Why is the currency of the USA crumbling?????

Question

Why is our dollar crumbling against the euro and is this bad for our country? It use to be the american dollar was the envy of every nation? What is causing all this and should we worry?????

Answer 1

six fingeredman is right on the button.

Basically the US dollar value is linked to oil. What happened was the US effectively left the gold standard and linked their dollar to oil after a couple of agreements with OPEC in the early 70's which ensured all oil would be sold in dollars.

This was all well and good at the beginning because it meant that to buy oil you needed dollars and to get dollars you had to trade with the US. The Dollar rapidly became the worlds reserve currency. More dollars existed and still exist outside the US than within it. The reason was oil.

Then somebody came along called Saddam Hussein. He had oil. Lots of oil. And what did that cheeky upstart do - you guessed it - he started selling his oil through the oil for food program in Euros. That meant that countries didn't need dollar reserves if they traded with Iraq for oil. Now if all countries cashed in their dollars then the US would suffer bankruptcy overnight and a recession bigger than any the world has seen. So after Saddam's little stunt the dollar began to decline in value. The US duely invaded. This didn't stop the rot, however, because other countries have seen the advantage of accepting Euros as payment for their oil. Norwey and Russia both accept dollars and Euros and then the bite came at the end of 2006. Iran switched to Euro trading and Venezuela annouced that they were looking at this option too. Notice the US pressure on these countries. And we thought it was just because they were "evil". OPEC are also looking at switching to a petroeuro. Iraq is the player that the US hopes will stop this. Now that US has its puppet government OPEC member in place in Iraq they hope that the Iraqis will ensure petrodollar supremacy. When the US pull out and the Iraqi government falls then the plan goes to pot and the dollar will fall. Basically the US used the petrodollar as a licence to print money. They printed too much and now it's gonna come back and bite them on the A$$.

Answer 2

The dollar is crumbling because there are more and more countries that are using Euros to trade for commodities like OIL. Even Cheney has jumped on the band wagon and traded most of his assets, that he holds in the form of currency, to Euros. And yes this is bad for our OIL based economy here in the USA.

America was the envy of every nation because of "the greatest generation," the generation that fought and helped the allies win WWII. This lasted until the Clinton era when people around the world thought we were crazy for trying to impeach on of the best presidents the US has ever had over a BJ. Our economy flourished, joblessness was at an all time low and we even ended up with a surplus in the budget despite the Reagan era. Now, under the Bush administration and the brainwashing power of Carl Rove, the country has lost it's way and all credibility and is no longer the envy of any nation.

That said, Yes, we should worry, because China has an enormous amount of US dollars in their reserves and if they decide to make a move to Euros on a major scale, our economy may see a serious downturn like it's never seen before.

Answer 3

I think the present government is bad
let s think fairly
first,do we have the right to have nuclear weapons and others not ?you may say we are a democratic country but you must know that Ahamadi Nejad elected and choosed by the iranian people(NB we are not sure if the president Bush desereved to be a president or not ,do you remeber the votes of the last state)
second: we are a democratic country but we hit Japan with 2 nuclear bombs at the end of the war without the need to do this (Japan was going to surrender)and we donot know if any japanese generation in the future may take revenege or not.
third:we allow some other countries to have nuclear weapond and help them like INDIA and ISRAEL WHICH is dangerous on the world peace and flaming wars from time to time (it is a reason of the hatred of many nations to usa)
forth:we have a very bad foreign policy against many countries like Cuba,Venezuela,middle east,north korea.,do you think if we have a fair normal diplomatic relation with these countries including iran ,does anyone of the world would attack us ?look at Canada ,it has a good realtions with all nations ,there is no terrorrism against it
fifth:we always attack others which makes them going to the steps of revenge.so if we stop shaking Iran regime ,do you think iranians and they know well that we are the strong power ,may attack us??

sixth: dealing with the iraq was is the worst .prisons of Abou ghareb ,killing citizens ,and many things which make others plans for revenge.

at the time of the second world war ,all countries of world and nations was looking up to USA ,now with the wrong decisions ,supporting some dictators,bad forign relations with many countries .the situation is difficult and there must be a change in the US policy

Answer 4

If it was crumbling, it would be falling rather steadily. It has hovered around .7-.8 Euros for a good couple of years, which is a boon.
It's still the preferred currency of choice in many nations where the currency may be more 'questionable.'
The lower dollar vs. the euro means that US goods will be more competitive in Europe against european products. Could lead to more selling there. Also, it leads to more european tourists coming to america, which can lead to more money.

Answer 5

Because when the "Almighty Dollar" rules a nation completely and basic truths like "value" and "quality" and "safety" are ignored over the single mindedness of "cost" then that nation is doomed to a fate of self destruction. The nations of the world do not need to fight a war with the USA, they simply need to continue selling them the cheapest, low cost, unsafe, impure, low quality, untested, illegal, slave produced products and foods and watch them self destruct; all the while shaking their heads in bewilderment and asking "Why ? "

You ( we ) are the authors of our own demise.

Answer 6

1.Fast-speed growth of imroving countries such as China,cheap labour and production attracts companies to move from other countries to China. i think alot of american companies are investing in China more than ever these days.Which increase the rate of China's RMB.And decrease US currency.

2.The war in IraQ,,

3.And the market's gone lazy..

Answer 7

not a bad theory rather. yet i might make American funds in reality valueless in places like Mexico. If the greenback is as useful as lavatory paper then the drug cartels might look someplace else to sell their product. of direction this may well be as much as the Mexican government.

Answer 8

It is not "crumbling." For many years, especially during Clinton's terms, US economists and politicians used to complain that other countries currencies were kept artificially weak against the dollar, and that made it harder to export our goods.

A weaker dollar makes it easier for us to export goods, but more expensive to import them. That's generally good news for everything except oil and raw minerals. Overall it helps us.

It also makes tourism to the USA cheaper so should boost tourism both from foreigners visiting the USA and from Americans choosing to vacation here vs. other parts of the world.

Answer 9

The weaker dollar is good for America. It brings in plenty of investments and that is one reason the stock market it higher than ever.

Answer 10

To keep it short......because everything else is crumbling about our country.....which is fast headed towards being a third world economy.