Dollar Hits 15 Year Low
Yes, the lowest since, well, a Bush was President.
From FT:The dollar fell to a fresh 15-year low against a basket of currencies on Tuesday as the greenback continued to suffer from the prospect of a cut in US interest rates.
Expectations that the Federal Reserve would move to lower interest rates at its meeting on September 18 have increased since last weekâ€™s US employment report, which showed the recent turmoil in the credit markets had spilled over into the wider economy.
â€œThe dollar remains undermined by the increasing prospect of monetary easing by the Federal Reserve as it attempts to forestall the US economy from slipping into recession,â€ said Derek Halpenny at Bank of Tokyo-Mitsubishi UFJ.
Thatâ€™s right folks. Recession.
Think we didnâ€™t have warning signs? Nonsense. For instance, this from 2004â€¦
Against the Euro, a relatively new currency backed by a European economy that is bigger than Americaâ€™s, the dollar has lost more than a third of its value. The same thing has happened to its value against the British pound.
Whatâ€™s going on here?
Economists can give you a lot of arguments and counter arguments, most of them complex and some a little dodgy, but the simple answer is that America is living beyond its means.
Our government has been doing what the average American has been doing. While American families pile up credit card debt and re-mortgage their homes, the government is piling up national debt and mortgaging our future.
Who is our government borrowing from? Mostly other governments, it seems. Foreign central banks now hold 2.3 trillion dollars (thatâ€™s $2,300,000,000,000) in American IOUs such as U.S. Treasury bills and bonds. China and Japan are among the biggest creditors. If they decided to sell off a substantial part of this mountain of dollar assets, the dollar would collapse.
Should we care? You bet, as Defense Secretary Donald Rumsfeld would say. The collapse of the dollar would drive American interest rates sky high. Your mortgage would suddenly become unaffordable, your credit card debt all but unpayable. And forget about those foreign trips. Who could afford a ten dollar cup of coffee?
How did our government get to the edge of this cliff? Again, the answer is simple. The Bush administration cut taxes, launched two wars in what it calls the Greater Middle East, and is now bleeding lives and money in an Iraqi insurgency that shows no signs of abating.
Yep, that was written 3 years ago.
So then, I think Iâ€™ve had had my fill of voodoo economics and hugely expensive wars for the time being. Catch me in 20 years and I might be up for some of it again, but for the time being letâ€™s try to balance the budget, make the dollar stronger and not try to spread democracy.
Oh, and letâ€™s elect people who are actually fiscally responsible instead of pretending they are.