How do we get the U.S. Dollar back up to it's true value?

Question

Recently the Euro has passed the dollar in value, and two whack-jobs no longer want oil's value based on the dollar. If the value of our money collapses so does our economy, and there's no doubt there are people out there trying to accomplish that feat.

What do we do and how do we do it to get back up on top?

Answer 1

The numbers we are talking about pale in comparison to historical swings, and each and every time when free markets are left to their own devices, things find equilibrium. It's only when governments try to manually mess with things do we get into severely painful situations.

And all you America haters in the group...You seem to forget, there would be no unified Europe unless you consider speaking german and hailing the Furor as a "unified" Europe.

Also, how does you 10%+ inflation rate and reduced work weeks feel? How does it feel to pay 2x as much for a car as we do due to liberal government spending? Or wait weeks for basic healthcare due to socialized medicine?

Re: lame Iraq comments, what we spend in Iraq pales to the bloated entitlement programs. We wouldn't have to spend as much if the rest of the world would do their fair share to keep the world safe. Why not try world rule under Iran and see what a great place things are.

Our Greatest Generation are turning in their graves to see what has become of the attitude toward the greatest country in the world. Why do we have so many people trying to immigrate here if it's so great everywhere else. I don't see a ton of Americans besides the Baldwins trying to leave America.

Answer 2

There is no true value; only current value based on supply and demand. There certainly is no "on top". And Rightie above is dead wrong, of course the dollar is not pegged to gold. Also, the dollar does not "reflect the economy" -- it reflects supply and demand among foreigners for dollars, which is something different. By most measures so far this year the US economy is handily outperforming that of nearly every advanced nation on earth, as usual.

But why bring it back up? If you are in the US what harm is the weak dollar doing to you? Actually it is greatly boosting exports and contributing to economic growth (at a time when there are some domestics problems working their way through), which is just what the textbooks say should happen when a currency weakens.

Don't know what you imagine when you talk of a "collapse" -- is your local McDonalds going to start refusing to take dollars one day? (Not likely since they cannot process anything else as money).

Every tick down the dollar goes, makes US exports and US securities and assets more attractive to someone, and draws in more shopping tourists here to spend money; and their purchases have the moderating effect of creating demand for the dollar -- which at some point will automatically make the dollar bottom out and rise again. In the long run, these things are cyclical and they happen all the time with currencies.

Answer 3

Thank you for the question. I didn't know much about this, then I found the website below. It's very informative about currencies and the history of the US Dollar. However, a lot of today's money ills read to me like dirty politics. Fiat currencies float and have no real value. Unless the dollar is gold-backed but as the author describes, that has its down-sides too.

It's complicated and probably not a lot can be done but I was thinking maybe reviving local industries, manufacturing and exports might be a good start. Unfortunately you need fuel for that - if you can find energy saving ways to produce goods, and the optimal balance in juggling debts and labour costs, there might yet be a glimmer of hope. America still has a lot of selling points to the rest of the world. And she still has real, tangible wealth (not money). Just don't put all the eggs in one basket (oil) anymore than she has to. Just like the arms-race during the Cold War period, US is in the energy-race but this time, you have more competitors. To win the race, you must have the upper-hand - lesser dependence on petroleum than any other country in the world - that entails a total change of way of life for all Americans - if you can be ready for it. And selling that kind of technology cheap to third world nations and developing countres will collectively put a real dent in those that hold the powers be. OR if there are other ways to reduce demand for petroleum - that could work too but we don't want world wars do we?

Answer 4

What's its "true value?"

Since the dollar has no real (as in monetarily real) backing, there is no true value at all.

The value of the dollar is entire based on good faith and the ideas of those who trade in it. That's the problem with a fiat money system.

Can we actually bring it back up? I bet on some levels we can, but a good deal of it is not under our control. Its all about perception. If people think our economy is weak, then it will be, since the value of the dollar will suffer from that fear.

