I was reading this article in the USA Today - Weakening dollar reflects USA's fading world status. This is scary stuff. Here are some clips from the article. Quote - Just five years ago, a euro was worth 90 cents. Now it takes about $1.45 to buy a euro."Until recently, the dollar has enjoyed an almost monopolistic position internationally. When people wanted to escape the uncertainties of their domestic economies, they turned to the dollar," says John Cole, an economics professor at North Carolina A&T State University. "The euro is now an alternative to the dollar."Direct Quote -
The underlying problemsThe dollar's declining value, Cole says, results from this nation's growing national debt and staggering trade deficit. Late last month, the federal government reported that the debt is more than $9 trillion — up 55% since President Bush took office in 2001. Communist China is the second-largest holder of U.S. treasury securities, which underwrite our domestic debt.Also this month, the Treasury Department reported that this country has a $56.5 billion trade deficit. Nearly half of this trade imbalance — $23.8 billion — is with one country: China."We're running internal deficits, which we're asking foreigners to fund for us. And then we keep pumping dollars to those people so they can send us cheap goods. This depreciation of the U.S. dollar is in lieu of the United States ... paying our own way," Cole says.How long can that continue without risking this country's economic dominance in the world?In the closing years of the 20th century, the world appeared to be in the final throes of the fight for supremacy between democracy and communism. The Soviet Union had collapsed. China's socialist market economy sputtered — and the United States was the declared winner.In the early years of this century, however, Russia is awash in oil revenue and is running on surpluses, just as China's economy has strengthened."China's rapid economic growth has boosted incomes and is making China a huge market for a variety of goods and services. In addition, China's abundant low-cost labor has led multinational corporations to shift their export-oriented, labor-intensive manufacturing facilities to China," the Congressional Research Service reported last year.What does this all mean?Once the world's economic strongman, the U.S. economy is much less that today. And unless the United States gets its financial house in order, Cold War history might need to reconsider its verdict on winners and losers.DeWayne Wickham writes on Tuesdays for USA TODAY.End QuoteIsn't that crazy stuff?! I hope our next president is concerned about this. It is evident that our current president doesn't care. And to think, I voted for him.