The Great Depression Online




Great Depression Online Archive Issue:

A Matter of Integrity

Great Depression Online
Long Beach, CA
February 12, 2008

Inside This Issue You Will Discover…

*** A Matter of Integrity
*** What Gives?
*** More Dollar Troubles Ahead
*** And More

A Matter of Integrity

It seems the dollar’s integrity is questioned more and more each day.

Six short years ago €1.00-euro could buy you just $0.88-cents of a dollar.  Now €1.00-euro will buy you $1.45-dollars.  In other words, the dollar will only buy you 60-percent of what it use to when measured in euros.

And while this decline has been primarily experienced by American’s traveling abroad, American retailers are now taking note too…

“In the latest example that the U.S. dollar just ain't what it used to be”, reports Angela Moore for Reuters, “some shops in New York City have begun accepting euros and other foreign currency as payment for merchandise.”

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But it’s not just in Europe that the dollar’s taken a dive – the USA Today, in a story from January, offers the following…

“In yet another troubling sign for the greenback, at least one of the seven wonders of the world is now off limits if you have only U.S. currency in your pocket.

India's tourism minister said Thursday that the dollar will no longer be accepted at the Taj Mahal and other national tourist sites.

“For years tourists visiting most sites in India were charged either $5, or 250 rupees.

“After falling 11% in 2007, hitting nine-year lows to hoover [sic] around 39 rupees, the dollar is out.”

And that’s not all…  Another consequence of the dollar’s decline appeared in an AFP story last Friday, February 8th…

“OPEC could switch the pricing of oil from dollars into euros within a decade, secretary general Abdullah al-Badri told a weekly magazine.

“The Organization of the Petroleum Exporting Countries could adopt the euro to combat the decline of the dollar, Badri told the Middle East Economic Digest (MEED), published in London.

“MEED recalled that OPEC is under pressure from its members, who have seen their earnings decline sharply since 2000 due to its use of the dollar.  The US currency has fallen 44 percent in value against the euro in that time.”

What Gives?

Yes, we are keenly curious.  Why is the dollar losing so much value in the world?

We didn’t have to look far for an answer.  Billionaire investor Warren Buffet, as reported by Market Watch on Thursday February 7th, had this to say…

‘“If our current account deficit keeps running at present levels, the dollar I think is almost certain to be worth less five to ten years from now compared to other major currencies,’ the Berkshire Hathaway Inc. (BRKA, BRKB) chief executive said, speaking at the opening of Business Wire Canada.”

It seems so obvious.  Spending money that you don’t have has consequences.  And in this instance of the dollar, it’s causing prices – when measured in dollars – to go up.  But are prices really going up…or, is the dollar’s value going down?

More Dollar Troubles Ahead

It seems for now the dollar will continue to lose value.  For the main cause of its troubles are increasing, not decreasing.

In last Friday’s GDO we touched on President Bush’s latest budget proposal, which will set a new record of $3.1 trillion, and includes deficit spending of $410 billion in the current fiscal year and $407 billion for the fiscal year that begins Oct. 1.

That’s $817 billion of new debt in just two years.  Plus the Senate approved the $150 billion economic stimulus plan last Thursday.  We aren’t sure if this is included in the budget deficit or not.  Regardless, it’s new debt that we’re racking up like an addicted gambler on the loose in Las Vegas.

And it further calls into question the dollar’s integrity.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  Investing in foreign markets is a strategy for diversifying your portfolio outside of the dollar.  And the folks at High-Yield Investing have just uncovered a fund that invests exclusively in one of the fastest-growing and most undervalued foreign markets on the planet.  Thanks in large part to its international strategy, the fund has posted total returns of +281.7% over the past five years, and it ranks in the top 12% of its category over the past decade.  Learn more about the Income Security of the Month for February 2008.

 

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