What factors have caused the dollar to become so weak and what can be done to reverse this trend?

Answer 1

The dollar has fallen because:
1. real interest rates have fallen relative to rates in other countries
2. productivity in other countries has increased faster becuase they are liberalizing their economies
3. Investment opportunities have increase faster in other countries


The dollar will increase for 3 reasons all else equal:

1. Raise interest rates
2. Increase productivity
3. increase the attractivness of US investments.

Each of these things increase demand for dollars, which in turn increases the value.


That being said, your question implies that the decreased value of the dollar is a bad thing. Nothing could be further from the truth. There are huge imbalances in the US economy (i.e., trade balance, savings rate, consumption) that have to be corrected eventually and a devalued dollar encourages these corrections. In addition, the worsening credit crunch and real estate woes are costing jobs and decreasing economic output. These declines are being offest- at least in part- by greater exports and foreign capital investment that would not occur if the dollar hadn't sunk to its current level.

Answer 2

Debt, Debt and more debt. The problem is simple just like a person the US owes too much money and in fact is the country worldwide that owes the most. The debt is increasing by $1.8 billion a day (trade deficit). So its like if you earn $30000 and spend $35000 a week. Eventually your debt will become really high and your Creditors will start doubting whether or not you can actually pay them back and that makes your credit rating worse. The US, at the moment has a not great credit rating and its making the world nervous so they don't want to hold too many dollars. Think of it as a currency being an I.O.U so initally the currency is worth 100c and then you can't pay back all your creditors and you can only pay back 30c to the 100c so all the IOU's only have a value of about 30c even though they say 100c - kind of like insolvency so that makes your creditors nervous and your currency devalue because people are worried they won't get paid back.

Ways to solve the problem : clear your debt (but you have to get the money from somewhere) so a country might have to raise taxes

stop spending so much i.e that war in Iraq is really, really expensive and most of the money the uS is spending on it has been 'loaned' from China which is the US's biggest Creditor.

Answer 3

the closest appropriate answer so a techniques is eternity. interior the era of documented history that we are in a position to confer with there have been 2 classes of over one hundred years that have been as much as a fifteen ranges warmer than we are experiencing at present. So if the international did no longer end then it won't end now. in actuality inhabitants grew, there exchange into greater food and there exchange into greater prosperity. and then somewhat later on the climate cooled somewhat decrease than what we now have and plant life failed in northern areas, extra populations from the warmth situations invaded southerly climates for food and residing area the place they does no longer freeze. So warming delivers greater food, soft residing circumstances and increasing populations. Cooling delivers shorter growing to be seasons, much less food, wars and mass dying.

Answer 4

Just like the market crash and depression of 1920s... the falling dollar is a carefully contrived plan that is being guided and controlled by the Bilderbergs. They want us all to get "chipped" and they want us to want it. If they cause the dollar to have no value, we will all want to ensure a way to pay our bills and feed our families. Enter Verichip... the new currency (www.verichipcorp.com ), all your assets will be directly tied to this. No buying or selling can happen without the chip. But before this happens they will first finalize the North American Union and give us the Amero to replace the dollar, claiming that it will have strength over our current currency as well as the Euro. DO NOT BE MISLEAD AND HYPNOTIZED BY THEIR LIES. They want you FOLLOW. They care nothing for the PEOPLE. They care only about global domination and world slavery. And as long as you people on both sides (dem/rep...con/lib... or whatever stupid label you chose to wear) continue to disbelieve that these people mean business regardless of your political affiliations or beliefs, then they WILL be successful. They created these divisions and ALL of you have fallen for it ... hook, line, and sinker. Standard military protocol... DIVIDE AND CONQUER. and they are doing a fine job of this. So we have two simple choices. Argue over our individual beliefs and let them enslave us all because we cannot get our act together and WAKE UP.... or we can realize the truth of what is being done against not just our country, but to humanity at the hands of our Bilderberg controlled government.

Answer 5

This is pretty simple. If there is an imbalance of trade, the currency of the country suffering from the imbalance will inevitably decline against the currency of the country enjoying the balance. I believe the solution is one world currency. An individual could create one, using a format like Paypal's with all currencies accepted and translated into one unit, based on decimals, and called something neutral, like the smurf.

Answer 6

china...china!?!?!? GET OUT OF TIBET!!! yeah you amerikees goyt lots of money problems coz you buy more than you sell (as a whole of a country) your best bet would be to make a product the chinese want to spend their sweat shop money on!

Answer 7

Econmoy... economy is not stable because of all the money spent in Irak... we would have to end the war

Answer 8

having a lower floating point is not all that bad it means that u can sell more and u make mo money.