Finance, Forex and Investments

US Dollars plunging value?

I just read a news about US dollars not being accepted in India because of it's plunging value against Rupees (currency of India) and other major currency. What do you think about that? Do you think this trend of US dollars currency value issue will continue? Ok for Chocolate who wants to know where I read the article here's the website http://www.foxnews.com/story/0,2933,319807,00.html

Public Comments

1. Why do you think a barrel of oil is now $100? The dollar's value will probably recover after awhile, but not until the Middle Eastern and Chinese dollars have flowed back into the U.S. stock market.
2. If possible, can you please cite the news article you read? Edit Addition: It may continue, but the situation is not all bad for the U.S. Exports are increasing on the cheap dollar. Net exports added 1.4 percentage points to economic growth over the past six months, more than making up for the 0.7 percentage point subtracted by the decline in residential construction. The cheap dollar just might SAVE the country from recession. Addition 2: Exports become more than a silver-lining when geo-politics are taken into account. The U.S. has had consistent growth for 25 years. We have one of the most stable government infrastructures in the world. Even countries that hate us, still model their parliamentary procedures after the West. Emerging markets that are seeing a growth spurt today have a lot more to do in order to match the strength of the U.S. We don't need countries to trust our current leadership, our track record speaks for itself.
3. Yes, some people will try to give this a silver lining by saying that the plunging value will help our exports by making everything cheaper. Unfortunately, it also means the world will eventually stop accepting our dollars in exchange for their goods. Iran is already outspoken about our crappy dollar situation and says they will only trade in Euros, Yen, and possibly Dinars. They hate the US anyway, but they're right about the plunging value of our dollar. I mean, if we give them a billion dollars today and 3 months from now the dollar loses 5 percent of its purchasing power then they just lost 50 million dollars technically. So naturally they don't want to trade their oil for dollars that are slowly losing value. Traditionally the Middle East has kept their currencies pegged to our dollar to keep a constant exchange rate between our currencies, but the recent fall of the dollar has triggered a lot of fuss in recent months as to whether they should drop the peg or not. Their currencies are technically worth more than they are exchanging them for, and you can bet that if they unpeg them then their value (in dollars) will rise. Just do a search on google and you'll find a lot of articles: http://www.google.com/search?hl=en&safe=off&q=uae+dollar+peg&btnG=Search Basically our bad business and troubles are spreading to other countries, and pretty soon they will have to turn their back on us or we will take them down with us. The crazy part is though, that when we go down we will take them all with us anyway since the world's economies are so intricately intertwined! As a result we saw a lot of money being infused into our banks from a lot of different sources in late 2007, like Countrywide recieved from Abu Dhabi and the FHLB Atlanta branch. http://www.nakedcapitalism.com/2007/11/schumer-demands-investigation-of-fhlb.html http://seekingalpha.com/article/55407-wall-street-breakfast http://www.reuters.com/article/topNews/idUSN0517748920071105 They try to say that these are investments and business is as usual, but of course that's what you expect. What would the average American do if they thought their bank was basically... bankrupt? The bank would go out of business and then it would take a lot of stuff with it. Our economy can't handle a tsunami like that, because the problem isn't just with Contrywide, it's everywhere! Fannie Mae, Freddie Mac, Citigroup, Chase, GM, Ford, our government itself. But oh well, stuff like this tends to bore people and they don't want to pay any attention to it. That's why when it all pops off it will hit them in the face like a ton of bricks. And it will be much sooner than later... Edit Addition: The guy above me says that the US has been doing so good for so many years it must continue to do so, right? That's not how a country works though. 25 years ago we were one of the biggest creditors to the world, lending money we could afford to. Nowadays we are the world's biggest debtor, no doubt and our multitrillion dollar debt proves it. How many people do you know that have credit cards, have a vehicle payment, have a mortgage, owe a hospital, or have racked up debt in some other way? The average American saves less and owes more than at any other time in history. The recent housing boom that swept the nation was no sign of how prosperous our economy was. It meant that banks were helping people buy houses by lending them the money they, in turn, borrowed from the government. Lending practices were basically nonexistent and they sold houses to people who wouldn't be able to afford them in the long run. What we saw last year was the accumulation of all these people defaulting on their mortgages or filing for bankruptcy because they've been losing their jobs or just plain couldn't keep up with the payments. This has been happening in the millions around our nation, and the banks have been losing a LOT of money. This has just begun, so they stand to lose a LOT, LOT more. People will keep losing their jobs. As people tighten their belts and spend less on luxuries and keep to the essentials then even more people will lose their jobs. This will keep going until we enter a depression. Anyway, at some point during all this the dollar will be discovered to be worthless. Oh well though, don't take my word for it. I encourage you to research this yourself. It took me a while to understand as much as I know now, and even that barely scrapes the surface. What I am sure of though is that when this much Greater Depression happens, it will take the system down with it. How we buy and sell groceries, trade items and use our money... so many people just don't see how bad it will get. Check this guy's site out for more information: http://www.markswatson.com He has a lot of good economy-related articles, as well as political ones. He is Christian so you will see some related themes on there, though he does a good job of separating his religious beliefs from the facts. He also has a great series of articles dating from as far back as 2002 titled "The Coming Economic Depression". You will have to Google that title to find them, since he has since removed links to them from his main page. He recently changed the names of his updates to "The Political, Economic and Spiritual Review." Read them if you really want to know the true state of things.