Vintage John Tamny from a speech delivered in Southern California.
Human talent is what drives advancement and California will continue to thrive because it still has the best people within its borders.
Periods of a strong dollar drive capital to the innovative concepts of the mind. To the contrary a period of a weak dollar drives investment on the margins to hard assets, like land, oil and gold, i.e., into wealth that already exists.
Oil is a great example–it is expensive only insofar as the dollar is cheap. If you look at the price of gold relative to the number of barrels of oil it will purchase, you see an interesting phenomenon.
- 1 oz of Gold # Barrels of Oil
- 1971 $35 15
- 1981 $480 15
- 2011 $1500 15
- 2012 $1700 16
A strong dollar will more appropriately move investment back into innovations, the assets of the mind. With such investments, come profits, growth, and productive private sector jobs.
Unfortunately, neither the Bush administration, the Obama administration, nor the current crop of GOP presidential contenders are showing any public or private proclivity to make the strong dollar a central theme.