Posted by
Always To The Right on Tuesday, October 13, 2009 1:52:23 PM
Economists have long predicted the dollar’s demise as the global
currency of choice. Some, such as Paul Krugman, hailed it as a means
of correcting the American trade imbalance. Love it or hate it, the weakening of the American dollar has begun
as central banks have started to buy euros and yen while dumping the dollar(via
Instapundit)
This could not come at a worse time, as the current American
administration busies itself with massive new spending — and massive
new debt. The weaker dollar will make the sale of Treasuries that much
more expensive, which should warn the US government away from further
deficit spending. The biggest problem afflicting the dollar, Bloomberg
reports, is that there is just too much of it on the market, thanks to
the increased need to cover deficit spending and the monetary policy
that accompanies that need.
Does a weak dollar matter? Should Americans care whether our currency dominates world markets? James Pethokoukis
says that whether we should or not, the decline of the dollar will
almost certainly become a large political problem for Barack Obama
The crisis has its roots in policies that go back at least a decade,
and in deficit spending that began to get out of hand with a Republican
Congress and Republican President and went insanely wrong when
Democrats took control.
However, Obama’s fiscal policies are the worst we’ve seen in a
generation. In a crisis which demands a return to fiscal sanity, the
White House has instead become the asylum, as these deficit projections
show — even without ObamaCare and cap-and-trade:
Instead of finding new ways for the federal government to spend
money, Congress and the President should be finding new ways to curtail
it and demonstrate that we intend to end our irresponsible spending and
massive government overreach into the private sector. In that sense,
we can blame Obama for losing the opportunity to stop the dollar crisis
before it reaches a tipping point.