October 29th, 2007

Our Dollar

Our dollar has been in trouble for a while. Things are not getting better (which means, yes, they are getting worse).

The following are some links containing information regarding our dollar that I’ve recently come across.

Here’s a graph showing the dollar index in the past couple of years:

Up until a few months ago, the dollar had never fallen below 80 on the index chart. Now it’s hovering around 77/78, for the first time ever. This comes after Bernanke and his pals at the Federal Reserve have continued Alan Greenspan’s process of printing money to satisfy the whims of government and economic officials wanting to save face and avoid paying the piper for bad policies.

Here’s a graph showing the Consumer Price Index (which shows the inflation of the dollar:

From wikipedia, here’s the value of the dollar since the birth of the nation:

Needless to say, why anybody would continue to invest in dollars is beyond me.

15 Responses to “Our Dollar”

  1. Dan
    October 29, 2007 at 2:24 pm #

    Ah capitalism.

    It seems the “communist” nations of the world are doing much better than the “free” nations, eh? Those darn socialists in Europe! How dare they have a better, more sound currency! We’re supposed to be da best.

  2. Connor
    October 29, 2007 at 2:27 pm #

    Ah capitalism.

    This has little to do with capitalism. This has everything to do with the government’s intrusion of economic policy, and the establishment of a central bank to print dollars not tied to any specie, giving Uncle Sam free license to spend whatever it wishes.

    How is that capitalism?

    It seems the “communist” nations of the world are doing much better than the “free” nations, eh?

    Far from it. Sure, a communist nation creates a populace of sweatshop workers and oppressed laborers, which then generate cheap products that rake in dollars. Does that make them “better”? Does that mean their economy is more sound, or their nation superior to our own?

  3. Connor
    October 29, 2007 at 2:30 pm #

    BTW, gold is doing very nicely. A 15% ROI in two short months… Beat that, dollar-based investments!

  4. Dan
    October 29, 2007 at 2:31 pm #

    Ah I forget. Excuse me. I keep forgetting that capitalism is a near-perfect system, and that it has no serious downsides. Silly me for thinking realistically.

  5. Travis
    October 29, 2007 at 3:03 pm #

    Actually, from my limited understand of the market. Now would be the best time to invest in the dollar. Buy low, sell high.

    Also, Just want to give a head nod to your comments about capitalism, government intrusion, and the economy.

    Regarding you comments about gold. Gold is doing so well, because it is so closely tied to the dollar. As the dollar goes down, gold goes up. Investing in gold is actually an investment against the U.S. Dollar.

    Now before I post this, I have to say, that my understanding of this is very limited and I may very well, be wrong, but this is my understanding of the whole thing.

  6. Connor
    October 29, 2007 at 3:06 pm #

    Now would be the best time to invest in the dollar. Buy low, sell high.

    That would require the dollar ever going up in the future. Based on inflation rates and historical trends, that’s very unlikely to occur.

    Gold is doing so well, because it is so closely tied to the dollar. As the dollar goes down, gold goes up. Investing in gold is actually an investment against the U.S. Dollar.

    Exactly. Spot on. Gold is doing so well mostly because the dollar is doing so poorly.

  7. Kelly Winterton
    October 29, 2007 at 4:49 pm #

    Dan, you have finally made some comments that made me smile. I agree with you, in a way. Capitalism is showing its drawbacks. Our form of capitalism is actually a form of extreme capitalism, which has evolved into fascism to a large degree. The type of fascism I am referring to is corporate control of government.

    But, realistically, much of the dollar’s weakness has to do with our military overspending. Last I heard it was costing us 10 billion $ per WEEK just to stay in Iraq. China is financing our war on Iraq.

  8. Sam Hennis
    October 29, 2007 at 5:46 pm #

    Right now is a good time to be investing in some gold & silver. It’s an excellent store of value. I’ve got some in my safe here at home.

  9. Sam Hennis
    October 29, 2007 at 6:19 pm #

    Now is also a good time to start using the Liberty dollar.

    It’s REAL money, unlike the Federal Reserve Note which is nothing, but fiat trash.

  10. Dan
    October 29, 2007 at 6:41 pm #

    Inflation-proof currency? Dude, there ain’t no such thing.

  11. Sam Hennis
    October 29, 2007 at 8:04 pm #

    Dude,
    I suspect you don’t even know what inflation is.
    The CAUSE, that is. . . :)

  12. Kelly Winterton
    October 29, 2007 at 10:00 pm #

    I’ve watched the exchange rate between the US$ and the Euro since before the Euro was introduced. I went to Germany in the first week of October 2001. This was less than one month AFTER September 11th. (The planes were about empty!) My US$ bought me 1.15 Euros back then.

    Actually, the Euro then was in an introductory phase. Europeans still used their cash like the Deutsche Mark, the Franc, etc. But, if they used a credit card, or some other type of cashless transaction, it was reckoned in Euros. It was pretty cool to see all the goods in the stores with two prices displayed – – one price in the local cash amount, and the second price in Euros. This made shopping in Europe easy to do for an American. Since the dollar bought 1.15 Euros, it seemed that I could look at the price of the item in Euros, and in my mind equate that to US dollars pretty easily.

    I returned to Germany in July of 2004. My US$ was then only buying .85 Euro. This was a loss of my purchasing power of approximately 30% since my previous trip in 2001.

    I returned to Germany last month (September 2007) and my US$ now only bought .73 Euros.

    But, since early September when my rate was .73, the Euro now (October 29) sits at .69.

    A rough estimate of the amount of drop in the value of the US$ against the Euro since 9/11/2001 is appoximately 45%.

    This might lead one to believe that the dollar is doing poorly, and the Euro is doing great. But, all the Germans I talked to in 2004 and 2007 complained how weak their Euro is!

    Indeed, the Euro is also weakening in value. But, what is happening is that the Euro is dropping, but NOT NEARLY AS QUICKLY as our US$ is dropping.

    So, I stated that my dollar has weakened approximately 45% in the last 6 years against the Euro, but the Euro has also weakened during those 6 years. This means that the actual drop in value of the US$ is greater than 45%!

  13. Kelly Winterton
    October 29, 2007 at 10:21 pm #

    Connor, thanks for all those links.

    I think it’s time we all sit down and re-read Revelation chapter 18.

  14. Sam Hennis
    November 11, 2007 at 3:44 pm #

    From What You Should Know About Inflation:

    “When modern governments inflate by increasing the paper-money supply, directly or indirectly, they do in principle what kings once did when they clipped coins. Diluting the money supply with paper is the moral equivalent of diluting the milk supply with water. Notwithstanding all the pious pretenses of governments that inflation is some evil visitation from without, inflation is practically always the result of deliberate governmental policy.”

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