As we turned through the gates onto the long, winding mountain driveway, I stared up at a massive white hotel complete with Spanish Renaissance-style red roof titles… I’d never seen anything quite so majestic.
I was just a teenager when I accompanied my parents to Bretton Woods for the first time, deep in the heart of New Hampshire’s White Mountains. It was the mid-1990s, which meant the Mount Washington Hotel itself was somewhere in its 90th year of existence… But it had all the trappings of an even earlier time. This was old-world European style. Towers graced each end of the building, and gables punctuated the roofline. The site was breathtaking… The building really stood out in the middle of otherwise rural New Hampshire.
As we were greeted at the main entrance and the bellmen took our bags, I gazed around “the Great Hall” as it’s known. Crystal chandeliers hung from the high, elegant ceilings finished with crown molding, and a huge fieldstone fireplace that was even taller than me housed a roaring fire. I remember taking in the view off the massive veranda… rolling green hills for miles, and nestled in the valley was a large swimming pool. Past the pool and the tennis courts – through the hills and the snowcapped mountains – was the highest point in the northeast: the great Mount Washington, for which the hotel was named.
This masterpiece was built by an eccentric coal entrepreneur from Concord, New Hampshire and his wife. Between 1900 and 1902, Joseph and Carolyn Stickney spent $1.7 million (about $52 million in today’s dollars) creating their masterpiece. They brought in 250 Italian artists to help build the structure, employing them to assist with granite and the hotel’s legendary red roof and white stucco masonry. Though Joseph died shortly after the hotel’s opening, Carolyn spent every summer at the resort until her death.
Prohibition, then the Depression, and then the war hurt the hospitality industry. By the 1930s, the Mount Washington Hotel had fallen on hard times. It closed its doors in 1942… and went up for sale.
The Bretton Woods Conference
In 1944, a Boston banking group scooped up the hotel for $450,000. They prepared this grand dame to become the site of the all-important, legendary monetary conference that quite literally reset the world economy… the 1944 Bretton Woods Conference.
Officially known as the United Nations Monetary and Financial Conference, the U.S. Treasury hosted this important meeting at the hotel with 730 delegates from all 44 allied nations in July 1944. They gathered in the New Hampshire mountains to restructure and rebuild the post-WWII international economic system… and provide a framework of monetary and financial stability to foster global economic growth.
The International Monetary Fund (“IMF”) was created at this conference, and the Bretton Woods gold standard monetary system was adopted. As a result, the United States, which at the time controlled two thirds of the world’s gold, saw the dominance of gold and the U.S. dollar as the world’s reserve currency.
That was 77 years ago. Time goes by fast… almost as fast as money gets spent.
In 1971, the U.S. abandoned that Bretton Woods system of the gold standard… And the subsequent lack of discipline has come with its disadvantages.
A main detractor, as any gold bug will tell you, is our inability to really peg our currency to something (other than the reputation of the U.S., which increasingly has come into question). As such… it’s becoming awfully easy to print money. And that’s exactly what our government is doing.
A trillion here… a trillion there. It adds up fast.
After a while, we’re starting to talk real money! I mean, remember that $800 billion “stimulus to nowhere?” That was considered a lot of money during the Obama years, so why is no one batting an eye at today’s multiTRILLION-dollar deals?
Outside of Senator Rand Paul, few in Congress are calling this out. In fact, there seems to be no effort to stop the spigot of endless money printing.
And the real question is… Do we really need it? I’d say no.
Can we pay for it? Certainly not.
Yet, these realities are not stopping lawmakers from salivating at the chance to print more money and fund their pet projects backed by the same lobbyists that help them get elected. The long-term consequences of this charade will be significant… catastrophic even.
There’s a push in Washington, D.C. to print money right now… whether it be the $2,000 checks popularized by President Donald Trump and Bernie Sanders, or the doves at the Federal Reserve aiming to pump more liquidity and money into our system.
Why this frantic creation of bills from thin air? Because our leaders believe more lockdowns are inevitable.
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So, as the state of California grapples with an escalating COVID-19 infection rate, it – like several other Blue states – has effectively shut itself down.
Outside of big chains and big-box retailers, few businesses are open… The small business owner, the lifeblood of our American economy, has been devastated. And for what?
As we began the month, California reported a record number of COVID-19 deaths in a single day. There were 53,341 cases in a single day, and a record-breaking 386 deaths. More than 20,000 remain hospitalized, and 4,525 were in the ICU.
It’s tragic… It’s also perplexing given the strict measures the state, led by Governor Gavin Newsom, put in. Those in favor of opening our economy suggest this proves lockdowns ultimately do not work.
The reality is that California, despite its draconian policies and forced closures, has the second-highest rate of coronavirus infection in the country. Critics of the lockdown policies argue this is because people are forced into riskier scenarios in their own homes. Instead of going out to eat in a socially distanced restaurant for 60 to 90 minutes, Californians are gathering in their homes with multiple parties and spending much more time together than they would in an outside establishment. This in turn exposes them in a closer proximately to the virus and for greater lengths of time than they might otherwise receive in a restaurant establishment.
It seems that states that are locking down are doing little to improve their overall health picture while simultaneously limiting their own economies in unprecedented ways. And the measures will come with significant side effects.
The economic consequences of the 2020 pandemic will be severe – and I don’t believe they’re entirely priced into equity markets yet.
