I’m not an economist, except to the degree that economics is a part of moral philosophy. However, being a philosopher does provide a useful perspective on the state of the dollar.
As most people know, the US economy is a bit wounded. We are dumping billions into Iraq and the war on terror. We are borrowing heavily. We are wallowing in the muck of the sub-prime mess. I could go on, but suffice it to say that the economy is weakening and this is reflected in the declining value of the dollar.
On one hand, this has some positive aspects. The most obvious is one everyone learns in Economics 101-if your currency is weaker, then your exports will increase. This is because those with foreign currency have increased buying power. There are other claimed advantages as well.
On the other hand, this has some negative aspects as well. The most obvious is that if you are being paid in dollars, you are now making less in relative terms. This is especially noticeable if you are traveling abroad. For example, that Starbucks card you just filled up in the US won’t buy as much coffee as you expected when you arrive in the UK.
On a larger scale, a weaker US dollar also serves to reflect and contribute to the negative perception of the United States. Since shortly after WWII the US dollar has been the backbone currency of the world. This is starting to change and is potentially a bad sign for America. This shows that our economy is weaker and that there is less confidence in America. This makes perfect sense. After all, America is showing clear signs of decline. One sign is that we are hemorrhaging money into the war on terror and borrowing heavily to do this. Another sign is that we have done poorly diplomatically. The Bush administration seems to have done all it can to create bad feelings towards the United States. A third sign is that our leadership is weak. The upcoming crop seems to offer little hope in this regard. It is hard to see any of the candidates as a strong President who has what it takes to get America back on track and deal effectively with the world. America, as always, needs greatness in its leaders. Sadly, that greatness seems to lie in the past. I do hope I am wrong-perhaps the person who is elected will be like some of our great leaders of the past: seeming small at the start, but rising to the challenge and doing what must be done. America has been lucky in the past-we have often had just the right person step into a dire situation and save the day. This happened in the revolutionary war, in the Civil War and WWII. Perhaps it can happen again.
It is said that empires are like people-they have the vigor of youth, the decline of old age and finally fall to death. Perhaps this is the start of America’s fall. Perhaps not.