What makes the u.s. dollar weak?

Question

i am trying to develop a greater understanding of how money and the economy works.

Answer 1

I'm in the same boat as you, I'm learning more about econ.  But through this site and from what I read, I learned some more stuff and I'll help you out too ^^.

I'm still learning though, but here is what I know--

:) hope this helps.  One reason why the dollar is so weak is because we keep having deficits.  With more deficits, the national debt goes up.  With a higher national debt, more dollars need to be printed to pay what we owe down.  That's a bad thing however.  With more dollars printed, the value of them goes down.  So, our dollar gets devalued.

http://www.cedarcomm.com/~stevelm1/usdeb...  (as you can see our debt went up A BUNCH during the 1980s and the last 8 years...thanks to terrible fiscal policy by the Bush (2) administration and Reagan (RIP Ronald Reagan)

Another reason for the dollar falling is the FED.  Thanks to the economic crisis, the FED lowered interest rates.  Unfortuantely, despite the best intentions of them, it has weakend the dollar.  Lower interest rates leads to the dollar to lose value.  So it makes dollar devalued.

http://www.marketwatch.com/news/story/lo...

A third reason is the trade deficit.  Thanks to that deficit (importing more than exporting, therefore paying more for goods that we get than what we make on goods that we send to other countries), the dollar has devalued.  This is because investors have been selling dollars. (They have been anticipating less dollar value).  With more selling, the supply of dollars available for sale goes up.  With more dollars in the system, their value decreases.

http://economics.about.com/od/exchangera...

Hope this helps. I know its confusing..good luck with understanding more about econ.  I'm trying to learn.

Answer 2

trade deficits (due to free trade) and increased money supply (from budget deficits and loose Federal Reserve monetary policy)