Can someone explain as simply as you can why has the dollar become so weak?

Answer 1

The dollar started becoming weak when it stopped being printed against how much gold is in the treasury.

Answer 2

The main reason is because of the huge budget deficit. The government owes so much money that it keeps printing more to pay for it. The more it prints, the lower its value. A lot of countries hold the dollar as a reserve currency. Some are choosing not to do this anymore because its not worth anything. They buy gold instead. If the dollar is abandoned it will seriously crash but has never happened to the mighty greenback!

Answer 3

it has been explained well by the long explonation, but not as simply as humanly possible..here goes:

dollar is just like any other commodity, so it's price is determined by it's demand and it's supply. So the decrease of price of dollar (weakening as u called it) can happen because supply increased, demand decreased or some combination of the two.

On the demand side, you have foreign investors who trade other currencies to purchase dollars (British, chinese, Japanese etc), they haven't been very keen to buy dollars. reasosn for that, have already been elaborated.

ps. in Britain, Bank of England have been doing an excellent job. I don;t know why peopel think they have second agendas, after all they are an independent body, and all that they do can be monitored and checked.

Answer 4

The dollar has become weak because we import many more goods than we export.
For many years foreign nations have been left holding American currency. Usually they use it to buy American stock or American companies, however, since the economy has been on uncertain footing and their has been a risk of inflation, some Foreign nations are not as interested in investing as much and are waiting to see what will happen.

Answer 5

It reflects the fact that the US, both its citizens and its government, have built up huge debts, and I mean huge and getting bigger. Not to mention large trade deficits. Much of the apparent strength in the economy has been predicated on massive house price inflation. This powered the economy but has also helped to build the personal debt referred to above. All of this debt, both personal and government related, has had to be funded by foreign savers, mainly the Japanese, and more recently, the Chinese. In order to encourage them to continue funding these deficits and to compensate them for the increased risk, the US government has had to continually raise interest rates to increase the return to lenders and to help protect the dollar. It is a measure of how bad things have become, when, even this, has not stopped the dollar weakening to the level we see today. Without these rises, the dollar would surely have collapsed already. In the US, house prices have already started to weaken; representing a bursting of this particular asset bubble.

We should not be complacent in Britain, because exactly the same thing has been happening here in terms of a debt build up, and house prices will surely weaken, and, in turn, the economy and the pound will suffer.

In both countries, governments have pursued an irresponsible cheap money policy, leading to a house price bubble, which has led to huge borrowing and a fuelling of the consumer boom. This policy, and the apparent economic strength that it led to, is based on unsound money (credit). It has to end in tears. For a while, it looked good, in both the US and in Britain, now, however, both Governments have been found out. Their cheap money policy made them look successful both economically, and therefore, politically, as well.

Both the US and British Governments have been claiming that they have had to raise interest rates to stave off inflation. I do not believe this for one minute. The US reason, was primarily to protect the dollar, and to try to stop its citizens from continuing to borrow. In Britain, it is primarily to try and halt the borrowing binge that has been going on for some time. We seem to have a population that isn't afraid of debt. It soon will be.

We certainly have had inflation in Britain, but it has moved to house prices and the public sector. In the latter case, it hits us in the form of increased taxes. It is well known also, that the inflation measure used by the Government, leaves out key items which affect us in our everyday lives. Clever though, because it helps to keep pensions down and all other items whose increases are predicated upon the official inflation measure.

Answer 6

If you are referring to recent activity, it is largely because of the slowdown of the US economy. It has not been growing as fast as it has been, so the dollar is losing buying power against other currencies. The euro, on the other hand, is getting stronger due to signs of economic recovery in Germany, which has been in a recession for some time. The recent travel restrictions by the FAA have also weakened the dollar somewhat because international tourists have been less likely to come to the United States because of recent terrorist threats and the new security measures put in place as a result. These security measures only apply on flights to the United States. In Frankfurt, I have to go through two different security checkpoints, where as flights to elsewhere in Europe only need one.

Answer 7

Because the U.S. government abandoned the policy of budget deficit reduction and proceeded to substantially increase the deficit. Deficits have a habit of eventually leading to inflation. Investors know this and respond by decreasing their allocations to U.S. assets, which puts the downward pressure on the value of the dollar...

Answer 8

The US dollar has lost strengthen in the world FX market for several key reasons as of late. One main easy reason is a loss of demand for the dollar as of late. With China hinting at lowering its need or rather want for US based federal bonds we see a decrease in the value of the dollar as well as the increased risk of inflation in the US Market has as well contributed to the devalued dollar.

Answer 9

1. we buy coat made in a country named Z
2 this money you spent on the coat goes to Z pay wages
3 the american coat sits on the shelf and is not sold.
4 the american company has not sold many coat so they lay-off
5 we give Z ..gold, not paper money
6. with less gold in the treasure, our money is worth, less than before you bought non-american goods

7 when people, from other countries, by our products they will send up gold for the items
8 we get more gold

this goes in a circle, but right now we are not exporting (sending out american made items
as much as we are importing , buying from counties like Z

Answer 10

Because we greedy Americans want to much money to work so we hire illegals to do it and they will work hard for pennies. Then we have all the third world countries make all of the sh*t you buy for nothing and corporate America makes huge profits on cheap labor.