Dollar Debate: Who Has Substance?

Wednesday, October 14, 2009
Posted in category Economics

There’s Judy Shelton, who is on a roll writing terrific articles in the Wall Street Journal. Today she has published another stern reminder of the slow death of the dollar.

Unprecedented spending, unending fiscal deficits, unconscionable accumulations of government debt: These are the trends that are shaping America’s financial future. And since loose monetary policy and a weak U.S. dollar are part of the mix, apparently, it’s no wonder people around the world are searching for an alternative form of money in which to calculate and preserve their own wealth.

…But as the dollar is increasingly perceived as the default mechanism for out-of-control government spending, its role as a reliable standard of value is destined to fade. Who wants to accumulate assets denominated in a shrinking unit of account? Excess government spending leads to inflation, and inflation plays dollar savers for patsies—both at home and abroad.

Her analysis of the looming federal debt fiasco is spot-on, and as she notes, the regime’s budget numbers do not include health care reform or the quietly proposed second stimulus package (or packages). Then there’s Timmy Geithner. In a discussion with the chief editor of China’s Caijing, Geithner stated that “investors have shown confidence in the U.S. government’s ability to maintain sustainable growth” and such confidence has helped stabilize the value of dollar assets. He dances around the issue of the diving dollar, and can only mutter such irrelevant filler as, “The dollar’s role comes with special burdens and responsibilities that require we are especially careful to sustain confidence in U.S. financial assets.”

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2 Responses to Dollar Debate: Who Has Substance?

  1. cousin lucky says:

    October 14th, 2009 at 8:59 pm

    I have been purchasing the sme brand of bread for years and today the price was $3.99 for a single loaf. Ice cream that I used to buy for $2.99 now costs $4.59. A ream of copy paper used to cost $3.29 but it now sells for $5.49.

    When a person lives on a fixed income price increases are noticed. It won’t be long before what I used to buy for $5.00 is going to cost $50.00!

    Chaos is coming, especially in the large cities of America!!

  2. Shannon says:

    October 15th, 2009 at 11:12 am

    Hmmm….while our rulers try to paint over the bleak picture of the financial situation, telling the ever hypnotized masses that the boo-boo is better, to celebrate a wrecovery, All the while, I’m projecting some future uses for the US dollar. Toilet paper, cigarette rollers, scrapbook embellishments, fire kindling, etc. Folks had better put some of their money into precious metals, and get stocked up on non-perishable essentials before all hell breaks loose. Cousin Lucky is right, the cities will be war zones.

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