by William Neikirk
The once-almighty U.S. dollar is under siege. It has hit record lows against the European currency, the euro, and could go lower. Some believe its role as the world’s premier currency is endangered.
This would be a great psychological and economic blow for the United States if it were to happen. But some prominent people think it could. Currency trader George Soros told the Wall Street Journal in a piece published last week that “the dollar is a deeply flawed currency and its days are numbered.” He cited the country’s huge foreign-held debt.
This is so ironic in view of the fact that the United States emerged from the Cold War with the former Soviet Union as the sole superpower with a super-currency that every one desired to hold.
And, for someone who has covered the dollar’s value from the days that it was tied to the price of gold, it seems to me that talk about dethroning the U.S. dollar as the main currency of world business and central bank reserves is far too premature.
Let us not forget our guns.
Our defense budget is the world’s largest and, whether or not it has been used as wisely as it should have been in recent years, nonetheless the U.S. taxpayer has stood behind spending so much money for our national and international security, particularly in the war on terrorism.
President Bush has called for spending at least $611 billion on the defense budget for the fiscal year that will start Oct. 1, plus untold billions more to finance the wars in Iraq and Afghanistan. That’s more money spent on military spending than by the rest of the world combined.
So, sure, we are borrowing from China, Japan and many other countries to finance our budget deficits, and they are building up huge dollar reserves that make them powerful in the marketplace. But it is fair to say that the money we borrow from others is also being used to build up our military, and to keep it strong. This is a role that our country has taken upon itself.
Yet that role isn’t being widely respected in the world marketplace when it comes to the value of the dollar.
The blood of American troops does not seem to be valued very highly in the world marketplace, either, but yet it is a factor that must be given great respect.
If the dollar is dethroned as the world’s chief currency and if the United States fades as a superpower like Great Britain did, which country or region will step up to the plate to assume this role? China? Japan? Europe?
The unpopular—and many say unwise—invasion of Iraq has caused rifts with our allies, many of whom have withdrawn their troops from the country. They know the costs in lives and money.
The major question is whether the U.S. is willing to maintain this role as sort of a worldwide security guarantor far into the future. Perhaps we are not, since it is so costly and has driven us into deep debt. But it is a role that others would like for us to continue, and our currency’s value should reflect that fact.
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Comments
Wasn't a weak dollar supposed to result in a boon for U.S. exports? Wasn't the idea supposed to be that once our goods became cheaper they will be swallowed up by buyers from abroad? Has it backfired? These questions, along with the idea that America is beginning to slide from the position as the dominant World power should be on the minds of every American as we tinker with our cell phones and sip 5 buck a cup Starbucks coffee. Wake up! the World may be passing us by! The military is becoming like the military in the poorest countries in the world, well fed and kept content. The main difference is our military is being worked to death. Hopefully Americans will wake up to what is happening before it is too late.
Posted by: GW | March 3, 2008 8:42 AM
The european Union has designed the euro to take the place of the dollar as the worlds standard.The euro is getting a free ride on defense. The countries that benefit from having our troops protect them should shoulder some of the cost. The playing field needs to be leveled.
Posted by: Michael J Hartman | March 3, 2008 9:29 AM
Thanks George W. Bush!!! At least your friends are making money, bloody hand over bloody fist. May you all rot in hell.
PS Mr. President, I see you'd like to have a 2 state solution for Israel and Palestine before you leave office, yet the same lofty goal for our involvement in Iraq to end before you leave is not made. Why do you hate America? Why do you want more American soldiers to die?
Posted by: john | March 3, 2008 10:17 AM
Guns, guts, and Christ made America free.
Chinese dollars just keep it going.
Thanks Bush republicans.
One can only cringe with fear at what a second morally bankrupt Clinton administration would bring. God help us.
Posted by: Holy Warrior | March 3, 2008 10:25 AM
My, we have members of the Loony Tune Left spouting their gibberish.
Anyway, we have another biased report from William "I love Recessions" Neikirk. He even quotes George Soros without really identifying who Soros is. Soros is a huge bankroller of Far Left (i.e. Loony) causes such as moveon.org and other way out there organizations. Soros is a smear merchant, who also has a financially corrupt past. Corrupt "Journalist" William Neikirk + Corrupt Far Left Financier Soros = BS report.
IN reality, the dollar is down and that CAN become a problem. Our trade deficit would be much worse if the dollar was higher though. The dollar needs to be stronger, but not as strong as it once was.
Posted by: John D | March 3, 2008 11:31 AM
Guns, guts, and Christ made America free.
Posted by: Holy Warrior | March 3, 2008 10:25 AM
Wrong, wrong, and wrong.
Wow, your score is 00.00 there Holy Warrior! Too bad this isn't golf.
