Why US Dollar value is Depreciating day by day?

The Value of the dollar has eroded greatly since the 1970's. It has been on a continual downward slope, regardless of the fact that you may purchase electronics at lower prices the big ticket items (housing, health care, education, etc) are far more expensive today than in the 1970's

The Value of the dollar has eroded greatly since the 1970's. It has been on a continual downward slope, regardless of the fact that you may purchase electronics at lower prices the big ticket items (housing, health care, education, etc) are far more expensive today than in the 1970's

I agree with many of your comments, particularly the one about closing in on themselves and locking the doors. Only time will tell regarding who eventually takes the number one spot.

Personally, I would prefer someone that can be trusted and there don't appear to be many of those about.

It's easy to see why many see the US as imperialistic when they see them looking after their own interests first. So what's wrong with that?

Gordon Brown worries me as he seems to think that leading by example in reducing (or cancelling completely) national debts particularly in Africa is the way to go. This has already and will continue to be a massive burden for the UK taxpayer.

Sorry to go off thread.

...benefits of a weak dollar is that it reduces the value of the foreign debt.

Non Americans tend to only see the brash, loud, interventionist side of the US. They don't see that they don't do anything outside their borders that isn't in their best interests.

They'll be a power for many years to come. I don't think any country will every be able to match the unique combination of innovation, creative thinking and entrepreneurial spirit. It would be a mistake to ever underestimate the US.

Basically, it would help for people to think of them as the economic and political Rocky.

and I think that is what is happening now. A weak dollar suits the US. Most Americans that don't buy European or Japanese cars and goods won't even notice a weak dollar. It will have little impact on them.

A weak dollar is part of the Xenophobic reaction you refer to. Foreigners seem to think that America wants to rule the world. This is not really the case. America wants to continue to be rich and to protect its interests and the American way of life. It is much more interested in this than world domination. China and India are still tiny economies compared to the US and the US is still the leader in intellectual capital and innovation. As American manufacturing dies out, the service sector continues to grow.

In the meantime, it suits the US to have a weak dollar and for foreigners to finance Americans expenditure.

Patriotism cannot be our final spiritual shelter; my refuge is humanity. Tagore, Bengali Poet

...good or bad for the US. If/when they lose their grip on top spot, who will lead the way? The EU, China, Russia, Japan...? Everybody wants to be number one but that means somebody has to be number 2, 3...etc.

In a floating market, currencies don't move in a vacuum. They fluctuate in relation other currencies. With the global economies becoming more and competitive and fractured, the result might be that nobody ends up on top for long.

In many ways, the US is, on a whole, much more of a xenophobic society than many outside it's borders think. It's common for the rest of the world to look at the US as an imperialist nation but every time there's trouble, they close in on themselves, put up fences and lock the doors. It's not that much of a stretch to imagine them sitting back and waiting until the dust settles.

The US position is also weakening. It won't be long before they have nothing but military influence.

It's well known that China and India are on the up whilst Russia are flexing their economic muscle due to their oil and gas reserves. Recent American administrations haven't exactly helped their own cause.

Anyone paid in US dollars has no worries as the QR is tied to the dollar..........for now!

and the perception is that the US is riding a mountain of debt, that Americans are spending the equity of their homes (and more) that the US housing bubble is in danger of bursting. Further perception is that US banks and hedge funds are packaging and reselling consumer and corporate debt that is of deteriorating quality. Also, the Yen carry trade is less attractive than it was and more investors are prepared to hold yen and JGBs. Also, to keep the economy vibrant, Fed discount rates must remain low.

On the plus side, the American economy is the most dynamic in the world and the most innovative. The dollar will recover eventually but it could take some time.

Patriotism cannot be our final spiritual shelter; my refuge is humanity. Tagore, Bengali Poet

to be more polical than anything else.

we all expatriates other than US citizens are suffering due to US dollar devaluation. lets keep our fingers crossed and pray for some miracle to happen.

...may be the biggest debtor nation in the world, but the rest of the west isn't far behind. It is also the biggest economy in the world, has the smallest unemployment rate, consistent growth rates, high productivity and high consumer spending.

Every one of these trends also has a dark side, of course. Indeed, the Fed has little interest in raising interest rates to increase the value of the dollar, as much as europe would love to see it happen. It keeps the cost of american goods down and foreign goods up.

The USA is trying like hell to get China to properly float the Yuan for the same reason.

The EU hates a high dollar, as much as they may say otherwise. The US is the biggest market in the world and will continue to be for years. A low dollar means fewer EU items sold in the US, from cheese to airplanes.

When I look at the economies of the EU compared with the USA, I, personally, don't see the 35% difference that the current value of the monies suggests.

A lot of it is political, of course. Since the value of money is subject to supply/demand, anyone with enough resources can alter the relative value of currencies by buying or selling.

It's about perception as much as about economic theory.

when all currencies become equal.

well this question is very tough to answer. because there are no signs for next 50years too. just try to live ur life at the best.

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When DaRuDE, when? That is the question!!!

dont cry dont cry everything will be fine.

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*feeling tears coming down the cheeks while reading*

Im not into economy, but could war be a reason?

The dollar is getting hammered because the US is the biggest debtor nation in the world. If it was a company it would be bankrupt. Debt repayments are huge yet the US continues to issue more and more debt in the form of T bills. This is both inflationary and expands the money supply thereby further devaluing the dollar.

Also, you have to remember that since 1971 (when the dollar was backed by gold reserves) the dollar is backed by nothing other than goodwill. There is nothing to stop the Federal Reserve from printing more and more dollars. This further erodes value.

Currency markets are moved by interest rates and by macroeconmic data. Interest rate differentials make the pound and the Euro more attractive to investors than the dollar. Therefore, investors sell dollars and buy pounds and Euros. On the macro front, the US has hige twin deficits in external debt to GDP and in the current account. This is bad for the dollar.

Finally as Rock the Casbah says, it is the interests of the US to have a weak dollar as it makes American goods cheaper for export markets thus inproving the balance of payments deficit.

The currency ma

Patriotism cannot be our final spiritual shelter; my refuge is humanity. Tagore, Bengali Poet

...most of which don't make any sense, even to the markets. The US economy isn't doing any worse than the EU, but they're getting hammered on the currency markets.

Market watchers will offer you many explainations, but they really don't know either.

Good luck.

of US Manufactured goods.This in turn will help reduce the $700billion trade deficit the US has with the rest of the world.

No idea stephen ... but at the moment is 'disaster' for us. Pay check in Qatari Riyal but we have to send money home in Pound. :-(