Ne Plus Ultra

In the new biography of Robert Morris by Charles Rappleye, the issue of the destruction of the value of the “Continental” is addressed.

He writes of economist Pelatiah Webster from Connecticut, graduate of Yale, “a public intellectual who served as a sort of American counterpart to Adam Smith.”  In 1776 Webster wrote: “I conceive the value of the currency of any state has a limit, a ne plus ultra, (the highest point; acme) beyond which it cannot go; and if the nominal sum is extended beyond that limit, the value will not follow.”

 We all know what happened to the Continental.  If Congress, Bush and Obama have not exceeded the ne plus ultra of the dollar supply with TARP and the Stimulus, QE2 is certainly going to. 

 I think it is no coincidence that QE2 is $800 billion and we owe China about the same amount.  The lesson is we are like the lunatic with a gun to his head saying: “If you come closer I will pull the trigger.”   China is stuck.  If they start selling we will destroy the value of whatever they left and bring chaos to their people…and to ours.

 Pelatiah means “Jehovah’s deliverance.”  Which about the only thing we have left in our trick bag.

 Ward Bond