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The Weak Dollar Is Not Your
Friend
Morgan Housel
The
Motley Fool
Tuesday, April 8, 2008
You'd probably never know it, but Richard Nixon has been picking
your pockets.
Ever since the former president agreed in 1971 to suspend the
dollar's convertibility into gold, the value of the greenback
has been backed simply by the capitalistic vision that is America
-- more specifically, the government's ability to tax citizens
like you. Without anything tangible backing its value, you might
be stuffing your wallet with confetti, for all you know.
OK, that's an elephant of an exaggeration. Tricky Dick isn't
pillaging your bank account, and he was probably looking out for
America's best interests when he decided to take those drastic
actions. He isn't at all responsible for the dollar's current
misgivings. He died more than a decade ago, making pocket-picking
somewhat difficult, but that's beside the point.
(Article continues below)
Here's the real issue: Ever since we ditched the gold standard,
the government has found it far too easy to create cash, and we've
become complacent, printing money like it's nobody's business.
Gargantuan trade deficits and unbalanced budgets have left the
value of the greenback withering away, compared to its global
peers. That, my friends, can cost you some serious coin.
The Cleavers ain't got nothing on us
The globalized economy has become one, big happy family. Countries
are as reliant on each other as they've ever been for economic
prosperity. Shanghai relies on Seattle to buy its knicknacks,
Dublin needs Detroit to crank out pickup trucks, and Raleigh counts
on Riyadh to produce oil. You scratch my back, I'll scratch yours.
When the value of the dollar falls, two things happen in the
global economy:
- The goods America produces and sells to other countries get
cheaper and more competitive.
- The price of goods America buys from other countries become
more expensive for us here at home.
Full
article here.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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