It is hard for most Americans to get a grasp on what has been happening with the dollar. It’s not like the stock market where its price is quoted on the nightly news. Now if you frequently travel abroad – you have a better understanding. Your dollar buys less stuff every time you step off the plane, but that’s a relatively small number of people. Regardless to what Bernanke says about inflation - people are quite aware that prices are going up more than 2-3%. However, most have not connected the dots.Â
I like how U.S. Representative Ron Paul describes the situation. “This decline in the value of the dollar is simple to explain. The dollar loses value as the direct result of the Federal Reserve and U.S. Treasury increasing the money supply. Inflation, as the late Milton Friedman explained, is always a monetary phenomenon. The federal government consistently wants to spend more than it can tax and borrow, so Congress turns to the Fed for help in covering the difference. The result is more dollars, both real and electronic– which means the value of every existing dollar goes down.”Â
Whether people realize it or not, we experience the impact of the declining dollar every day. Dollar goes down – prices go up. So what is one to do? Continue reading “Impact of the Dollar Decline”