What we can do to try and fix it is being confident. It sounds funny, but consumer confidence does make a difference in the value of the currency. If the economy looks strong to the investors, they will treat it as if it was.

This holiday season may be one of the big deciders on the economy for this year. If people buy a lot and the money flows around in our economy, then we will likely see a rise.

EDIT

To answer a post below:
The US dollar has no gold backing at all. All of the backing on the dollar was removed several decades ago. Take a look at older bills moving forward in time. Originally all of them could be traded for their amount in gold or silver, now they say nothing of the kind.
Try taking one in and getting it traded for gold at a mint, they'll tell you they can't.

Answer 5

The guy above is a little wrong...

The dollar is fixed against the price of gold bullion and as of which means it cannot be fluctuated as it has a fixed value (true value!).. However, other countries can fluctuate there currency's. In terms of economy it is very dependant on a couple of things. I live in England and love the dollar at its current level since its now $2 to the pound and everything American is pretty much half price and theres little/no inflation on American imports to this country. There has never been a better time to, buy a house, go on holiday or buy US currency for foreign exchange dealings. So your economy will be fine in terms of its exports.

I admit I don't know the full legistics of the US economy (being only 20 and all) but I believe you import more then you export and thats where you come unstuck. Yes all your exports are booming but I don't believe you supply your own factors of production (oil, raw materials) so these are all imported meaning higher costs of production and domestic goods seem more expensive to Americans.

Not much I know about that you can do about this. Since your dollars a fixed value you can't depriciate it. The only way to maybe increase its value is for the government to buy all its foreign curreny reserves (i.e. buy back all the dollors on the foreign market) High demand (cheap prices) and low supply of currency will push up the exchange rate. But I can't see you doing this as it will plunge you further in debt.



AND!!! mark_chi...

What are you on about..

Our inflation rate is 2% not 10%
Our prices our higher because we earn more:
average wage is £30,000 equivalent to $60,000 dollers, I very much doubt you earn that.
Your public services don't even compare to ours.. At least we don't have people dying on the streets and familys having to pay thousands of pounds for operations.

Your history is minimal, English explores went over and made a settlement, called it America and populated. The only thing you learn about in History is George Washington and the American Civil war because thats the only history you have! So please read a book before you start spouting off. If anything England is the country with the most history because we once owned the world (much like you nation want to do know!)

Europe is in a lot better shape then your economy which is facing overheating and a crash.

Everyones talking about exports greater so better off because of the doller. This is rubbish, you import a lot more then you export so your trade deficit is growing at an uncontollable rate and its not looking rosy for the future.

I was wrong about the gold thing (tho that used to be the case) but I know more then a lot off people like you, you muppet!

Answer 6

the true value of the dollar is the BIP or BSP and thats quite low in the US so is the dollar.
got to slow down the inflation rate, costs for weapons,army,Iraq war are to high.
the inflation rate on estates/homes are much to high.
the dollar is at his real value, because he reflects the economy in the US.
we need to realice that we have no longer the strongest money in the world and strongest economy. Only one european country like germany is as strong as the states and they got more in the top 10 like England, France,Italy, Spain. Europe gonna be very strong and got good relation with China, India and Russia (big market)

Answer 7

The value of USD has overvalue cause political reasons. Europe can not sustain a trade imbalance like US; they have to adjust permanently its coin to maintain low deficits in its accounts.
US government does not want move the value of USD to down because this measure will affect many economies (in Europe and Asia) and prefer maintain its trade deficits than to push the economies of Europe and Asia to economical crisis.
A depreciation of USD will strong the US economy because this will increase its export and will move many factories from China and Europe to US.
Rigth now there is a political discussion in Europe and Third World about the power that had accumulated the US government in the world and take measure to aliviate that situation, but there is a hard economical true: the power of US economy

Answer 8

How do you define "true value"? And what gives the dollar the right to be the strongest currency? Because it is in your best interest? Why shouldn't the euro be indeed the strongest currency? european economies are much more stable than the US. Have you ever thought about that?