The Incredible Shrinking Dollar

By: Steve Greenfield

The Dollar Has Become the World's Toilet Paper. How Come No One is Worried?

Okay. I am not the world's authority on anything but my 1966 Mustang. But there are those moments when the back of my neck tingles, and I know I'm picking up a bad signal on something. Sort of like what those wild animals must have felt. You know, the ones that headed for high ground days before the Tsunami hit and killed 250,000 people. The scientists were tiptoeing among the dead bodies when it hit them that they hadn't seen any dead animals among the muddy bodies of dead humans. Who knew how those wild animals knew it. But whatever they felt, they listened to it. Hard.

Here's what I'm feeling now. Today, the dollar, the US greenback, the piece of paper I work an outrageous number of hours each week for is in trouble. I read with alarm the articles reporting for the past six years that the dollar has slid way way down, from the day when the "Euro" debuted in 2000 to today, it went from a starting line of equality with the euro to today, when one Euro gets you $1.40. So, the greenback has been in a race with the Euro and now, the euro is worth 40% more. Not swell.

We're fast running out of countries to feel superior to. During the week of October 8, the US dollar fell to 97 cents versus the Canadian dollar. I love my Canadian brothers but if I can't make them feel badly that their summers are colder than my winters and my dollar is bigger than their dollar, then what's the point of living? I traveled to Montreal in June of this year and the US dollar was worth 1.08 Canadian dollars. That's not as good as in 1998 when I visited Montreal prior to this trip and the greenback was worth 1.30 Canadian --those were the real good ol' days. Still, this past summer, 1.08 Canadian to my buck still afforded me a bit of swagger. Now it's worth 97 cents. That's a loss of 11 cents in less than 4 months.

The "experts" in economics react with a "tut, tut" to all of us ignorant enough to be concerned. According to economists quoted in every article I've seen about the decline of the dollar, none of us should be concerned because the decline simply means that the goods produced here at home are now cheaper to Europeans, about 40% cheaper in fact. That means European and other foreigners can now Buy American. That will translate into our factories and companies selling more to the overseas crowd. And that will mean more income for our employers who will be able to pay us more because they will have make more. The only "losers", the experts say, will be those Americans who want to vacation in Europe. Our dollar won't go very far, so we won't be able to buy as much French wine or German autos. Sounds good, right? But then there's that feeling at the back of my neck. Something is very wrong with this picture. American buying power, which is what the greenback represents, is shrinking, unless the Europeans and other foreigners buy enough of our cheap goods (what are we China?) to offset the value of our in currency. If the factory I work for sells just a few more cars to Europe, it won't make enough to offset the shrinking buck. Who is keeping track for working, middle class families? I remember not too long ago hearing politicians say "a strong dollar is American policy". So who is letting this free fall happen? Who's in charge? Think of Zimbabwe. Used to be called Rhodesia. It's got a currency that is so devalued, so worthless, that if someone pays you at 9:00 in the morning, by noon, you need another cash injection just to come out even. Runaway inflation. As a currency goes into the Toilet, workers don't want to be paid in that currency. They want to be paid in some of the "good stuff". Would you rather be paid in a currency that's stable. Or want that's losing value worldwide. See what I mean. There's that nagging feeling at the back of my neck again.

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