Doughnuts tip scale over reeling dollar

The U.S. dollar has been slipping again. So, just how low can the dollar go? During a recent interview, Swiss America CEO Craig R. Smith put it bluntly, "The U.S. dollar has now lost over 40% of its buying power since 2001--and that is under a 'strong dollar' policy from the White House," he says. "Can you imagine what the next four years hold in store for the debt-burdened dollar?

"Sure, a lower dollar has some benefits, such as lowering the trade deficit and increasing U.S. manufacturing competitiveness abroad," allows Smith, "but the price is very heavy upon 'We the People,' who become the ultimate victims of declining dollar-denominated assets.

"Investors," he adds, "are voting with their feet, moving in droves out of U.S. dollars and into foreign currencies and gold, and the $64,000 question is: What will happen if the enormous world oil market shifts from the dollar to the euro? Middle East oil barons no longer accepting U.S. dollars for oil? Unthinkable? Think again!"

Meanwhile, the next leg of the new bull market in gold, silver, and other commodities appears to be well on its way and should take gold prices to the $1,000 level. "The Fed and Bush Administration know that the euro's ultimate aim is, by necessity, to slowly attract foreign investors and central banks to the euro and away from the dollar," explains Alex Wallenwein, editor and publisher of The Euro vs Dollar Currency War. "But they also know that an explosively upward rocketing euro will wreck the Europeans' major economies in a heartbeat. As a result, the U.S. game is to allow the dollar to drop lower--and faster--than the Europeans' fragile economies can tolerate.

"In the meantime," he continues, "China and the Muslim nations are playing another game altogether. Every time the dollar drops, they are buying gold. The lower the U.S. lets its currency fall, the more temptation the Asians feel to dump their U.S. debt holdings, as they see their U.S. 'assets' depreciate with every tick lower by the dollar.... At some point, this temptation will become overwhelming. The U.S. is currently betting that the Asians' point of no return comes after that of the Europeans. I don't think that's a safe bet to make."

Is there any hope for the recovery of the U.S. dollar? If not, what will happen? Smith answers, "Hope is based upon faith, and faith is based upon confidence and substance, at least in the financial world. Today's dollar, devoid of any substance, is purely symbolic of the American dream. Sadly, U.S. dreamers are no longer working hard and saving, but instead, spending hard and borrowing more. The U.S. debt limit must soon be extended from eight trillion dollars to infinity, or else the 'strong dollar' era" will come to an end.

COPYRIGHT 2007 Society for the Advancement of Education
COPYRIGHT 2008 Gale, Cengage Learning