Dollar Daze

Every administration has pledged to hold our currency strong since Nixon devalued the dollar in 1971.  Since the Euro was introduced only ten years ago, the dollar has lost more than 50%. During the same period of time, the dollar is down almost 25% against the Yen.

The inconvenience of more expensive European vacations aside, the precipitous slide is something that needs to be stopped. The idea that a weak dollar is good for American exporters is a fallacy. Except for agricultural commodities, we export virtually nothing. All a weak dollar will do is exacerbate our trade deficit, bring on inflation, lead foreigners to sell off US investments, and make it more difficult to pay down our debt.

A weaker dollar devalues everything — our assets, our incomes, and particularly our nation’s role as the preeminent economy. The dollar is still the reserve currency for investors, but the pace at which it is falling means it will be only a matter of time until the Euro has the critical mass,  or investors start to become comfortable with a communist Yuan, and the dollar will lose its position as the world’s currency of choice. Every administration has pledged to hold our currency strong since Nixon devalued the dollar in 1971.