What do you think of the dollar value?

Question

The Dollar value has been going down a lot, but not many people know of it, and yet it affects their daily lives. What do you think we should do to help the dollar value go back up?

Answer 1

I only have problem buying foreign snickers. Everything is fine, will be fine after sometimes.

Answer 2

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.


The dollar will increase for 3 reasons all else equal:

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

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

Answer 3

Please ignore the first comment you got as it's nonsensical.

The dollar is still the representative currency of the BIGGEST economy in the world. Therefore, a slumping dollar will steer foreign investment into the country. This should particularly be helpful in the housing sector where foreign investment continues to increase month by month.

We do back the dollar with a significant amount of gold. There's two big hordes of precious metals.

http://en.wikipedia.org/wiki/United_States_Bullion_Depository

http://en.wikipedia.org/wiki/Federal_Reserve_Bank_of_New_York

Look at China, for example, they keep the value of their currency artificially low to stimulate foreign investment and are one of the fastest growing economies in the world.

So the answer to your question; nothing. Continue to spend the same way you have. Continue to save the same way you have. Enjoy the roller coaster that is international economics.

Answer 4

I disagree with you -- I think nearly EVERYBODY knows about it, but that it has almost NO impact on our daily lives, unless you are in a business that is directly benefiting from all the juicy exports the low dollar is stimulating, or you are selling cars to Canadians, or you are in the tourism industry collecting tips from European travelers.

You should not view it as a "bad" thing to be fixed. It just is what it is -- a mechanism to regulate the trade deficit and bring supply & demand for US dollars into equilibrium.

Answer 5

The reasons the dollar is going south are twofold, IMO: the FED has started to lower interest rates and our HUGE deficits. So we're in for some more sliding, at the minimum until the European central bank starts lowering their interest rates too. That is not likely to happen anytime soon, as inflation is picking up in Europe.

The most important factors necessary for a stronger dollar are low inflation, an open economy, reasonable regulations and low tax and interest rates.

Answer 6

I find it interesting that the closer we get to the primaries, the less the Democrats are crying about the high price of oil and why doesn't Bush do something about it? They know if they did, someone would ask the Dem candidates, "If elected President, what would you do to lower oil prices?" The same goes for the dollar. If you got an answer, it would be something along the lines of "...build new and better bridges of understanding and cooperation with our friends of the world".

Welcome to the world economy.

Answer 7

Why does every American think they can just say "the dollar has gone down". I'm Canadian and I will say, "Actually the DOLLAR has gone way up!" What you mean is the American Dollar. There are tons of other people in the world.

The war is taking a serious toll on the economy.

Answer 8

It makes everything you buy cost more. Just look at the prices at a supermarket now. Everything has gone up in price by about $1.
Stop inflation. Vote Dem.

Answer 9

Burn all the paper money in the world. just kidding. not much we can do is there.

Answer 10

it won't go back up as we don't have any gold or anything to back it p i think it is innevitable that we're not gonna pay our debts back to other countries and switch to new currency