Back To The Gold Standard

The Street Hustle


Rents in New York are outrageous, true.  Not a day goes by I don’t hear of another friend, acquaintance or just one more horrible story of someone losing their business or apartment because the rents have tripled.  Just two weeks ago, rumors started to swirl around Barfly, a mainstay for drinkers in Gramercy.  According to several bartenders in the neighborhood, Barfly will be shuttering its doors at the end of the year.  (Many is the New Year’s Eve I spent in that joint, ringing in the New Year and then eating breakfast and watching the first of the day’s bowl games.  Who is going to get the 24 hour liquor license for Gramercy now?)


As bad as it’s been this past year, it just got worse.  Although it got very little press, 216 Jamaica Avenue LLC v. S&R Playhouse Realty LLC, a case decided on 8/27/08 has just set the precedent for what is to come.  The lawsuit revolves around a parcel of land in Cleveland.  The landlord enforced a clause which stated the $35,000 annual rent had to be paid in US gold coins.  This would increase the rent to nearly $1.5 million per annum.  It seems an outrageous demand to make of a renter but the 6th Circuit Court of Appeals in Ohio said the renter had to do just that, pain in gold.


Relax.  For the most part this isn’t going to happen to us average folk.  In 1933, FDR had legislation passed that made illegal for most Americans to privately own gold.  This meant that most of the gold clauses found in leases and other contracts were, therefore, null and void.  The “New Deal” prohibition on private gold ownership was repealed by Congress in 1977 and a few clauses slipped through, this being one.


What I find disturbing is just how far our currency has fallen.  I was in up in the newly re-opened Plaza Hotel last week and heard nary a word of English on the streets of Manhattan.  For a moment, I thought I was in Peter Stuyvesant’s New Amsterdam, not present day NYC.  But why should I be surprised?  As of 12:53pm on September 10, 2008, for every 1.40 euro, you get $1.  That’s nearly 3.00 euros for $2.  My lord, we’re almost a banana republic.  I’m waiting for the day when $100,000 will get you a cup of coffee and the New York Post.


While it is nice to have all of the tourists in the city, spending their money here, certain industries are suffering.  Walk up and down the avenues and you see empty restaurants, more people going losing their homes and a dearth of jobs in the financial sector that was the backbone of the City’s economy throughout the ‘80’s and ‘90’s.


The New York Sun, in and editorial, proposed linking the dollar to gold once again, going back to ‘the gold standard.’  Although this would give some more value to the dollar in the short run, would it help the average consumer in the long run?  Honestly I don’t know.  That is for the economists to decide, it is not the pervue of this slightly cranky, wholly cynical (but with heart!) blogger.


All of this backroom conversation on precious metals and worthless dollars reminds me of one the few Holocaust stories the Old Man ever told me.  (In general when I would ask what happened in Europe, the Old Man would remind me he was no one’s victim and could easily take me out of the world he brought me into.)  It was late 1941 and the Nazi’s had finally come to Romania.  My grandfather and grandmother chose to run towards the retreating Soviet troops as they thought Stalin offered a better chance at survival than Hitler and his promise of genocide for Jews.  When they reached the Dneister River which separated the Ukraine and Romania, the men who ran the ferry boats refused to take the Old Man, his three older sisters and parents across the river.  They kept telling my grandfather all the boats were full.  My grandfather, a jeweler, took one of the boatmen aside and handed him a gold ring.  Viola, there was more than enough room on the boat for a man, his wife and four kids.


My brother’s and I would hear this story several times a year, as my parents had the disconcerting habit of throwing us in the car and driving all over the country.  Dad would pull out several ounces of gold he carried around and tell us how he crossed the Dneister River.  Of course, we’d roll our eyes and shake our heads.  I would always mumble something about Depression era paranoia had gone wrong in his head.


Now, when I travel, I always have an ounce of gold in my pocket and a gold ring on my finger.  Am I paranoid?  Perhaps but certainly not of the prospect of Hitler returning to finish the job.  No, my fear is to be caught in deepest, darkest Jersey with a dollar that has totally failed.  The paper in my pockets is worthless and no one speaks English.  I want that gold so I can get back to New York.


I think I just described present day Newark.


Where do you fear being stranded with no money to your name?


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