American Currency, what's wrong with it.

[MegoNinja]

Hello every one,

I am not sure whether this has been discussed here before or not, but my question is, what exactly is happening to the American dollar? I live in Australia so everything I buy off of eBay is from America, meaing I have to convert the Australian money into American money, which always means I have to pay more, obviously. A few years back, if some thing was in American dollars it meant I almost had to pay double the amount, but recently if some thing is in US dollars the price difference is right next to nothing, in fact to give an example I just bought an item off eBay for $75US, ended up being $83AUS, however 5 months ago I bought a $75 US item and it was close to $100AUS.

I thought the Australian dollar might be increasing in value but I heard that the Canadian dollar is also worth more than the US one now, and in my time I have heard a lot of jokes about the American dollar always being worth more than the Canadian, so some thing must be wrong.
Does any one know what's happening? Did Fort Knox get robbed or some thing? I honestly don't know much about how currency value works, so if some one could fill me in that would be great,
thanks.

[MegoMonk]

It is subject to debate, but a few reasons might be that:
interest rates have been kept artificially low to encourage people to borrow to buy things that they really cannot afford.
we import far more than we export.
the american public now has a negative savings rate for the first time since the depression. The average american spends more than their take home pay.
The government borrows from other countries, especially china, to finance the Iraq war and other expenditures.
Wheeling WV, where we have MegoMeet every year, is an interesting point. A few decades ago the wheeling area had the Marx toy factory and the Fosteria Glass factory. Both produced items that were sold all over the world. Both closed over two decades ago. They just increased legalized gambling, because they could not figure out any other way to create jobs.
When our economy has these issues, other countries are not going to value the $ the way they used to.

[UOBob]

Did Fort Knox get robbed

Wouldn't matter really... we spent 1933-1975 doing away with the Gold Standard. These days our $$$ is backed by... uh... Pixie Dust I guess?

Seems to me that William Gibson's "consensual hallucination" definition of cyberspace also fits the value of the USD today... as long as most of the world agrees to pretend that it exists, then it does.

[Mikey]

I thought the Australian dollar might be increasing in value but I heard that the Canadian dollar is also worth more than the US one now, and in my time I have heard a lot of jokes about the American dollar always being worth more than the Canadian, so some thing must be wrong.
Does any one know what's happening? Did Fort Knox get robbed or some thing? I honestly don't know much about how currency value works, so if some one could fill me in that would be great

Basically when we (the US) need more money ........ we just print more green backs.
It's a shame the world is finally starting to catch on.
But, it was a good strategy while it lasted

m

[cjefferys]

Try living in Canada and working in the US. I went from getting 50% extra on my paycheque a few years back, to this. It's like getting a pay cut every week. Oh well, it was fun while it lasted.

[Captain]

Its not just the interest rate debacle in the States bringing down the American dollar. the Canadian dollar is also rising due to the oil boom. Alberta has more oil than the Middle East, and the last few years world wide investment in this industry has propped up, and now graduated, the dollar to a wee bit more than the Yankee buck. I dabble in the oil industry myself, and am amazed at the level of development going on right now....and dont see this changing anytime soon.
Saskatchewan has just as much oil as Alberta in its Northern area, but due to past Provincial Governments, hadnt even begun to tap into this...until now. As a result, Saskatchewan is now second only to Alberta in growth, and I can see it catching up, and maybe even surpassing, Alberta in the next decade or so.
Black Gold ladies and gentleman...love it or hate it, it makes the world go around!!

[MegoNinja]

thanks for this interesting bit of information guys, I can undersand how the Iraq War would change things, Sun Tzi say's war is the most expensive thing a country can delve into. Is the US dollar going to continue to decrease, or will in a few years will it go back to being how it was?

[Titan4ever]

My "Magic 8 Ball" says, "Ask Again Later."

But seriously, there's no way to reliably forecast an individual nation's foothold in world ecomonics, given the increased globalization of corporate enterprise. Historically speaking, every political empire rises and falls, their influence waxing and waning over time. Decline is a certainty. The USA been a super power arguably for over a century. It's unlikely our or any other nation can remain at the top forever. Whether this is the "beginning of the end" or something else entirely, is best left to paid professionals to decipher. All we can do is try to learn and respond to the indicators we're given.

[Zemo]

There are several factors for the decline, but the main reason is huge trade deficits.

[Adam West]

The dollar is actually down substantially to most major currencies

I was looking at a few exchange rates the other day and saw

the U.S. $ trading at 50% of the GBP....normally the GBP is trading maybe 30-40% higher.

The Euro is now trading at $1USD=1.50Euro. When the Euro was first introduced, it was generally thought that they would in theory trade relatively close to one another. When I was in Europe around 2000, the Euro was trading at $1USD to .85 Euro.

Things come and go in cycles. With the greenback being so cheap right now comparatively, it actually helps our economy as goods and services are cheaper to outside countries and in some ways it hurts other countries as well because it makes it very expensive for us to purchase items from other countries. I just about choked at the prices when I was in England in 2000 when the exchange rate was only about 30% higher but now at double the price! I'm not vacationing in Europe anytime soon.