THE DECLINE OF THE DOLLAR
By Bob Confer
On Oct. 6, The Independent, a newspaper based in the United Kingdom, issued
a shocking report that said Gulf Arabs, along with the leaders of China,
Russia, Japan and France, have been meeting in secret to develop a plan that
would abandon the dollar as the unit of trade for oil. The article noted
their plan to move to a mixed currency basket that would include, among
others, the Chinese yuan and the euro.
Those nations are moving in that direction because our dollar — the world’s
reserve currency — has tumbled as of late. Over the past six months, it lost
more than 10 percent of its value versus the currencies of the United
States’ largest trading partners. This decline follows a brief half-year
period when it grew in strength, becoming a safe haven for domestic and
foreign investors in the panic that followed the collapse of the financial
markets in September and October 2008.
Prior to that, the dollar had been in a frighteningly steep decline —
independent of the recession — in which wholesale prices grew by 6.7 percent
in 2007, inflation’s greatest annual increase in 26 years.
The dollar has become so weak that many investors — at home and abroad — are
abandoning it and heading to gold, which seems to reach all-time highs on a
daily basis. At press time, it hit $1,070 an ounce, a record high that will
no doubt be exceeded in the coming weeks.
The expansion of gold’s value is something one typically sees in periods of
crisis, but we are supposedly not in a crisis — many nations and even the
Federal Reserve have said that the world is climbing out of the recession.
That means that people are now buying gold not out of fear but rather
because it’s a safe bet against inflation.
This situation has become so extreme that the aforementioned oil funding
conspirators have planned to add gold to their currency basket, something
that would mark the first time since the abandonment of the last vestiges of
the gold standard in 1971 that the precious metal will be used as a currency
This indicates even rougher times ahead for the U.S. dollar. As investors
sell off their dollars and foreign borrowers pay off their debts far in
advance, the global markets will be flooded with greenbacks that no one,
other than Americans, will really have any use for. Because of high supply
and low demand for it, the dollar will continue to devalue and become the
least powerful of the currencies used by the world’s largest economies.
As that takes place in the global markets, the U.S. federal government,
aided and abetted by the virtually untouchable and uncontrollable Federal
Reserve, will demand the creation of more of our money — out of thin air —
in an effort to address the irresponsible runaway spending that the Bush and
Obama administrations have instituted in their misguided endeavors to right
our faltering economy.
The national debt is just under $12 trillion and the Congressional Budget
Office recently estimated that the federal deficit will be $1.4 trillion for
fiscal year 2009, which is a mind-numbing 9.9 percent of our gross domestic
product. This constant addition to the already-overabundant supply of
dollars will debase our currency because it won’t be backed by anything of
value (which it really hasn’t been since the loss of the gold standard)
because those who have been our biggest borrowers (like China) will borrow
no more out of fear of getting no return — or, quite realistically, a loss —
on their investment, meaning that every dollar added makes all other dollars
worth even less.
This is inflation in practice, which is guaranteed to cause real pain for
the average American. Higher money supply will raise the specter of growing
wholesale prices, which, in coming years, will far exceed the pinch we felt
in 2007. This will in turn create a lower standard of living for all who
live in the United States.
Upon assessing this development, one cannot help but realize that the
dollar’s demise is being done in purposeful fashion. It’s not the dollar’s
naysayers, the Chinas and Russias of the world, who made it weak. No, it was
the government itself. Even while knowing full well the impact of
overspending and inflation, our leaders have pressed ahead in a manner that
cheapens our dollar and our existence.
Such decisions are part of a deliberate effort to weaken our nation, the
most powerful in history, so it can be fully integrated into the
less-prosperous and less-free economies and societies of the world,
facilitating our ability to export and interact on equal playing fields.
The dollar has been made worthless by design. Chances are, our great nation
will follow suit.