Dollar Crashing it's Time for Action

Martin Weiss, Ph. D. examines the U.S. dollar decline and its association with foreign currencies. In this issue of Money and Markets, Dr. Weiss explains how the dollar decline affects the U.S. economy and offers advice on how to defend against the falling dollar.

Jupiter, Fla., (PRWEB) September 14, 2007 -- Martin Weiss, Ph. D. examines the U.S. dollar decline and its association with foreign currencies. Dr. Weiss explains how the dollar decline affects the U.S. economy and offers advice on how to defend against the falling dollar.

The U.S. dollar is crashing. It's crashing against the euro, the pound, the Swiss franc and especially the Japanese yen.

On September 6, one U.S. dollar could have bought 115 yen; the very next day, it could buy only 113. In just 24 hours, the dollar fell more than it would historically fall in 24 weeks.

So based on the dollar's decline against the Japanese yen, this means that, between the close of business Thursday and close of business Friday over one trillion dollars in American wealth was wiped off the map.

The dollar is already sinking in terms of the corn, wheat, eggs or beef that it can buy right here in the United States. Already, the cost of more than 90% of the products sold at Wal-Mart (all produced overseas) is being impacted. Already, the vast majority of products sold in electronics stores, furniture stores and appliance stores are being affected. Ditto for the lion's share of the oil, natural gas, gasoline, and heating oil you buy.

So when the dollar falls, the people pay.

And a lot of America's money is borrowed from foreign countries. It's been loaned to America by Japan, China, Germany and others. It's been loaned: To finance the deficits in our federal budget, to fund our addiction to debt, to help Americans buy luxury homes, and to sponsor the shop-till-you-drop crowds all across the U.S.A.

And look what has happened: The amount the United States owes to foreigners has grown to $3.9 trillion in 2003, $4.8 trillion in 2004 to $5.4 trillion in 2005, $6.4 trillion last year and now over $7 trillion.

And just last month, foreign central banks and governments decided to pull money out of America in huge amounts. And in the process, they dumped a whopping 3.8% of U.S. bond holdings, the biggest such sales in over 15 years. That's despite the fact bond prices were going up. If bonds turn down, they're likely to dump even more.

But dollars aren't sold in a vacuum. Whenever foreign investors and governments are selling U.S. dollars, they're also selling U.S. stocks, bonds and real estate. And that's how it comes back to bite ordinary Americans on the rear end, causing potentially big losses in portfolios, gutting real estate, and making a big dent in the $65 trillion of household wealth.

For many years, America's day of reckoning was postponed. Why?

The key difference that separated the United States from other countries was that whenever another country slacked off or did the wrong thing financially, it got slapped down. Hard. But when the United States made similar mistakes, it got away with it.

And so it was that the U.S. merrily ran huge deficits, borrowed to the hilt, and continued to party as if nothing were wrong. And that's why, despite it all, foreign investors continued to pour more and more money into America.

In the 1980s, it was primarily cash-rich Japanese who led the way, investing billions in U.S. stocks and bonds, helping to lift the Dow and Treasuries out of their worst slumps of the postwar era.

In the 1990s, it was mostly Germans that played that role, helping to drive the big tech boom.

And in the 21st century, China has become the big provider of new funds to the U.S., along with another huge influx from Japan.

Still, it remains that:

The $13.5 trillion mortgage market is melting down, and the giant housing market is busting.

The U.S. economy is sinking quickly into recession and the dollar is crashing.

In order to defend against the falling dollar certain steps must be taken into account.

"The first step must be to reduce your stake in the world's weakest major currency, the dollar. The second step is to build investments that go up when the dollar falls. The third step: Go on the offensive, aiming for the unusual wealth-building profits that only crises like these can generate," Dr. Weiss advises.

For more information and to read the full article, visit this link:

http://www.moneyandmarkets.com/press.asp?rls_id=930&cat_id=6&

About MARTIN WEISS & MONEY AND MARKETS

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

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