The Dollar is Falling! The Dollar is Falling!

27Mar10

I have an embarrassing confession to make: I like to look at www.RedState.com.

It’s the entertainment value that attracts me. Yes, it is a disgustingly perverse hobby, but as our beloved Bill Clinton used to say, “I don’t inhale.”

One of the RedState bloggers calls himself Dan Perrin, although I’m convinced that his real name is Chicken Little. Here’s a sampling of his recent blogs:

The Dollar is the New Peso, Sept. 29, 2009
The World Moves Against the Dollar, Oct. 5, 2009
The Record Deficit and Dollar Meltdown, Oct. 8, 2009
The Dems Are Killing the Dollar, Oct. 10, 2009

According to Chicken Little, the US dollar is doomed, and it’s all President Obama’s fault.

Comparing the dollar to the euro, here are a couple of points to keep in mind:

– During George W. Bush’s eight year reign of error, the dollar lost 30% of its value, falling from 1.07 euro to 0.75 euro.

– The dollar’s current value is low (0.68 euro), but it’s still 9% higher than its all-time low in April, 2008 (0.62 euro). At that point the US dollar had lost an incredible 42% of its value since Bush’s inauguration.

May I suggest that it’s a bit premature to predict the dollar’s demise and to pin it all on Obama. As former Chinese Premier Zhou Enlai purportedly replied when asked his opinion of the French Revolution, “It is too early to say.”

Get back to me again in seven or eight years, Chicken Little.

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One Response to “The Dollar is Falling! The Dollar is Falling!”

  1. First posted Oct. 9, 2009, then revised Oct. 10, 2009.

    The dollar vs. euro figures mentioned in the article were correct when I posted the article. Now (end of March 2010) the dollar has climbed to about .75 euro, which is where it was when Obama was inaugurated.

    When I posted this article at FireDogLake.com, several commenters expressed skepticism about my claim that the dollar had lost 30% of its value during the George W. Bush administration. For those who want to check up on my figures there are many web sites that keep historical exchange rates, for example Bloomberg and Yahoo Financials. This site is less well known but has very easy to use tables: http://www.oanda.com/currency/historical-rates

    Most people who live in the USA are generally unaware of swings in the value of the US dollar, but they have been dramatic during the past 10 years.

    For example, Americans who were complaining about rising oil prices, and the high price of gasoline, were generally unaware that what they were really complaining about was the weakening dollar. Those of us living in Europe have seen gasoline prices rise somewhat, but nowhere near like what happened in the USA.

    As for RedState.com, the level of stupidity there is monumental – when you read something there you can almost be guaranteed that the opposite is the truth.


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