Dear Mr. President:
I am writing to propose that congress make a formal currency revaluation of the U.S. Dollar at the end of this year that will have several positive effects:
- It will create an unprecedented economic boom.
- It will reduce the economic clout of foreign drug lords.
- It will wrest considerable power from the Federal Reserve banking cartel, and return it to the U.S. Treasury.
- It will correct the effects of seven decades of gradual inflation.
- It will mean that our currently laughable Penny and Nickel will again have value and meaning.
- The U.S. Treasury will again make a profit through seignorage. (Presently it costs more than two cents to mint each Penny. But with a revalued Dollar, the cost will drop to less than 1/10th of cent. Likewise, it costs more than 8 cents to mint each Nickel. The difference (seignorage) would again become a profit to the government, as it should be.
- The U.S. Treasury will have the opportunity to issue U.S. Treasury Notes that will circulate side-by-side with Federal Reserve Notes. Issuing new currency that is not debt-based will both reduce the National Debt and foster economic prosperity.
Knock A Zero Off
My proposal is simple: Knock a zero off the Dollar.
You can accomplish this by meeting congressional leaders, and making a formal legislative proposal. This currency revaluation should be timed for the end of the calendar year. As of January 1st, 2019, it will take 10 of the currently circulating Dollars to buy one of the new Dollars. All electronically-held Dollars would be re-valued instantaneously. This would include all bank deposits. The prices of all stocks, equities, bonds and goods would be revalued as of January 1st, 2019.
The only exception to the revaluation would be for holders of circulating coinage and postage stamps with printed Dollar or fractional amounts. (They would be the beneficiaries of a 1-to-10 value windfall.) However, the holders of postage stamps marked “Forever” (which now constitute more than 95% of uncancelled stamps in circulation) would not benefit, since Forever Stamps would be revalued overnight.
A new stock of paper currency with a substantially outwardly-different appearance would have to be printed in advance, and distributed throughout the banking system and held with a firm embargo date to begin circulation on January 1st, 2019.
Then Comes The Boom
The subtle psychological effect of a 10-for-1 currency exchange will be profound, sparking a huge economic revival that will last for more than a decade.
Think about the implications of revaluation:
- Instead of costing $2.90 a gallon, gasoline will be priced at 29 cents a gallon.
- Instead of costing $3 a gallon, milk will be priced at 30 cents a gallon.
- Instead of costing $26,000, a typical new car will cost $2,600. (To compare: The sticker price of a 1965 Ford Mustang was $2,734.)
- Instead of costing $2, a bridge toll will be 20 cents.
- Instead of costing $1 or $1.25, a candy bar will be 10 or 12 cents.
- Instead of costing $10, a movie ticket will be priced at $1.
- Instead of costing $700 to $900, a typical men’s tailored suit will be priced at $70 to $90.
Again, the subconscious psychological effect of the revaluation will be enormous. The prices of goods and services will seem low, so people will buy more. They will buy more cars, bigger houses, more dinners out at restaurants, and more of just about everything.
The genuine need for revaluation is considerable and overdue , given the gradual inflation of the U.S. Dollar. A typical retail item that cost just $1 in 1950, now costs $10.08. And something that cost $1 in 1913 now costs $24.53. Rightfully, instead of debasing our coinage as we did in 1964 (replacing 90% silver coins with silver-plated copper tokens), we should have revalued the Dollar at that time. So now is our opportunity to at least partially set things right.
Without revaluation, within a few years the U.S. Treasury will be forced to start making all coins out of stainless steel or plastic. (The penny and nickel already now cost more than their face value, to produce.)
Yes, Its Been Done
There have been many precedents for 10 for 1, 100 for 1, or even 1,000 for 1 revaluations around the world in the past century. However, most of these were acts of desperation, in times of mass inflation–mostly in small, economically weak countries. But to make 10-for-1 currency change in an economic powerhouse like the United States during times of fairly low inflation would be tremendously positive. The prestige of both the United States as a nation and of the U.S. Dollar as a currency unit would be greatly increased. (On the Forex, it would cost 12 Euros, to buy One Dollar! Thinks about that.)
