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The Fate Of The US Dollar

Jul 12, 2008
Ever since the dawn of our modern economy there has been much talk about our dollar, the American dollar. Debate after debate shows the contempt many economists and business law grads have for our suspicious economy. One must ask when listening to the news and visiting various media sites: Is the American dollar doomed?

First let's take a look at the US dollar and a brief history of its use within our country. Even though the word, "dollar" itself seems to be as American as Wonder Bread or the New York Yankees, the term itself or a derivative of the word was used way before the establishment of the United States as an up and coming and hungry country.

The word, "dollar" was actually referred to as the Spanish coin around the time the United States adopted it into their economy. Stemming from the Holy Roman Empire, the dollar referred to the fact that it was minted using silver deposits extracted from mines.

Within the United States it wasn't until the August of 1786 and later on onto 1792 that the US approved it use officially. Initially the dollar was backed by silver and gold but later on solely by gold as the value of the silver started to decline with discoveries within the US of silver mines which over saturated the market of silver. After serious political debate, those in power at the time decided to have the American dollar backed solely by gold.

Such a feat was challenging at times, with its operation being suspended several times within the difficult times of our countries history such as during World War I and our stock exchange crisis during the early 1900's. Eventually the dollar became backed by what today is called the Fiat standard, which basically means that the money itself is not backed by any physical entities but has value because we as a society said it has value.

With nothing truly backing the US dollar, the dollar has became more of a symbol, one enforced by corporations and tyrant politicians to sway those (foreign countries) into handing the US power and sovereignty. Whether this is true or not is purely debate and a reasoning as one as I have just stated is straight abstract but one question still needs to be answered: What is future of our American dollar? Recent reports have shown our dollars value to be decreasing and for several years now.

Reasons include interest rates, over saturation of the currency itself and and a forever increasing US debt that now soars high into the heavenly realms of trillions. Investors are now putting their focus on other currencies due to the trouble with the dollar, and foreign lenders are starting to raise an eyebrow because one cannot be borrowing forever, eventually they have to pay back their principal. Such a financial system as the one the US government orchestrates is doomed to fail.

To add salt to the wound Famed investor and author Jim Rogers has also recently made comments on Bloomberg regarding the US Economy and stated that it was ill fated, making references to the US practices of bad management and foreign competition such as China as reasons for this.

One has to ask how do we overcome such obstacles, that is a question I cannot answer myself, but maybe the government has already. Oil, Iraq, some left wings seem to think their is too much coincidences for such situations to just be nature but a way of America deploying tactics to strengthen their American dollar and answer that age old question is the American dollar too weak?
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