The collapse of Iran’s currency triggered the uprisings that may yet bring down the ayatollahs. Will the Trump Administration take heed?
Last June, in a space of 12 days, Israel and the U.S. smashed Iran’s nuclear facilities. When it became clear that despite that disaster Iran’s extremist regime would continue pouring money into its nuclear and terrorists ventures, its currency completely fell apart. A desperate population, long-writhing under a murderous and corrupt tyranny, rose up on a scale never seen before. The mullahs have responded by killing thousands of demonstrators and arresting thousands more, most of whom will be executed if the regime survives.
If the U.S. provides the needed assistance and makes the necessary moves, the ayatollahs may well be sent into the hellhole of history.
This astonishing turn of events underscores a factor that historians will acknowledge but underestimate the profound importance of: the role that inflation and a destroyed currency play in changing history. This is because monetary policy utterly lacks the excitement of battles or uprisings and the drama of high-level diplomacy.
There are plenty of examples:
• The worthless money of revolutionary France during the 1790s was critical in creating the conditions that led to the rise of Napoleon and two decades of war.
• The collapse of the ruble during World War I fatally undermined the three-centuries-old Romanov dynasty.
• The devastating hyperinflation of the German Weimar Republic in the early 1920s laid the groundwork for the rise of Adolph Hitler.
• The severe inflation in the late 1940s that destroyed China’s anti-Communist middle class in urban areas helped enable Mao’s Communists to triumph in that country’s civil war.
• Hyperinflation and the destruction of Yugoslavia’s currency in the late 1980s and early 1990s shattered that country into seven separate nations. The process involved ugly acts of ethnic cleansing and a war that led to a U.S.-led NATO intervention. We still have troops stationed in Kosovo and Bosnia and Herzegovina.
Of course, the inflation the U.S. is experiencing today is way down from the highs during the Biden presidency. But President Trump is flirting with the idea of weakening the dollar to deal with our trade deficit. The dollar is already wobbling against other currencies and has fallen sharply vis-à-vis gold, which is the best barometer of monetary inflation. If the trend isn’t reversed, a weakening dollar will undermine Trump’s presidency. The same thing happened to President George W. Bush in the early 2000s, when he and his economic team were seduced by the supposed benefits of weakening the greenback. A weak dollar also did in the presidencies of Richard Nixon, Gerald Ford and Jimmy Carter.
A dollar stable in value is critical to genuine prosperity. Will President Trump and his team recognize this before we do ourselves and the world unnecessary harm?