The logistics of issuing a new circulating currency might initially seem daunting, but they really aren’t. This is because only around 7% of the “Dollars” in circulation are in tangible printed or minted form. The other 93% of the “Dollars” are electronic ledger entries that can be revalued with a few keystrokes. No muss, no fuss.
Now, on to the legalities and logistics of a revaluation:
- Replacing the paper currency could be done very quickly and with minimal expense because the revaluation would require only 1/10th the volume of the now-circulating paper currency to be printed. (A new $20 bill would have the purchasing power of $200 in current dollars.) The Bureau of Engraving and Printing (BEP) could produce enough of the New Style currency in just a few months—well in advance of the transition date. These could be stockpiled at the regional Federal Reserve banks before December, and then sent out to local banks in sealed bundles in mid-December.
- Domestic holders of old style currency will be allowed one year to exchange their old bills for the new bills (at a 10 for 1 ratio.)
- Overseas holders of old style currency will be allowed two years to exchange their old bills for the new bills (at a 10 for 1 ratio.)
- The few remaining domestic holders of old style savings bonds will be allowed five years to exchange their old bonds. (Or have them overstamped and have a holographic security sticker attached.)
- Holders of all circulating coinage–which represents less than ½ of 1% of all Dollars in circulation–would not be required to make any exchange. (They would have an overnight windfall.) But coins represent less than ½ of 1% of all currency in circulation.
- Holders of postage stamps marked “Forever” (which constitute more than 97% of un-cancelled stamps in circulation) would not benefit, since Forever Stamps would be revalued overnight. (Instead of being worth 49 cents each, Forever stamps would be formally revalued at 5 cents each.)
- Holders of the few un-cancelled postage stamps with printed Dollar or fractional amounts would not be required to make any exchange (They would be the beneficiaries of a purchasing power windfall.)
- Holders of un-used money orders and travellers checks will be allowed one year to exchange their old ones for newly-denominated ones (at a 10 for 1 ratio.)
- In cooperation with the BEP and Treasury Department, the Federal Reserve will issue the new currency into circulation. Banks will gather all of the old style bills, bundle them, and be credited by the BEP when they are received for destruction.
- To meet the new demand for coinage (since small coins will again have value and meaning), the BEP must embark on a program to double or triple its annual coin production. American miners and metals refiners would benefit from expanded BEP contracts. But since the coins themselves will be unchanged in their markings and metallic composition, the circulating coins will be unaffected by the revaluation. They will simply gain 10 times their purchasing power on January 1st, 2019. Imagine a cup of coffee at Starbucks costing 20 cents. What a concept!
- The new style currency could have advanced anti-counterfeiting features, similar to the new series of Swiss Franc notes.
A Few Challenges
Granted, there will be a few challenges. These include:
- The operators of vending machines and coin changing machines will have retooling costs, to install new optical bill readers. But these costs would be much less than the costs of them installing new mechanical coin gauges, if the metallic composition of coins were changed. (And, with gradual inflation that will become a necessity soon, unless our nation revalues its currency.)
- Although toll bridges and highways have largely switched to E-Pass transponders and credit card payments, and few of them are still set up to collect tolls with paper currency or coinage. A national “no toll holiday” lasting for the months of January and February would be announced, easing the transition to new toll-tallying equipment.
- There could be sporadic shortages of some coins for a year or two. But countless numbers of home Piggy Banks will be emptied and spent into circulation, this problem will be largely self-correcting.(When 10 cents will buy a soda or candy bar, all of those “forgotten” coins tucked away at home will again see the light of day.)
- Some businesses and governments operate on fiscal years, rather than calendar years a January 1st currency reform will complicate some tax calculations for the transition year.
- Special arrangements for currency trade-ins would have to made in countries like Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Panama, Turks and Caicos, British Virgin Islands, and Zimbabwe that have partially or fully Dollarized economies.
Seize The Day
This is an opportunity to make the Dollar Great Again, and thereby help make America Great Again, Mr. Trump. This may go down in history as one of your greatest legacies. Seize this opportunity!
James Wesley, Rawles
Novelist, Rancher, and Blogger