The Rise and Fall and Rise of the American Dollar

As you probably know, the value of the dollar has been falling. Recent news has been discouraging. Other currencies have threatened to replace our coveted green backs.

It was even mentioned that the dollar was becoming a sort of “black market” currency.

“The U.S. dollar, once universally accepted as the world’s strongest currency, has been trounced in recent months by everything from the euro to the Brazilian real to the South Korean won.”  The Wall Street Journal October 28th, 2009


So what’s the reason for this decline in “the big one’s” power? A decline in the economy.

When the stocks, and general economy goes down. Consumers lose trust. And it’s all down hill from there. And as soon as our the dollar goes down, all other currencies look a lot better (as the above chart says.)

But don’t lose all hope. It’s not quite as bad as it might seem. Let me finish that quote from the Wall Street Journal.

“But in the back-alley markets where business is done in many of the world’s developing economies, the dollar still reigns.” The Wall Street Journal, October 28th, 2009

And a different Wall Street Journal article said that when compared to the Euro investors “embraced safer assets such as U.S. Treasurys.”

Also, another Economist article said that it was “unlikely to turn into a dangerous collapse.”

So, the dollar has fallen in value. Other currencies have been considered. But investors still trust the dollar. And if investors continue to trust the dollar, it is unlikely to cause a collapse.

Of course, if the government wanted to promote free market and a better economy overall. Instead of a stimulus, try getting out of the way.

-Ben


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