1 of 27

Write now Article Tools

Page 2 of 2

also contributed to international unease about America's future.

Now the US dollar is in crisis. US government officials in the Bush administration have gone on record as being in favor of US dollar devaluation, saying that as the dollar falls in value America will sell more exported goods, which will help defray the US balance of payments on current debt. The more widely held view is less cheery.

For twenty years the US economy has actually been subsidized by international investors. Now the rise of new productive national economies, new stock exchanges, wider opportunities for investment globally, and destabilization of the US economy is taking those investors elsewhere. They are, simply put, less inclined to subsidize the American economy. As a result, the standard of living enjoyed in America will fall. The consumer money stream will be reduced, America will buy fewer imports, there will be more financial instability.

What's in the future? No one knows for certain, but the general outlook for America's place as the preferred global investment economy is dour. If certain conditions prevail, unlikely in the view of many global investors, America can continue to attract global capital. If America can produce real value in the form of durable goods, services, and products which the developed and developing world will buy from America, the trade deficit can be reduced and the American money stream energized by new inflowing capital. If real value cannot be produced, investors will increasingly go to emerging third-world markets and other offshore economies.
The value America has recently been living on has not been a true produced value. It has
been created by the inflation of property values. Increased value through production will
save the American economy. No other development promises to substantially restore America. If we do not embrace economic fundamentals, we are lost.

The American trade deficit is the reason for the dollar's decline in value. The conditions which caused it are the sources of America's current despair. The actions which can correct it offer us hope. America will have to work to restore its supremacy in the global economy. It must produce real value in the form of durable goods, services, and valuable products. Now more than ever before that work is absolutely critical to our economic survival and restoration of the dollar's world-wide value.

Learn more about this author, Robert Griffith.
Click here to send this author comments or questions.

• << previous page
• 1
• 2

Add your voice

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