Click on image to see larger graph.
This is something I’ve been toying around with. It is based on the hypothesis that the Presidential approval rating will following how strong the dollar is. It thus compares the Presidential approval rating to the worth of the dollar. The worth of the dollar is an inverse of the price of gold.
I put horizontal lines at 40% and 60% approval ratings. In general, the country is about 40% liberal, 40% conservative, and 20% independent. At any time, a President should have at least 40% approval. If not, it means they have lost their own base. If they are higher than 60%, it means they have won over some of the other side’s base.
I am very much aware that other factors influence the Presidential approval rating. In this chart, we can clearly see Watergate, the unpopular agenda of the first 2 years of the Clinton Presidency, and 9/11 having an effect on Presidential approval rating. However, barring these major events, it seems generally true that if the dollar plummets, so does a President’s popularity and if the dollar stays stable, the approval rating is more likely to be high.
A strong dollar is at once both a cause and indicator of a good economy. Thus, this chart more proves that a good economy is the reason for a President’ popularity. In the words of President Clinton, “It’s the economy, stupid.” However, a good economy is not a mysterious creation. It is a result of free markets, low regulation, and sound banking. A strong dollar is the solid foundation on which a good economy is built.
The dollar clearly plummets from 1969 until 1974. The US went off the gold standard in 1973. Leading up to this, the U.S. government decreased how much gold would be given for each dollar. President Nixon was impeached in 1973. While the Watergate scandal certainly had a lot to do with his unpopularity, so did a bad economy.
Next, Ford completed Nixon’s term. There is a slight upswing in the price of gold, and his popularity increases as well.
The next major plummet of the dollar is during the Carter years. There is a straight decline during these years. These years were also marked by “stagflation.” This economic downturn did contribute to Carter losing re-election.
During the Reagan, Bush Sr., and Clinton years, the dollar stayed relatively stable. These are years recorded as undeniable economic prosperity. Of course, in the 1980s it was called “Greed” and in the 1990s it was called “Prosperity.” People were generally happy with the economy, thus happy with their President. George Bush Sr. did fail re-election but many attribute this to his broken promises, an uncharismatic personality, and the Ross Perot factor. Also, he was running against Clinton–who made the economy his platform. Clinton went out of his way to show that he would guard against too much public debt and keep the economy prosperous. By running on this platform, I believe, he was able to attain, really, extremely impressive ratings.
George Bush Jr.’s high popularity in 2001 and even in a few years after it was clearly attributed to the attacks on 9/11. However, after this, his popularity declined almost in perfect sync with the value of the dollar.
If you notice, the only 3 times that the approval ratings fall below 40% is during the Nixon, Carter, and Bush years–all times when the value had either a sharp decline or a steady but long one.
Now enter hope and change. Due to his newness and historical election, Barack Obama enjoyed high approval ratings. However, that he has paid no attention to the economy, job creation, and yes, the value of the dollar, he is fast slipping into George Bush Jr.-like popularity decline.
So what can a President do, i.e., how does one create a strong dollar? It is simple: don’t create fiat money. A previous post of mine shows how the creation of fiat money, from the Federal Reserve, has driven up the price of gold and thus driven down the value of the dollar.
The bottom line is this: Presidents need to wise up to the importance of a good economy, and, thus, the importance of a strong dollar. While bailouts and government programs may be politically popular among certain special interest groups, they mean almost certain doom for their Presidency in the long run. This “stimulus” money is in fact completely ruinous to an economy. Prudence, savings, and industriousness are still, believe it or not, the path to prosperity–not hyper-consumerism, easy lending, and debt.
If Obama wants to turn around his Presidency (which I don’t think he does), he is going to have to start speaking the language of how to create a good economy, and, more importantly, getting tangible results. A stronger dollar, higher employment rates, and higher returns on stocks are the tangible results. He is going to have to look at what Clinton did, who, after the 1994 Republican influx, reformed welfare. We don’t need more government programs we need A LOT LESS. In short, Obama needs to listen to the Tea Party–the allegedly racist, non mainstream ogres he so hates.
In a way, I love my country for so clearly rejecting the welfare handouts promised by the Democrats and so clearly demanding a return to sensible government. But in another way I am mad as hell that they elected them in the first place. Americans WANT a good economy and will so clearly vote out anyone who fails to deliver it to them. But it is as if they have no idea how to pick the correct candidate who will deliver a good economy. It is NOT mysterious. Free markets and limited spending will create a healthy economy. By definition, Democrat economic policies, which in the past several decades have been socialist, will NOT.
Anyone who has voted to elect these socialists in, for whatever reason, bears some guilt. To not put the economy as the most important factor in any election is to take your eye off the ball. It is focusing on the decoration of your house instead of the foundation. If both candidates are equally good (or bad) on the economy, then it is appropriate to look at other issues. But, if not, then it is morally reprehensible to vote in anyone who will destroy the very source of our livelihood. The only other issue to override the economy is the defense of the nation.
I am very much looking forward to Nov 2 and I hope, maybe, Washington starts listening!