There are times when I go back to – for some – the beginning. In this case – from the wisdom of Hugo Salinas Price. ~ Editor
Hugo Salinas Price
January 1, 1989 ~ In 1946, the Mexican peso/US dollar exchange rate was $4.85 pesos to the dollar. That year, Mexican President Miguel Aleman became President, and he launched a program to “industrialize” Mexico. The peso began to slide, from $4.85 to $6.80, and then to $8.65 to the dollar. Finally, the exchange rate stabilized for a fairly long period at $12.50 pesos to the dollar, during the 12 years when Adolfo Ruiz Cortines and Gustavo Díaz Ordaz were Presidents.
After Diaz Ordaz, Luis Echeverria Alvarez became President for the next six-year period. His very peculiar personality expressed itself in enormous government expenditures, which caused the fall in the value of the peso, from $12.50 to the dollar, to $22.00 pesos per dollar in 1976, at the end of his term.
After Echeverria, Jose Lopez Portillo became President; he had his share both of Success and of Failure; during his first years as President, Mexico was enjoying a huge oil bonanza, which let him to declare that “Mexico will have to learn to manage abundance”. However, it was his bad luck that at that time, the USA decided to crash the economy of the Soviet Union, as Russia was named at that time, by crashing the international price of oil. The move had the desired effect of causing the crash of the Soviet Union’s economy, but it had the unfortunate side-effect of also crashing Mexico´s oil-based prosperity. The peso fell to $70 pesos to the dollar, when Lopez Portillo left office.
After that, there was nothing to stop the fall in value of the Mexican peso.
It was not until Carlos Salinas de Gortari became President (1988 – 1994) that it was possible to stabilize the value of the Mexican peso with regard to the US dollar, when the peso/dollar rate had fallen to $3,100 pesos to the dollar. Three zeros were wiped off the exchange rate, which left it at $3.10 (new) pesos to the dollar. New paper money was issued, as well as a new coinage.
Supposedly, everything was to be OK henceforth.
Alas, nothing had really changed.
Note: The author updated this column 3o years later. ~ Editor
At the present time – 2019 – the peso has fallen to $19.40 pesos to the dollar, which is really $19,400 pesos per dollar, if we ignore the cosmetic surgery applied to our peso by Salinas de Gortari, who simply erased three zeroes from the exchange rate.
And we have to take into account, besides, that the dollar itself has been devaluing constantly, since long before 1946: in 1946, $35 dollars would purchase one ounce of gold; today, it takes some $1,460 dollars to acquire an ounce of gold.
In 1946, when gold was worth $35 dollars an ounce, and the peso/dollar relation was $4.85, in Mexico it was possible to acquire an ounce of gold for $35 x $4.85 = $169.75 pesos.
Today, with gold at $1,460 dollars an ounce, and the peso is – really – at $19,400 to the dollar, we have: $1,460 dollars x $19,400 pesos per dollar = $28,324,000 pesos (without cosmetic surgery) are required to acquire one ounce of gold.
The catastrophic collapse of the purchasing power of both the dollar and the peso is quite evident: The ounce of gold which could be purchased in 1946 for $169.75 Mexican pesos, now costs $28,324,000 pesos (if we ignore the cosmetic surgery applied in 1994). In 1946, the ounce of gold in dollars cost $35 dollars; today, it costs $1,460 dollars.
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Our world has gone completely insane, and the cause has been the mental derangement which I identify as “Development-ism”. The virus of this plague came into existence in the course of the 19th Century, when the best and brightest (as they thought of themselves) of the world’s thinkers thought that it would be possible to eradicate poverty from human life, if only the proper methods – which the thinkers favored – were applied by governments.
The method these “great thinkers” proposed for eradicating poverty for once and all, from human life, required lots and lots of money; and since gold was so terribly scarce, they decided to invent their own money to finance the great job of eradicating poverty. Thus was born the age of “Paper Inflation-ism”, to pay for the “Development-ism”.
“Development-ism” has gone hand-in-hand with “Paper Inflation-ism” ever since.
All these “Great Thinkers” – as they consider themselves – refuse to acknowledge the fact that the wealth of a few and the poverty of many are facts which cannot be removed from human life. All governments of the world, under the sway of these “Great Thinkers” seek to achieve the impossible: to eradicate poverty from human life.
The wealth of a few and the poverty of many, are inevitable and eternal characteristics of human life. Mary Magdalen, a sinner, kneeled before Jesus and washed his feet with her tears, and then she anointed His feet with a precious, expensive balm. One of those present said, “Would it not have been preferable to give the money to the poor?” And Jesus answered, “I shall not always be with you, but the poor you will always have with you.”
Today, in order to keep the poor from rioting, all governments of the world attempt to buy them off with “Development-ism”, and since there is never enough money to pay for “Development-ism”, they have invented “Paper Inflation-ism” to cover the costs. The inevitable result, of course, has been the constant depreciation of all the false paper monies and the creation of unimaginable quantities of debts, totally un-payable.
The governments of our Planet Earth, operate beyond the bounds of Reality – in other words, they are clinically insane as they apply their “Development-ism”.
What is happening, is that great numbers of human beings are being impoverished by the related “Paper Inflation-ism”, because no matter how much effort they put into their work, the depreciation of the Paper Money they are forced to use cancels all their efforts, and they are steadily becoming poorer.
The tragedy is that the multitudes impoverished by the “Paper Inflation-ism” going on in the world, tend to think that it is their own fault that they are unable to make ends meet. And to escape from what they think is their own fault and their own incapacity to sustain their lives and the lives of their loved ones, they turn to drugs for relief from their supposed guilt.
Today’s “Development-ism” goes hand in hand with the massive increase in the use of drugs, by those millions upon millions of humans who lose the battle against “Paper inflation-ism”
The silver coin, turned into money, would serve as a tangible refuge for millions of Mexicans, because it would offer them safety for their own lives and for the lives of their loved ones, and an alternative to the deadly flight into the dream-world of drugs.
Written by Hugo Salinas Price for In This Age of Plenty ~ January 1, 1989
