"It's still there," Secretary of the Treasury W. Michael Blumenthal said after a visit last week to the country's gold store at Fort Knox. He wasn't just whistling "My Old Kentucky Home," either.
For foreign economic policy constitutes one area where the Carter administration has unmistakably outperformed the Ford administration. This country's cast economic power is now working for - rather than against, as in the recent past - the rest of the world.
A side effect of the new emphasis has been a slight drop in the value of the dollar relative to other currencies. Because these dollar doldrums have spread confusion that threatens to subvert the whole new policy, acts of reassurance - like the visit to Fort Knox - and words of explanation are in order.
A good starting point is the $40-billion surplus that the oil-exporting countries grouped in the OPEC cartel figure to derive this year from the enormous hike in prices they have imposed in the world since 1973. The OPEC surplus this year, as in the past, is a kind of tax on all oil-consuming nations.
It promotes slowdown by reducing purchasing power and demand for goods. It promotes inflation by raising prices on energy that directly affect all other prices.
Thus, the oil-price increases have combined with the business cycle and the demands of the welfare state to put most of the world in bad economic straits for the past three years. Though there has been an inevitable bounceback from the recession of 1974-75, the recovery has been extremely slow.
The 24 relatively rich countries grouped in the organization of economic cooperation and development are expected to raise their gross national product by only 4 per cent during 1977. In Western Europe unemployment is actually growing.
The United States - along with Japan, Germany, Holland and Switzerland - is one of the very few countries to escape the general economic blight. Growth during the first half of this year has been over 6 per cent, and inflation is holding steady at around 6 per cent while unemployment has been coming down slowly. So this country is foa better equipped than most countries to absorb the huge fuel bill imposed on the world by the oil cartel.
The Ford administration did not accept this responsibility. It obliged other countries to pay their fuel bills by borrowing from private sources, a measure that deepened recession and weakened the delicate network of international credit.
The Carter administration has accepted the responsibility of economic leadership. Its has allowed this country's imports to soar to the point where the annual trade deficit is now running at $25 billion. In the process, however, other countries have a chance to improve their economies by selling to the United States. American imports during the first four months of 1977 were up nearly 20 per cent from the countries of the European Economic Coumunity, and one-third from the under-developed world.
The American lead, unfortunately, has not been much followed by the other economically strong countries - notably Japan and Germany, which have been running foreign-trade surpluses of $7 billion and $3 billion annually. But under U.S. pressure Tokyo and Bonn have agreed to let their currencies appreciate against the dollar, thus making their exports slightly more expensive and their foreign imports a little cheaper. In consequence, there has been a steady fall of the dollar against the Japanese yen and the German mark.
The falling dollar has combined with the huge trade deficit to give some people - notably interested parties - the jitters. Protectionist interests have argued that American industry is becoming uncompetitive and needs the support of higher tariffs. Financial interests have warned that they might be obliged to raise interest rates in order to prevent a flight from dollar holdings by foreign investors.
In fact, the President's special trade representative, Robert Strauss, has taken care of the legitimate protectionist complaints by special arrangemnts limiting exports of shoes and television sets to this country. The right way to bolster the dollar, as Blumenthal keeps saying, is for this country to conserve on energy while Japan and Germany expand their domestic economies in ways that open the door to imports from the United States and other countries.
But the intuitive response to a drop in the dollar and a rise in the trade deficit is that the United States is getting poorer. So the panicky warnings gain currency, and all American officials are obliged to keep educating everybody to see that the present policy helps the world toward recovery that is ultimately in the best interests of the United States.