Back in 2004, when I moved to Costa Rica, I began using the local currency, the 'Colon.' Over the years, I became accustomed to the inflation here and the corresponding fall in the value of the Colon versus the US Dollar. The Costa Rican central bank had been regulating the value of the colon versus the dollar for the past 20 years, until December of 2006, when the central bank loosened the link between the dollar and the colon. And surprisingly enough, the colon's normal fall versus the dollar began to abate. Just last week, the central bank reset it's target exchange rates. In effect, the mighty US dollar lost 4% of it's value versus the colon. Inflation here is a fact of life. The government of this (relatively affluent) third world country can't bring itself to tax it's population (especially the rich part) enough to meet expenditures, so it simply prints money. Sound familiar?
So a retired old fart like myself gets a 4% jump in his cost of living in ONE DAY. And many of the local ex-pats are scratching their collective heads. But they shouldn't be surprised. The borrow-and-spend policies of the Republicans are significantly to blame. The Federal Reserve Boards 'easy money' policies are partly to blame. Check http://www.economyincrisis.org/ for a better summary than I can put here.
So what's my point? Who cares about the Costa Rican colon? Look at it as yet another canary dropping dead in another coal mine. The writing is on the wall. The US dollar can go nowhere but down, long term. The United States can't even benefit from the 'advantage' of a lower dollar, to whit, making US produced goods more attractive (cheap) to foreign customers. The US doesn't make much anymore. If a recession is not inevitable, I have yet to see anybody explain how.
Check http://www.rgemonitor.com/... for further details of the coming economic meltdown.
The Republicans have been running on the tax cut theme since before Reagan. And they have gotten away with the hoax, to a great extent. I have waited in vain for Democrats to call 'bullshit' on them. If your savings and wages are falling like a lead baloon due to borrow and spend policies, is the American public too stupid to understand that tiny tax rebates haven't remotely offset what they've lost due to the falling dollar and it's impact on everyone in the country?
It will be to the Democrat's advantage that the economic meltdown will probably happen before the 2008 elections. It has already started, and should be in full swing by next November. Sadly, I don't see the front-running candidates as willing to tackle this issue. It seems like a natural to me. The falling dollar = lower standard of living for everyone, even Paris Hilton (not that she'd know it, of course). The falling dollar is the fault of the Republicans. Is that simple enough?