Down on the Dollar

by Ryan on March 24, 2009

in Economy,International Relations

The US dollar is not in good shape.  I will primarily blame Bush for this because it was during the last administration when the dollar was in free-fall for a many reasons, but nonetheless suffers greatly as a result.  Obama, however, has done nothing to fix that, in fact making the situation considerably worse by printing money to finance our ever-increasing debt! 

Well, China owns an awfully large section of that Treasury of ours and is sick of all the terrible monetary policy coming from the world’s largest economy.  So, they’ve mentioned dumping the dollar as the world’s reserve currency.  They have a point, though a collapsing American economy would collapse China’s as well, so I don’t think they are serious in the short-term.  They sense a lack of strength or direction from Obama (well, duh) and an opportunity to put pressure on His Weakness.  I don’t think China really wants to go to the euro or forcing the yuan to be honest, they’re just looking for the US to get its act together — they want America to cherish capitalism again and change our monetary and tax policies to something that would resemble something out of Reagan’s America, rather than an Obama Nation.  For Goodness sake I’m defending the Chinese here! (How low will Emperor Zero take us?) 

In the short-term I’m not too worried about countries leaving the dollar, but down the road, talk about dumping the dollar may lead to planning, then action.  Strengthening the dollar is critical for an economically secure future for our nation.

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It’s Too Late for Obamanomics | Axis of Right
March 30, 2009 at 8:12 pm

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Sal March 25, 2009 at 8:02 am

The moving of the global financial system away from the dollar would have disastrous consequences to the American economy. One of the reasons that things like trade deficits and our national debt don’t really impact us at the current time is that much of the currency out there is in U.S. dollars and inevtaibly flows back into this country to keep us going. It is a circular flow of capital that would cease if the currencies of the world began using a new international currency in place of the dollar. The likely impact would be a massive decrease in demand for the dollar unlike what we have ever seen before in this country, probably on par with the German currency situation after World War I.

Luckily, both Geithner and Bernacke basically said that this was not an option, and it would also be very difficult for member nations to do this without severely impacting their own economies. I just hope Zero doesn’t cave and give in to the Chinese.


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