What made this country free was people standing up and demanding an end to governance by guns, guts, and Christ. That's why our founding fathers called a standing army "the bane of liberty" and wrote freedom of religion (even those that don't think exactly the way you do about Christ) into the constitution.
So, sorry, you're absolutely wrong. The Founding Fathers wanted the federal government to spend $0 on a standing army and stay the F out of religion. The Founding Fathers would be appalled by George Bush and the concept of the Federal Government spending $600 billion, year in & year out, forever, on "defense" (i.e. an imperialist standing army) and you're thinking that the Federal government should govern & go to war for your particular brand of religion.
Posted by: crafty b | March 3, 2008 11:57 AM
"BUSH SPEAKS TO GOP"
NO IMMUNITY NO DOLLAR.
NO IMMUNITY NO DOLLAR.
NO IMMUNITY NO DOLLAR.
NO IMMUNITY NO DOLLAR.
NO IMMUNITY NO GAS, FOOD, ELECTRICITY.
NO IMMUNITY MORE "BIG DAIRY"
NO IMMUNITY MORE VETOES
NO IMMUNITY MORE FILLIBUSTERS
NO IMMUNITY NO MILITARY
NO IMMUNITY NO GUARD
NO IMMUNITY NO "BORDER SECURITY"
NO IMMUNITY, Well Dick, Fred and David and I are attempting to find some way to get it through every INVESTOR in the world
NO IMMUNITY NO AMERICA!
Mr. UM UM UM UM UM "MUKASEY" SAID SO!
Posted by: Roger Morris | March 3, 2008 1:29 PM
You're right, Johnny D!!
Soros was quoted in that well known "loony left" liberal newspaper, The Wall Street Journal.
Plus we now have the Bush Administration throwing a $40 billion dollar airplane contract to the French.
What say you, John McCain????
Posted by: BobinATL | March 3, 2008 2:29 PM
*****
Posted by: crafty b | March 3, 2008 11:57 AM
crafty b:
You are quite wrong.
We didn’t win our independence from England by strong speech, lofty platitudes or a Constitution with checks and balances. We won the Revolution by firing bullets at British soldiers, by the guts and perseverance of those who took up arms to die for the cause, and by not a small amount of Christ’s inspiration. We wouldn’t have been able to do more than dream about freedom or a Constitution until we won our independence. That’s what (I believe) Holy Warrior was talking about.
In the second place, Article I, Section 8 gives Congress the power “[t]o raise armies” which is separate and apart from its power “to provide for calling forth the militia . . .” This is the power to maintain a standing army. The only limitation on this power is that “no Appropriation of Money to that Use” - i.e. to pay for a standing army “shall be for a longer Term than two Years.” This means that Congress must revisit the issue of funding the Army at least once every two years. And it does so.
I refer you to “The Federalist” Number 24 where Hamilton states that, although a standing army is not preferred, it is somewhat necessary in order to garrison our frontier outposts to protect against invasion. In Number 46, Madison explains that any danger or disadvantage from having a standing army is offset by the large natural militia “amounting to near half a million of citizens with arms in their hands, officered by men chosen from among themselves, fighting for their common liberties . . .”
Thus, it is incorrect to say the Founders “wanted the federal government to spend $0 on a standing army . . .” They expected the government to expend whatever was necessary to defend the country by any means. What they didn’t want was for us to engage in foreign military entanglements. I refer you to Washington’s Farewell Address to Congress for the reasons.
Posted by: John W. | March 3, 2008 4:47 PM
Yes, we won the Cold War by having Russia spend into bankruptcy. But of course, we didn't learn from that leasson, we are now spending ourselves to bankruptcy! Voila!
The weak dollar is suppose to be good for the economy but many countries refuse to buy the U.S. dollar because they know it will go lower. Just like our stocks are still too high for a recession. Nobody wants to buy even thought it is low already. Don't catch the falling knife!
Posted by: lou | March 3, 2008 8:46 PM
Well, Bill N., as you know, it is simply NOT sustainable. Just ask our friends, the British, as you pointed out.
We could actually cut the military $$ in half, still be spending more on guns than 3/4 of the world combined, be as safe as we are today and balance the budget.
It's why we have defense agreements with UK, Europe, Aussie, others, so we don't have to carry the whole load.
Only in GWB's psychotic world do we have to do this.
Posted by: C.Morris | March 3, 2008 8:57 PM
Don't use power for small reasons, then your power will go way. you have power as long as other feel of it. once that is gone, america will become a failed state.
Posted by: abc | March 3, 2008 9:31 PM
Don't use power for small reasons, then your power will go way. you have power as long as other feel of it. once that is gone, america will become a failed state.
Posted by: abc | March 3, 2008 9:32 PM