Why is the dollar weak and what can be done to fix it?

Question

I don't really understand economics very well so you may need to explain in a more simple fashion. But basically I keep hearing about the weak dollar and was curious as to why it is weak, who let it get weak, and what can we do to fix it.

Answer 1

It is a matter of how much folks around the world want to have their assets in dollars.  And they base that decision on whether they believe we as a society can pay off our debts as consumers and that the government can pay the money it has borrowed.  In a way, it is similar to the analysis that a lender goes through (or should go through) in deciding whether to loan an individual money.  Our national debt is going up very rapidly as has consumer debt.  We have been, and are, living beyond our means.  Our finances and economic don't look very good.

Answer 2

Basically, the U.S. Dollar value comes from how other countries veiw the USA.  There's NO secret mathematical formula involved:  it REALLY comes down to if global market holders like or dislike the U.S.

For 8 years, Bush avows other countries hate the U.S. because those countries are jealous of how we live.

Maybe that's so.....but maybe.....these countries dislike Bush and his cabinet.  And Bush's political enemies in the U.S. (and he DOES have a plenty of 'em) aren't much help, either.

So it comes down to whether these global markets dislike USA, Bush---or both.  

And another complicated ingredient in the mix is the dislike for Bush held in the hearts by our own media---who know all too well the power of propaganda:  They "guide" us to believe the U.S. dollar is weak.

THERE IS NOTHING WRONG WITH THE U.S. DOLLAR!!!

It just takes us as a UNIFIED society to go out and DEFY those who look down on the U.S. Dollar---and crank back up housing markets, while at the same time--DEFY those raising gas prices.

The two key words here are DEFIANCE and UNITY.  We can still trashcan Bush, the "War" and gas prices---and so something together to make OUR OWN efforts at saving America.

Answer 3

ask George Bush

Answer 4

Bush.

I think to make out dollar stronger, we need to start pulling our troops out of Iraq because the war has put our country in so much debt.

Answer 5

uhhh.. lets see... we could fix our economy by getting us all out of debt... stop refinancing our loans... Everytime we do this we dig a deeper hole... It can't be blamed on war or oil..

Answer 6

top fix it, your country must get the h**l away from all political violence.

Answer 7

The US Dollar is weak because of several factors.  The major factor is our Trade Deficit. We import more than we export, which means that we are really exporting our currency in exchange for widgets. And with less currency to go around in the country, new money has to be created. That in turn weakens the dollar.

The next factor is our account balance. The Congress spends more money than it raises in taxes. The shortfall is made up by selling Treasuries. Payable with interest at some point down the road. The people buying those treasuries are the Chinese and such. So they (A) sell us widgets and take our money. Then (B) loan us our money back that we have to repay with interest. Crazy, isnt it?

And last, our Entitlements. The baby boomers are getting older and they've been promised a fat paycheck and free medical care in their old age. That money doesn't exist in a bank account, but is paid for with current income taxes. So as the workforce declines, tax revenue will decline. While at the same time Social Security and Medicare will increase. Another Government expenses that will exceed revenues. If nothing is done, the Govt will have to vastly increase the IOU program of selling Treasuries for our children to repay.

All this is making the US Dollar worthless. Another will change until somebody does the following:

A) Increase Import Tariffs on everything (including Oil) until we get our trade balance back in balance.

B) Stop spending more than we get in taxes

C) Raise Retirement ages or have means testing to reduce the number of people collecting social security and medicare.

Answer 8

Currencies all rise and fall based on supply and demand. Right now there is too much supply for the dollar. Interest rates are very low so money is created in greater quantity. Also we import more than we export, so there is just less demand for our paper. Think about all those container ships from China, they all go back to China with our used cartoons and nothing else. The rest of the world basically cannot afford what we make or service here, so naturally the dollar is weak.

But it won't be this way for much longer, the dollar has fallen enough that its causing problems in stronger currency countries like the EU. Dollar weakness is temporary, so don't buy gold or oil!