Thursday, October 1, 2009

The Dollar

In what can be only bad news for American families, there is reason to believe that as soon as our economy starts to rebound there will be rapid action by investors to move their savings into other currencies. As a result the dollar will decline in value and all those imports we consume will be much more expensive. When our economy is in recession our standard of living drops, but as soon as our economy starts to grow again the expected fall in value of the dollar will again lower our living standard. Even economic recovery may serve to make life more difficult for families and it may be along time before things start to improve.

It is also important to note that the U.S. dollar is in relative trouble globally and there may be increased pressure to replace it with the Euro, Yuan, or a new currency. Jeffrey Sachs observed that the U.S. has already passed on the "baton" to the G-20 as our economy is becoming less important globally.

This is bad new for families in the United States. Even our economic recovery may make life more difficult. Fortunately, we do not hope in economics or the dollar which, even in the best times, cannot answer the needs of the heart.

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