Granted, I’m always happy to be surprised, and nothing would please me more than to see America get back to work in a meaningful way, complete with another surge in stock prices… But when California, the fifth-largest economy of the world in terms of economic output, ahead of India, the U.K., and France, shuts down as it has… the effects are bound to be felt.
So, forgive me for being just a little skeptical as our market powers higher. We began January in territory never seen before on the Dow, Nasdaq, and the S&P 500.
And while I’m not here to ruin the party – in fact, I don’t quite believe it’s ready to end and suspect this rally has room to run thanks to all the expected money printing – I just don’t love what’s fueling it.
You see, the old adage “Don’t Fight the Fed” is important. And, in the case we are about to see – in the new Washington of Joe Biden and Janet Yellen – there will be a merger of monetary and fiscal policy that could fuel another leg up in these markets.
Politicians (and I blame the Right and Left for this) have never met a spending package they didn’t love. Sure, some Republicans will feign to care about fiscal responsibilities in an effort to court the old Tea Party which has seemingly disappeared, but for the most part, they just can’t resist a little here and a little there.
As such, the spending feels increasingly like the nursery rhyme, “This little piggy went to market, this little piggy stayed home, this little piggy ate roast beef…” and these little piggies gorged on federal taxpayers’ earnings to line the pockets of special interests and foreign pet projects!
Really, how else can you explain a spending bill with such provisions as these:
• $1.3 billion to Egypt for the country and Egyptian military, who President Trump complained, “will go out and buy almost exclusively Russian military equipment.”
• An additional $25 million for “democracy and gender programs” in Pakistan.
• $85.5 million for assistance to Cambodia, plus $134 million to Burma.
• $505 million to Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.
• $40 million for the Kennedy Center in Washington, D.C., which is not even currently open for business (and already received $25 million in the first go around).
• $1 billion to the Smithsonian Museum (for the creation of the National Women’s History Museum and the National Museum of the American Latino).
And, an additional $154 million for the National Gallery of Art.
This is neither the time nor the place to be spending so much money.
I understand spending money on vaccines and the distribution of vaccines. We need that. And I understand the assistance to small businesses and an extension of unemployment benefits to out-of-work Americans…
But this spending bill targeting so many foreign pet projects? A spending bill that hands out $2,000 checks to everyone making less than $75,000, regardless of whether they’ve lost work or not? (To be clear, that means a government worker and spouse with three kids could see a hand-out of $10,000.) While we want to be generous, shouldn’t this be targeted to people who actually need it as opposed to a big giveaway we can’t afford?!
It’s high time America realizes that we cannot spend so much on ourselves, and certainly not overseas. As such, this is as good a time as any, amidst a pandemic, to look inward at the moment and consider what’s needed immediately here.
Reopen Our Economies
I am a big believer in an individual’s right to go to work, go out to dinner, go shopping, etc… We are all capable of assessing our own risks and should be able to do so. After all, no one wants to get coronavirus, and no one would willingly expose themselves or their families and friends to the virus – but that’s what some lawmakers continually forget.
The reality is individuals are fairly good arbitrators of risk and can determine for themselves whether or not it’s safe to be out in their community. It’s for that reason that we must reopen our economies.
And yet Joe Biden is telling us to prepare for the worst. Newsom is launching a mandatory lockdown. New York, Michigan, Nevada are all engaging in similar behavior… and they think stimulus checks are the answer?!
I’m all for the government helping people in times of need. I understand the president’s sentiment when he demands the $2,000 checks and questions wasteful spending on foreign projects… However, where is the money coming from?
American families know the dangers of debt. They know it’s a recipe for disaster to spend more than you make. And American families understand that they’re supposed to budget for the future… so why can’t the U.S. government do so?
Because it doesn’t have to…
You see, we’re the world’s reserve currency, which is a double-edged sword at times. On the one hand, it’s great because it means that no matter how bad things get, everything is priced in dollars, and as such… the rest of the world will keep buying dollars for the foreseeable future. The downside is that demand – that massive demand for dollars – gives us a very false sense of protection. It enables us to continue amassing more and more and more debt (nearly $28 trillion, at present).
The Gold Room
After years of being closed, the Mount Washington Hotel got a huge investment and was outfitted once again for grand summers (this time complete with air conditioning) and even snowy winters (heat was installed!). It reopened in 2011… and I began a yearly pilgrimage back to the live-free-or-die state.
This year was my first New Year’s holiday that I wasn’t at the Grand Dame of New Hampshire hotels. Every winter, I like to visit the hotel and go skiing with my family… And every year, I take my kids inside the Gold Room, which, yes, is appropriately adored all in gold.
I explain to them what the gold standard was, and the part their mother’s home state played in helping to reorganize the world economy in those challenging days of 1944.
“Could it happen again?” I wonder as I run through the story. “Maybe,” I think.
In fact, sometimes as I watch the printing presses roar on… and the Fed injects more liquidity, and Congress offers more handouts… I wonder whether a little Bretton Woods financial discipline tied to something meaningful might really do America some good.
Perhaps the Tea Party will one day see a resurgence… a Bretton Woods 2.0 kind of moment. In the meantime, let’s all hope the spending and an economic revival goes according to plan.
Trish Regan is one of America’s brightest and most recognized conservative economic thought leaders. An award-winning journalist, Trish is the host of American Consequences Podcast with Trish Regan, a weekly radio show dedicated to economic and political truth, as well as a columnist for several publications.