The 'Dying Dollar' Dilemma: Facing the Cold, Hard Truth Behind the Dollar's Historic Decline

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With help from the Fed, the dollar has been in a decline for some time now. While most of us know that isn't good news, it's hard to make heads or tails of what it all means. Addison Wiggin clears it all up…and sounds a dire warning about the future.

last year's dollar is worth 90 cents today.

In recent months, the dollar has hit historic lows, and we're witnessing the results: celebrities requesting to be paid in currencies other than the dollar, desperate US retailers opening their doors before dawn the day after Thanksgiving 2007, and overseas visitors packing the streets of New York City scooping up bargains. The sinking of the dollar didn't just happen when all the recent recession talk started. It's been a growing problem for quite some time, says Addison Wiggin--it's just that many Americans don't quite know how to put it in perspective.

"The dollar is a victim of its own success," says Wiggin, author of The Demise of the Dollar (Fully Revised and Updated) and Why It's Even Better for Your Investments (Wiley, April 2008, ISBN: 978-0-470-28724-8, $19.95). "Trillions of dollars flow through the global financial markets every week from Kiev to Karachi. But today, as a result of a government and a populace living beyond its means, we are going deeper and deeper into debt, and the dollar is quickly losing its worth."

Wiggin warns that a dollar collapse is inevitable, and it's only a question of how quickly it is going to occur. Here are some of his insights on the demise of the dollar:

Outsourcing has changed the face of the worldwide economy. Our government likes to cite the creation of millions of new jobs in the retail and health care sectors as a sign of growth. But the reality is these new jobs are very low-paying compared to the high-paying manufacturing jobs that have gone overseas. The flailing labor economy results from the roughly three billion new capitalists who have entered the market by way of China, the former Soviet Union, Vietnam, and India, citizens who are glad to work for dirt-cheap wages.

Leaving the gold standard was the start of the problem. When a country is on the gold standard, it has to live within its means. But when it goes off the gold standard and begins using floating money the sky's the limit. As long as any government is able to print money indefinitely, you can bet that it will. Unfortunately, even the best economic experts can identify when the printing of money has gone too far by only one yardstick: when the system implodes. By then it's too late to prevent the damage.

Our nation is drowning in debt. US debt is growing at a rate of $1.4 billion a day or $1 million a minute. Today, many people, including most of those running our country, simply accept as a fact of life that the national debt is unimaginably high.

The world's de facto dollar standard will come tumbling down. Americans have codependents and enablers in the form of foreign exporters who love selling their goods to Americans. The governments in those foreign markets are as concerned about the US dollar's fall as Americans are. That's because the fall of the dollar is the same thing as a rise in other currencies. So the competitiveness of the foreign export economy is damaged more and more as foreign governments' currencies increase in value.

The dollar's purchasing power is sliding relentlessly downhill. The theme that "a dollar is always worth a dollar, but inflation results when businesses raise prices," just isn't accurate. It would be more accurate to define inflation as "a reduction in purchasing power of the dollar." Instead of deceiving ourselves by saying that "prices are up 10 percent over the past year," it would be more meaningful if we simply acknowledged that "last year's dollar is worth 90 cents today."

"There is good news in all of this, if you are willing to be proactive," says Wiggin. "There are many ways you can capitalize on a falling dollar. I highlight four of those strategies in The Demise of the Dollar. The important thing is that you take your financial future into your own hands. The days of the strong dollar are over, and it's time to start making financial decisions based on that truth."

About the Author:
Addison Wiggin is the executive publisher of Agora Financial, an investment research firm based in Baltimore, Maryland. Agora publishes The Daily Reckoning, a financial newsletter with more than 500,000 readers in the United States, Great Britain, and Australia, and is translated daily into French, German, and Spanish (http://www.dailyreckoning.com). He is also coauthor along with Bill Bonner of bestsellers Financial Reckoning Day and Empire of Debt. For more information, please visit http://www.AgoraFinancial.com.

About the Book:
The Demise of the Dollar (Fully Revised and Updated) and Why It's Even Better for Your Investments (Wiley, April 2008, ISBN: 978-0-470-28724-8, $19.95) is available at bookstores nationwide and major online booksellers.

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