Why is the dollar so devalued? what does the us have to do?

Question

Why is the dollar's value so low? What does the USA have to do? What can be done? How long will the economy problems last?

Answer 1

raise interest rates to lower the amount of dollars in circulation - (less dollars in circulation more value to each dollar ) - problem is banks are holding on to assets which arent worth what is written on paper and it is eating up their money supply) so the central bank (the federal reserve ) cant raise rates without putting them out of business - so nothing can be done until the banks are on solid financial footing again -

Answer 2

If you want to know what's happening to the dollar, our economy and the world, I recommend researching this:

"The Bilderberg Group".  These are the rich-elite, most-powerful people in the entire world (politicians, business tycoons, royalty, etc.) , and they meet once a year in secret, with zero mainstream media attention (weird?) to discuss world events, and future goals.

Answer 3

The dollar was like the camel, a beast of burden. The back has been broken this much is true. Now there are two sides to this coin. No longer will the beast of burden carry. The burdens will be placed upon the companies or corporations should they want their services or products to be moved or production will fall to drastic levels for their business. No longer will there be large profits to be made for the vendors. The talks will break also and a division will be felt.

Answer 4

Everybody cites lowering interest rates to boost the dollar, but that isn't the root of the problem, nor the cure.

The 2 top reasons the US Dollar is weak and getting weaker is because of (A) Our Trade Deficit and (B) Our Account Deficit.

Because the US imports more than it exports, in simple terms, we are exporting our currency in exchange for widgets. That leads to a shortage of dollars in the US economy. The only way to over come that problem is to create new money (ie: The Money Supply is Growing). This causes a weaker dollar because as the basics of Supply/Demand dictate, too much of something causes its price to fall. And the US money supply has grown from $5/trillion to $12/trillion in the last 10/yrs.

Second is our account deficit. The US Congress is spending more than it receives in taxes. The shortfall is made up by issuing debt. As our Debt to GDP rises as a nation, we end up spending more of our tax'd money on debt. Just as a person can't get richer as their credit card debt grows. A nation cannot become richer as it's debt grows. And that problem is translated into the best economic indictator. The value of a Nation's Currency.

So forget about interest rates. We need to do something to maximize exports and limit imports along with only allowing the Congress to spend what it receives and not a nickel more. Otherwise, expect the dollar to go down the tubes.

Ohh, and some people might think this cannot happen to America, we are the greatest, everything will work out in the end.. WRONG..  Go study your Roman History. They had the same problems. They imported more than they exported. They funded an empire larger than they could support. And they started devaluing their currency in a vain attempt to feel richer, all the while they got poorer.  Rome failed not because its military was over run or anything. Rome failed because its economy failed. Slowly over time, year after year, the economic gorillia slowly crushed the Roman Empire.

Answer 5

Rooster doesn't know what he's talking about. Here it goes:

The main reasons why we have a weak dollar are:

1.) lowered interest rates from the FED

2.) The amount of imports higher than exports where the dollar is going overseas. You actually LOWER the value of the dollar when you buy that TOYOTA because you are exchanging DOLLARS for YEN to purchase that car. This CREATES DEMAND for YEN which raises it's value in relation to the dollar. That's why you see billboards that say "SUPPORT AMERICA; BUY AMERICAN!" because that's money that goes into an AMERICAN's hand and not a Japanese hand when you buy an AMERICAN car.

The FED can raise the value of the dollar by STEADILY raising the interests rates, but it doesn't happen overnight. The reason the FED lowered the rates so much is to help the economy out. The bank is more willing to loan out money at this certain time and has a lot of money in it's reserves. When we see HIGH INTEREST RATES, the bank is less reluctant to loan out money because there is less money available in the reserves. I hope this helps! Macroeconomics baby! ;)