Your Wealth and Wisdom

Once seen as the currency of the World, since 2008 the United States dollar has steadily decreased in value against most currencies. This has started a process of dollar de-coupling where nations lessen their dependence on the greenback.

The US dollar is still the currency of debt, diplomacy, and international trade. However since the American banking crisis where effectively over 90% of US banks were bankrupted after the 2008 market crash. The greenback has lost its appeal, as newly emerging countries are slowly becoming the engine of growth, like China.

Quantitative easing (printing money) has also affected investor confidence in the US dollar, as debts created by massive bailouts have been added to by the sale of US bonds to allow for further printing and supplying dollar notes into the global money supply.

The main concern about the real value of the greenback, is the current state of the US economy which is seeing a boom in Wall street, but a depression in main street America. The sense that this is somehow unreal, as share prices are somehow not linked to what is really happening in the economy, has created a mistrust of the dollar as a currency unit.

By 2012 the US will be in the highest indebted nation in the world, with a debt ratio higher than Greece or Ireland. And the only current solution the Federal reserve has had is to print more money, and hand it to bailed out banks, who in turn are only using it to invest in the stock market- rather re-invest it in the economy in the form of loans. Read the rest of this entry »