...The USA is under the auspice of people that profit from higher oil prices and war, so for them this is a boom time and the decline of the dollar is not their concern. The rest of us are not making billions off the war or increased petroleum price...
The falling dollar is a boon for the Euro, and leaves the USA vulnerable to further manipulations. Just to maintain the status quo petroleum exporters must raise prices to offset the loss of profits from the dollar decline.
In 2001 and 2002 I resided in the Netherlands and at that time I could get 1.27 to 1.30 euro on average per dollar. That meant if the meat at the market cost 20 euros it was around fourteen or fifteen for my US dollars. That gave me a lot of buying power. I earned thirty five hundred US dollars a month but had closer to five thousand euros of buying power in Europe. The Pound Stirling was stronger, but not widely used, so dollars were king. By the time I left Europe the dollar was sinking, and today its value is as low as it has ever been in modern times.
Recently, I spent nearly three weeks in Italy and discovered how weak the dollar has become in the Bush years. My meal came to fifty Euros and that was approximately eighty dollars US. The Exchange rate was 1.36 dollars per euro, or 66.3 cents on the dollar if you got the best rate. Some places were exchanging for 1.47 dollars for a euro - that means my dollar at that rate was worth fifty three cents.
Whoa, now I get the payback for all those good deals I used to get!! But, it's leaving Americans exasperated and befuddled at the prices, and European travel is dying for the traveling US citizen. We saw far less Americans in Italy then ever before, and realized our cultural exposure was now limited by buying power.
Yet this is not the real crisis, as the dollar falls compared to the Japanese Yen, the Swiss Franc, the British Pound and even the Brazilian real, the decline might impact all our futures.
With this quick pace of decline of our dollars the USA could suffer a flight of capital. Not only will our dollars buy less, there will be fewer dollars available as foreign investors slash the flow of dollars from Asia Europe and the Middle East. Worse yet, they may pull out their own investment money; further weakening the US Buck.
Oil and other commodities are tied to the US dollar, so there is an intrinsic connection that is causing many to switch currencies affiliations, and bringing the dollar into a less desired currency rating.
The crisis could do the following:
1. Drive US bond prices into a tailspin
2. Drive up interest rates on long term bonds commercial loans and all forms of mortgages
3. Kill the US housing market
4. Force the Fed to raise rates to attract foreign investors back
5. Send counter dollar investments, gold silver and other commodities into an upward surge.
6. Oil prices will rise further as petroleum is based in dollars and oil producing countries as well as refiners must offset the dollars decline by raising gas prices.
What causes this drop in dollar value?
1. Trade deficits, the US is importing 800 billion more then its exporting and the dollars planned decline by the Bush people has not improved its deficit.
2. Mounting foreign debt, the Bush people have out spent every administration in history and we borrow from the World Bank, China and Japan to float this war in Iraq and other projects for a new American century.
3. Loss of confidence is growing across the globe. Nothing requires International investors to Continue to invest in the USA or holding US assets they now own.
4. Winds of war and strife drive down investor's confidence. As we threaten Iran and others we become the hornet's nest of angry bees and tend to upset the quiet of economic stability
5. Economic sanctions against Iran and others tend to reflect back on our own economic stability. Iran is reacting to our pressure by threatening to pull out of the Nuclear Non Proliferation Treaty causing many to question the future peace process.
6. Coalitions of defiance such as Hugo Chaves of Venezuela and Evo Morales of Bolivia and others to form an anti American alliance and drive the dollar away using oil as a weapon.
Most of these are caused by misguided or aggressive arrogant government policy. If we do not lose total control, perhaps the next administration can repair some of the damage by sound fiscal policy and improved diplomatic measures. Yet, daily we see the loss of prestige and confidence. Since almost two years of the current Bush policy remains, it may be enough to crush the once-mighty dollar.
The USA is under the auspice of people that profit from higher oil prices and war, so for them this is a boom time and the decline of the dollar is not their concern. The rest of us are not making billions off the war or increased petroleum prices. Nor are we getting rich from future options like Cheney is from Halliburton or the Bush and Bin Laden families are from the Carlyle Group. These people will simply shift the dollars to euros and take the loss because they are wealthy beyond measure.
What can we do to offset this wolf at our doorsteps?
Investing in other currencies may precipitate the decline, but might help diversify your own assets and give you some long-term protection. Changing unsound economic policies and foreign policies that drive down the value of the dollar is essential. But, most of all, Pray.
Good luck America we are going to need it.
by Robert W. Barker [send him email] , who is a writer, professional photographer and travel offcinato from Eureka Ca. His work is carried on many web sites around the globe, a first novel recently copyrighted in the library of Congress, soon to be published. Robert is a Populist Party contributor.