It's A Dollar Tragedy!
World finance is obviously interconnected with all countries, especially the United States. We are the largest market on the planet. Now, I don't claim to have special knowledge about how all this works. You ought to look at my check book. Whether it's monetary exchange rates, oil, wheat or gold, it's mostly Greek to me. Probably like you, it mainly effects my psyche when I have to pull out my wallet at the gas station grocery store.
Nonetheless, I've come across some facts that I need to share with you. We'll try to understand them, together. Like I said, we'll try! Let's take a look at just one world commodity. It's "brent crude oil". It's a foreign oil that directly effects the price of our "light sweet crude oil". Here we go! In January of 2000, brent crude oil was priced at $25.00 and at 25.00 euros( the recently released currency of the European Union). So, at that time, the two currencies were at parity. 7 years later, that same barrel of brent crude oil as of December 2007 was priced at about $95.00 and 64.00 euros. A quick look at this might not mean much to you. Here's the eye opener. The price had gained 252% when bought in euros, but it had inflated a whopping 372% when priced in U.S. dollars! What a difference!
Here's my take on it and I think it's close to more or less accurate. The fabled Alan Greenspan, the God of our U.S. monetary policy as Federal Reserve Board Chairman, for years continued to lower interests rates. Currency market players like to park their money in documents that are not losing their worth. The lowering of a country's interest makes its currency go down compared to the rest of the world, generally. The brent crude oil story we already talked about gives a shocking example of how much our currency has lost its value. In just seven years the U.S dollar lost an incredible 47% of its value!
Let's switch gears for a moment. There is inflation we know about. A carton of eggs goes from $1.00 to $2.00. The apparent reason is the price of feed (a lot of it's corn, which has gone up because of competition from federally subsidized gasahol) has gone up. Labor has gone up, partly because the federally mandated minimum wage has gone up. Shipping has gone up, mainly because the Democrats refuse further oil drilling in our own country. Utilities have gone up for the same reason. Now that's up close and personal inflation! Then we have that seemingly far away inflation caused by a sinking dollar. Any thing we buy from overseas automatically goes up!
Now, we are in a quandary which may offer no way out, but pain and lots of it! The national economy seems like it's tanking. Federal Reserve Chairman Bernanke is lowering our interest rates, literally, like there's no tomorrow. He's trying to stimulate our economy. The world sees that. The dollar goes down even more! Imports cost more, effecting our inflation which goes up.
Another problem we have is the housing debacle. Low interest rates brought out greed, greed and more greed! The consumer wanted a house they really couldn't afford and were too ignorant about re-setting interest rates. The mortgage "sales" people just wanted the loan to be approved. Their greed was passed on to the vultures on Wall Street, which was subsequently "shared" around the world! Builders built like crazy. Prices went sky high! Then the bubble burst. One day, the price of a house may be incredibly cheap. Just make sure the builder wasn't greedy, too!
Besides an ever increasing public debt (and private debt; credit cards, etc.), it is estimated that we, as a country, have a $59,000,000,000,000.00 (that's trillion) unfunded liability (retirements, medicare, and the like). That's at this moment! The world see that, too. My friends, this is not a play we're living. It's real and it's a tragedy!
Mark Harris



