APO AE 09213-1315
February, 1995
Bill Archer, Chairman
Senate Banking & Finance Committee
Senate Office Building
Washington, DC 20510
Dear Sir:
I wrote you on January 11 when it began to appear that after years of debate the United States would soon be adopting a new form of currency with different sizes and colors of bills to assist the visually impaired (and foreigners) avoid confusing different denominations. Even at that time this was good news, being the sort of major change which occurs only once in half a century. Now with the run on the dollar during the last couple of weeks, and its depreciation visa a vis the yen and deutchemark of upwards of 13 per cent -- far more than purchasing power parity would consider its equilibrium, the moment for introducing a new U.S. currency is doubly indicated. Indeed, the need, as well as the moment, is unparalleled. As a Harvard PhD with forty years experience as a monetary economist with the State Department and, prior to my retirement, close work with Treasury and Federal Reserve officials, I'm desperately concerned that without attention from your Committee we may lose the opportunity to achieve an even greater and more important reform: to use the occasion to restore the value of the U.S. dollar by revaluing the currency at the time of introduction. As the Romans put it: carpe diem -- seize the opportunity!
I enclosed a paper with my January 11 letter, written following President Bush's electoral victory in 1988 and sent to him and the National Economic Commission -- but, so far as I could tell, with of no effect at all in their search for new economic modalities. As you and your Committee undertake the search for ways to reduce the deficit, you may find some of these suggestions just as fresh as they were seven years ago: A Federal Road Tax for foreigners (a la Suisse ); charges for foreign tourists visiting National Museums and Historical Sites (as per every other country in the world); a Stamp Tax for legal documents; A negative Income Tax and a "Sump" Industry (workfare) proposal to reduce welfare-dependency; and variable Social Security payments for eligible aliens living abroad -- none of which appear to have been considered by Mr. Gingrich in his House welfare/budget reform bill. In case this paper was sent to the "round file", or otherwise mislaid, I enclose another copy for your attention in hopes it will stimulate early action on introducing a revalued, as well as res-styled, new U.S. currency.
The section on which I hope you and your staff will concentrate at present is found on page 6: A New U.S. Dollar, which. provides the argumentation for revaluing the dollar at the time the new currency format is introduced. A "heavy" currency has been found to be the best anti-inflationary weapon around. According to a study by Milton Friedman of the University of Chicago, the US currency has lost 90 per cent of its value since the '30s. Inflation is again becoming an issue in national policy. And the best time to head off a new outbreak is before it starts. Taking into account the current inflationary calm -- and the coincidence that a current ten dollar bill is worth almost exactly one dollar of pre-WW II money, now is perhaps the best moment in over half a century to knock a zero off the value of the new currency, restoring the U.S. dollar to its historic position as a dependable reserve currency. Let it be remembered that the new French Franc introduced by French President Charles DeGaulle in 1962? still holds its value after more than thirty years. A revalued dollar would give the world's main reserve currency a new lease on life for the coming new century. If we merely adopt new sizes and colors without revaluation, we'll all be dealing in yen and deutchemarks within the next few years.
Sincerely,
D. B. Timmins, PhD (Harvard), Professor of Finance & Economics (ret.)
 |
 |
 |
 |
 |
 |