The US Dollar
and Its Loss in Foreign Exchange Value
Thirty-three Year Decline
Michael W. Hodges
I think many scared eyes these days are on the US dollar, now down 26% vs. the Euro past year, also down against many others including 21% vs. Swiss franc. To help place this decline in historic perspective, look at my
long term trend chart which comes from my chapter called 'Grandfather Foreign Exchange Report'.
Scary times, regardless of the impact of U.S. stock, bond, real estate or commodity markets. In the end most Americans think of their assets in terms of dollars, yet few recognize that a huge international depreciation (write-down) of those assets is again in progress - - and there is little most know what to do to protect themselves.
Just think, for every 100,000 dollars of a citizen's assets, the international buying power dropped $26,000 this past year vs. the Euro. Not only does that wipe-out incentive for foreigners to invest in dollar assets to help finance our savings-short, deficit economy, (but also it wipe's out American incentive.) Americans neither.
In the past several years many average citizens experienced large decreases in the dollar value of their stock market assets due to huge market declines of a bubble economy that was pumped-up by soaring debt. Many more conservative citizens, who stayed away from the market pounding to protect their savings, at least came out with their assets in tack but were later horrified to witness interest earnings on their assets chopped 60%+ the last 2 years as the Fed forced rates to record low levels. On top of this, during the past year comes the huge depreciation of all dollar assets in terms of its international-value, as the dollar falls.
All of this leaves the too few US savers (including a lot of seniors) vulnerable and devastated, wondering who represents them and why are powers-to-be making war on savers instead of on debtors?
© 2003 Michael W. Hodges
Michael Hodges
The Grandfather Economic Report - - home page
http://mwhodges.home.att.net
May 12, 2003
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