SOCIETY
DEATH OF THE DOLLAR
THE
BY
Beth Ann Mock
over, but we are also responsible for the largest debt in the world.
excess amounts of dollars when they export a lot more than they import. This means that when our dollar declines, the value of the dollars they hold declines as well. The two other nations who hold the most reserves of US dollars (also the two countries to whom we owe the most money) are China and Japan.
THE FACTS
Foreign countries amass
China holds about a trillion
dollars in U.S. Securities.
China periodically
The rise or decline of the U.S. dollar is based
threatens to devalue our dollar if we don’t start
on its relative value to foreign currencies. When
paying down what we owe. Japan has the second
our dollar is devalued, it can buy less of the many
largest dollar holding, and it does this to keep
imported goods we depend on. This causes the
the value of its yen from rising. A low yen allows
cost of goods to skyrocket and produces high
Japan to export goods very cheaply. Japan’s debt
inflation. When inflation rears its head too high,
is beginning to climb, however, and there are fears
citizens who hold U.S. Treasury Bonds sell them,
that the country might begin to liquidate its dollars
and this exacerbates the already rising inflationary
to help pay for the recent tsunami it experienced.
costs. A major reason for the ill health of the dollar is our continued deficit spending and our rising national debt, which is now upwards of $14 trillion dollars. Our federal and state governments are spending above and beyond the revenue they take in by taxing us. According to Porter Stansberry, head and founder of Stansberry and Associates Investment Research, even if every
The International Monetary Fund reports that
U.S. citizen were taxed at a rate of 100%, our debt
some countries are beginning to move their
would still not be paid off.
reserves out of dollars, albeit slowly.
China,
The dollar is still the world’s reserve currency,
Russia, and France have begun to discuss an end
however, and that is very good news…for now. In
to pricing oil in dollars. Should this happen, our
a nutshell, this means that we are the only country
entire way of life would change drastically and
that doesn’t pay for its debts or imports in a foreign
unpleasantly. Gas prices, of course, would rise to
currency. Oil, as well, is currently priced in US
an untenable level. The cost of every single item
dollars. The problem is, many economists suggest
we buy would climb to an outrageous price. Think
that is likely to change in the not too distant future.
of the cost of transporting food, for instance, with
So, for now, our money is accepted the world 20
so6ix.com | MARCH 2012
oil and gas at record highs.