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American Dollar Hits 26 Year Low Against Foreign Currency

The America dollar has now hit a new 26 year low in the value as measured against European currency such as the British Pound. Worldwide concerns about the huge American trade deficit and also the subprime mortgage market and it's sleazy impact on the American economy is helping to raise doubts about the health and value of the American dollar in general for the world currency markets. The dollar has hit a new low against the European Euro as well.

In addition to the shrinking value of the American dollar as compared to other world currency, the value of foreign held U.S. Treasury bonds and securities continues to only increase where Japan now holds $612.3 billion dollars in bonds, while China now holds $420.2 billion in bonds, as of the first quarter of 2007. Both nations now hold such a high dollar value of U.S. bonds that they can now help to virtually dictate the terms of foreign trade legislation that congress writes both by their sheer power of bond holdings and skillful use of lobbyists and trade negotiators. Americans who frequently use credit cards may also be surprised that their high interest rate payments may actually be headed off to some foreign bank in Toyko or Bejing as well.

Unfortunately, while many Americans spent July 4 engaged in competitive eating, beer drinking, flag waving or firing off fireworks, the rest of the industrialized world didn't have the day off, and instead worked hard. The U.S. has now become largely like a giant Wal-Mart, selling the goods that other nations such as China produce, and having moved from a manufacturing based economy to one of mere consumption and merchandising.

Anthropologists and archaeologists will tell you that every past civilization was able to at least produce their own pottery. In the case of our society, that pottery will all be marked with tags as "Made In China" when the ruins of our society are unearthed.


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Comments (3)

Paul

" In the case of our society, that pottery will all be marked with tags as "Made In China" when the ruins of our society are unearthed."

I'll let you do the math on this since you brought it up.

What would our trade deficit be today if the US Congress allowed:

Drilling the entire ANWAR geologic formation?

Mining of coal in all protected areas of the the U S Forestry and National Park Service?

Harvesting all available hardwood species in protected areas?

Denying China access to our mining and exploration technology.

Imposing a 20% increase in tariffs on imported automobiles? On imported steel?

Enforcing copyright and intellectual property laws on ALL of Asia?

It's worth a hell of a lot more than pottery.


andrew:

Uh, when other people invest in our treasuries because they don't trust their own countries it's a sign of our strength and their weakness.

bryanD:

This post reminds me of how the US's situation now is analagous to that of the UK on the eve of WW2. Outwardly prosperous (awash in "money") and educated (by a dumbed-down system of diploma mills in superflous skills, aka: "ticket punched"), yet de-industrialized with a merchant navy leased to competitive economic powers. Translation: our wealth is far, far less than even it seems.
Check out the Introduction (or Chapter 1 (can't remember)) of Len Deighton's Blood, Tears and Folly (WW2 monograph) for a modern self-comparison of our situation to Britain's pre-WW2. Sure, they won their war (barely! with gifts from the US) yet still fell into penury in the 1950s. They basically only got their nose above water with Thatcher. But as the USA is THE "superpower" now, where would we turn? China? EU? (And the UK has still not recovered, anyway)
Only a Ron Paul-style period of reorganization ("isolationism") can forestall our decline. Might include cancellation of debt should the bankers call in our debt. The rest of the candidates are likely to sell our corporate ass.


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Publisher: Kevin Aylward

Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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