not buy nearly as much war material as 6% of ours will and also there is the fact that the soviets must keep up her military posture or she will soon lose her satellites as Afghanistan plainly shows. She also has continued responsibilities in Cuba, Ethiopia, Angola, Vietnam and her eastern colonies. The Soviet is in desperate circumstances financially, and all of the banking world know it.

If the Soviets do not get loans from somewhere they will be forced to default on loans they already have. It will not be a matter of choice.  They just don’t have the money to pay. Since we are now living in a world of money that has no intrinsic value, it is worth only what the people can be persuaded to believe it is. If a large country like Russia defaults on its loans, it is likely that other countries will be tempted to do the same. How many of you remember the song, “Fifty million Frenchmen can’t be wrong?” Almost all of the countries that had borrowed from the U.S. Defaulted on their loans, and the U.S. had to absorb the loss of many millions of dollars. That was after the first world war when all money still had gold, silver or copper behind it. Now all of these metals have been demonetized almost through the world and the paper money is juggled about the world in the attempt to keep its value up. However if general defaulting began throughout the world it would probably mean unimaginable chaos for the banking world, as well as commerce and industry. A chaos such as has never been seen in the history of man.

This is probably why intelligent bankers are making bad loans to undesirable creditors. They probably feel that it is better to lose few billion dollars than it is to be present at the beginning of Armageddon.

So long as nations insist on printing fiat money, or money that has nothing behind it, except its solemn promise, which means nothing, as has often been proven, there will always be the hazard of fiscal collapse to keep the international bankers busy, and making unsecured loans for a few millions, or billions is one of the things they do best on such occasions. Of course it’s not their money they are playing with, it’s ours, so what does it matter if we lose a few million or so? After all it’s only money! And we can only hope for the best!

Have a happy Easter anyway, it’s the time of new beginnings.

Daniel W. Fry

(hand written) P.S. We closed our P.O. box permanently since we did not care to pay another year when changes are being made.  One is already in effect!  All mail will now come to:

614 14^th, Alamogordo,

New Mexico, 88310

Until further notice.