If the euro collapses, France would go back to the franc, Italy would go back to the lira, Greece would go back to the drachma, and Germany would return to the deutschemark. Euros were first placed into circulation on January 1, 2002.
Perhaps the next Wall Street Journal headline should read “Banks Prep for Life After Dollar.”
The United States is a currency union. It’s a sovereign nation -- with a constitution, a military, and a judicial system -- but it is a currency union nonetheless. The similarities between the 17 member euro zone and the 50 member United States are striking. The euro is in a state of collapse because of its debt and spending. Profligate members such as Spain, Italy and Greece spend large sums on entitlements and the public sector, yet do not produce enough to cover these costs. So they borrow (in euros). America’s spendthrifts like California, New York and Michigan don’t borrow so much as they get direct “investment” from Washington D.C., like the stimulus, grants, subsidies, etc.
The national debt of the United States is now over $15 trillion, which exceeds 100% of yearly Gross Domestic Product (GDP). This ratio is very troublesome by most accounting standards because a currency cannot stand under the weight of such debt, and history shows this. In the early 1990’s, the Soviet Union went through what the Europe is going through. The Russians bankrupted themselves, and when the ruble collapsed, places like Estonia, Lithuania, Latvia, Georgia and Ukraine just drifted apart.
What unites America is our currency: the dollar. By many accounts, though, America is on a similar trajectory as Europe in terms of borrowing, spending, and paying for it all. Unless we change course, it is only a matter of time before our currency union dissolves. As everyone knows, Europe’s strongest member Germany will do just fine post-euro, thank you very much.
North Dakota is an agri-industrial powerhouse
North Dakota is a lot like Germany. North Dakota’s economy grew by 7.1% in 2010, while the nation as a whole grew at just 2.6%. North Dakota is an agri-industrial powerhouse. The Bakken formation in the western part of the state is producing over 400,000 barrels of oil per day, while North Dakota accounts for 78% of the nation’s Durum wheat. Companies like Microsoft and Amazon have recently expanded there. North Dakota’s government is small in size, limited in scope, and very, very efficient. It is fiscally well managed. While most states are awash in red ink, North Dakota has a $1 billion budget surplus. What’s most important, however, is that North Dakota has a state bank -- The Bank of North Dakota.
If the dollar collapses, North Dakota would be wise to move onto the Canadian dollar. It’s a natural fit. Nicknamed the “loonie,” the Canadian dollar is strong, and both Canada and North Dakota are highly productive free-market economies that are geographically compatible. North Dakota’s largest city Fargo is a 3½ hour drive from Winnipeg via Interstate 29 and Lord Selkirk Highway 75. The 29/75 corridor is a booming artery of commerce. Fargo and Winnipeg are natural trading partners; they were made for each other. You see huge tractor-trailers going north and south carrying all kinds of goods on most days, while the parking lots at hotels and stores in Fargo are packed with Manitoba license plates.
Established in 1919, the Bank of North Dakota (BND) was set up solely for business transactions of the state and state agencies, and is the only state-owned facility of its type in the United States.2 It’s like its own mini-Federal Reserve (minus the politics). In the event of a break-up, it would take the BND about a week to exchange its greenbacks for loonies. Commercial banks, businesses, and individuals would follow suit, and North Dakota wouldn’t skip a beat. No need for printing presses. The North Dakotans might have to petition Ottawa to accommodate this, but I see no reason why the Canadians would not approve. And as far as the Air Force bases in Minot and Grand Forks, the Pentagon would be more than welcome to keep them open if they wish. North Dakota, like Canada, would be a loyal U.S. ally.
Even the liberal New York Times is quietly hailing North Dakota. “Paging Gov. Dalrymple!” implored Gail Collins in an October Op-Ed piece where she reviewed potential Republican presidential candidates.3 When asked about this after a speech in Medora, the governor quipped, “Am I missing something here?” The audience burst out in laughter. Does Jack Dalrymple know something we don’t? Not anymore. When the dollar goes the way of the euro, North Dakota just might be the place to be.
- Thursday, December 8, 2011 Wall Street Journal “Banks Prep for Life After Euro” by David Enrich, Deborah Ball and Alistair Macdonald.
- Wikipedia.
- October 5, 2011 New York Times “Desperately Seeking Dalrymple” by Gail Collins.
