How Weak Really Is the Dollar?
August 3rd, 2011Remember back in the good old days when the dollar was king? It was that strong green piece of paper that the world used for its commerce. It was strong, dependable, and it was backed by the full faith and credit of the United States government, something that everybody believed would ensure monetary supremacy for the dollar for years to come.
Then dark times came, in the form of debt, deficit, and Federal Reserve caused inflation that made the dollar progressively shrink. Sure, not many people notice its declining value in the short-term. However, the decline is noticeable around the world, especially when compared to currencies that we used to be stronger than. Here are a few examples of how the dollar has declined compared to other currencies:
When compared to currencies like the Swiss Franc and Canadian Dollar, both of whom have remained strong due to the strength of their nations’ economies, the dollar looks all the weaker, especially since the dollar has traditionally outperformed them both. The dollar is less weak against the Euro and the Pound, but that’s mainly due to the fact that their economies are sagging as bad as America’s, which might account for their weakness as well.
An important point to note as well is that the central banks of Europe and Britain are noted for their transparency, whereas our Federal Reserve has to be dragging kicking and screaming into transparency. When the Fed does reveal some of its agenda items, it becomes clear that they’re weakening the dollar with their “quantitative easing” measures and trillion-dollar bailout programs.
If you think the drop-off is bad now, just wait until QE3 comes along.
