What has caused the devaluation of the US Dollar in the past 5 years?

Question

What must be done to reverse the trend?

Answer 1

Americans have started spending more and saving less. This has caused the dollar to be worth less because we are spending money that we are borrowing from foreign countries (China mostly). Since we are borrowing more than we have in our banks than we have littel to back our dollar. As a country we need to spend less. Our country is borrowing money to spend and our single biggest expense is the war in Iraq.

Unfortunatly it looks like things could get worse if Venzeula and Iran start to trade their oil in a currency other than the petro dollar (see article below). The petro dollar is currently how most countries trade oil. If they start to trade in the Euro we will see a huge decline in the dollar.

I know that the simple explanation is to get out of Iraq but it is more complicated than that. And Americans can't just stop spending money and start saving. Foreign countries need to have more confidence in America and need to start investing in us again. That means that we need t start improving our foreign policy. Foreign countries want us to have a good economy because we are their biggest customer. And when your customer is broke than they aren't buying from you and you aren't making money. But if a foreign country does not like your policy than they start to trade with other countries.

To sum it up though our government needs to spend less and we need to end the war in Iraq.

Answer 2

The low US interest rates were certainly part of the issue; other currencies were more attractive investment options. The IRAQ war and oil prices are other key factors, combined I think a growing anti american sentiment. The far est cheap labor is a big problem, becuase even with a cheap dollar, our goods cannot compete. Maybe if the US became a huge theme park for tourists, the economy dollar would perk up. (Kidding)

Ending the war on the current scale will be a big factor. I think the election will certainly help. Oil prices are not really controllable, only oil dependency.

Finally, a cure for greed....not likely

Answer 3

The devaluation of the dollar is caused by buying tons of foreign goods or imports with little exports going out. Its a big problem that needs to be fixed but there is no easy solution.

Answer 4

Because China and India are doing good. Just a question of time earlier than the US will ultimately start to slip from the highest spot as the sector's greatest economic climate. Rome was once as soon as the bastion of tradition and vigor however not anything lasts ceaselessly. Last december, I was once in Shenzen and our excursion-consultant refused to difference bucks. He could as an alternative difference pesos consistently buoyed through remittances (a different list prime) from overseas! The drop was once fairly predictable, that's if you're consistently studying the industry component to main dailies. I could propose that you simply difference your plans from making an investment in estate overseas, to making an investment in the community whether or not in estate or possibly a industry enterprise.

Answer 5

Operation Desert Welfare.

Answer 6

BUSH and Cheney

Answer 7

George Bush and his war.....Impeach him and Cheney!