Obama under fire over falling dollar

The sharp fall in the US dollar is giving ammunition to the critics of the Obama administration and fuelling broader concerns about the erosion of America’s reserve currency status.

Republican politicians have highlighted the dollar’s slide as evidence of waning US power. On Wednesday, Sarah Palin, the Republican former vice-presidential candidate, added her voice to those who have expressed concern over the consequences of rising US indebtedness and dependence on foreign oil.

“We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar,” she wrote on her Facebook site.

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Posted in * Culture-Watch, * Economics, Politics, Economy, Globalization, Office of the President, Politics in General, President Barack Obama, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc)

7 comments on “Obama under fire over falling dollar

  1. Ad Orientem says:

    The Republican critics are of course right. But they would have a bit more credibility if they had found their voice on this issue back when George Bush was bankrupting the country with 3 wars, and the largest expansion of the Federal Government since the Johnson Administration, all while massively cutting taxes (mostly for the very wealthy). Under which circumstances they might look like something other than the opportunistic hypocrites that they are. But yes they are right (for a change).

    In ICXC
    John (the Libertarian Monarchist)

  2. tgs says:

    Sorry to be stuck on the same comment I made a couple of days ago, but it bears repeating. The solution to our (America’s) financial problems is to kill the Fed and to return to a hard currency. By doing this you kill the ability of the federal government to print fiat dollars at any time and in any amount to use for anything and by doing so obligate the people to massive trillions of dollars in deficits and debt plus destroy the value of the dollar. By doing away with the Fed we would also withdraw America from the global financial system now being established as this will be controlled by a global central bank with national central banks affiliated with it. Under this system our Fed would follow the dictates of the global central bank thus taking control of our money not only out of the hands of the American people but also out of the control of America period. Finally, keep in mind that in this present crisis if there had been no Fed there would have been no bubble and consequently no bailouts and no stimulus to the tune of trillions of dollars which, if America survives, will burden the people for generations to come. It’s truly time to kill the Fed.

  3. John Wilkins says:

    I’m amused that people would blame Obama for the falling dollar. Its a monarchist perspective. In a truly Capitalist economy, nobody should care. It’s just the natural work of the market.

  4. Ad Orientem says:

    John Wilkins,
    When a government racks up a debt far beyond their ability to pay and they consciously act to debase the currency that is not the free market at work. That is government incompetence at best and criminal corruption at worst.

    What Bush did and now the Obama administrations is continuing, is mass theft of the savings of the American people. By racking up an unrepayable debt that is simply fed by more borrowing they are just copying Bernie Maddoff on a much larger scale. It’s a giant ponzi scheme. And that is not the free market.

    Once upon a time we used to jail people for printing pieces of colored paper with numbers written on them that were passed as “money” when backed by nothing. We called it counterfeiting. Some of us still do. Printing money out of thin air is just legalized counterfeiting that will produce mass inflation. Fiat currencies and mass inflation are a covert form of taxation which is anathema to the free market.

    And none of this has anything to do with monarchism.

    In ICXC
    John

  5. dwstroudmd+ says:

    Hey, John, let’s give him Nobel Prize since the weakened dollar is more fair to all the other countries of the world, right?

  6. John Wilkins says:

    John,

    I’m sympathetic, of course. Unfortunately, I don’t think you can just blame the feds for this mess. The government is essentially covering for the bets that the banks were all making with the Mortgage Backed Securities.

    There may be inflation at some point, but right now nobody is buying, so there is more of a risk for deflation. In order for inflation to happen, there has to be scarcity. There isn’t any right now.

    You might be right ideally. But currently, it’s not playing out the way you think it should. Right now, banks are hoarding, and nobody is buying.

    #5 – if you say so.

    What is true is that most libertarian economists would make precisely that argument: wanting America to be prosperous is unfair to other countries. Yes, by sending jobs overseas we destroy our middle class, but we do improve the lives of others.

  7. Ad Orientem says:

    John,
    You are confusing the symptoms of inflation with the actual inflation. The former can be kept in check for a period of time by exigent circumstances (in this case high unemployment), but only for a while. Inflation is the printing of money. We are in deep trouble.

    That said I agree that a large chunk of blame for the economic crisis rests on Wall Street. But who is bailing them out? The Feds of course. They should have been made to suffer the consequences of their bad investments and allowed to go under. By propping up big banks and businesses like GM we are sending a message that there is no risk in the private sector (at least once you get “too big to fail”). This is a very dangerous precedent which will do nothing to discourage reckless risk taking since these big banks have figured out that their high risk bets are insured by the taxpayers. The Feds are responsible when they make the decision to bail out with public money those who made huge investment errors with private money.

    In any event none of the blame for our monetary problems lies on Wall Street. That is all on the FED and Congress.