3 of 27

Write now Article Tools

The American dollar is losing value because our government is creating money at rates that far exceed the rate of economic growth in this country. How can our government do this? It is not bound by any restraint in printing money. It can print as much money as it wants. Our money does not have to be backed by any precious metal, such as gold or silver. In other words, its a fiat currency. Fiat currencies always revert to their mean value-meaning, the value of the paper that they are written on. This means that the American dollar will ultimately become worthless.

We have a government that can't control its spending. It relies on other countries to buy hundreds of billions of dollars of our Treasury bonds in order to finance the operations of our government. We have a national debt in excess of $8 trillion dollars. And that is just the debt that is on the books. Off the books liabilities included and the amount exceeds $50 trillion by most estimates. Serious economists are writing articles in scholarly journals making the argument that the US is a bankrupt country. The American dollar will continue to decline in value as long as our government continues to have to borrow hundreds of billions of dollars from our trading partners to fund its operations. Economists fear that our government will "monetize" our debt by simply printing money to pay it off.

Our government is literally flooding the world with dollars. This has been aided by the digitalization of currency. Dollars are created through electronic transfer and debit transfer today.

About 2 years ago the Federal Reserve quit reporting on what was before then considered to be the best measure of total dollars in circulation, the M3 money supply figure. Conspiracy theorists believed this was because the government wanted to be able to print money without the constraint of having to report how much money it was printing.

There is a web site called Shadow Government Statistics. It is run by a professional economist and he estimates that our money supply has been increasing at double digit rates now for several years.

Inflation is easy to understand. More money printed means that the money in circulation has less value. Money derives its value from its scarcity. If money is not very scarce, its value declines.

Learn more about this author, Simon D. Lewis.
Click here to send this author comments or questions.

Add your voice

Know something about Why is the American dollar losing value??
We want to hear your view. Write now!