No need to worry about U.S. dollar
To the editor:
A recent articulate article in this paper expressed concern that the value of the American dollar will collapse leading to a massive decline in our standard of living. This is unlikely to happen.
The American dollar is currently strengthening against the Australian dollar, the Japanese yen, and many first and second world currencies, e.g., Slovakia. The International Monetary Fund is predicting America’s economy to grow at double the rate of the Euro Zone’s through 2015. This will lead to a strengthening of the dollar against the Euro, which is already happening.
Economic changes do not occur as logically as one may assume. The Federal Reserve’s creation of trillions of dollars, in part through its bond purchasing, has not led to inflation. There is no rising cost of living. Beef prices have gone up due to drought and not the central bank. Now is the time to purchase Australian lamb chops.
China’s economy is not a threat. They have enormous problems including inflationary pressures due to rising wages. This is already leading to manufacturing returning to the United States.
China will continue to purchase our Treasury bonds as they are getting cheaper and paying more interest. They will not risk devaluing the ones they already have by panic selling, and, besides, where would they go with the money?
The article used 1952 as a base year stating that the dollar was a greater percentage of the world’s money supply then compared with now. That was because the world, particularly Europe and Japan, were recovering from a world war. If you used 1945 as the base year, America’s economy was enormous compared to the rest of the world. Would any American be willing to return to the standard of living of 1952 with its 720 square feet Levittown homes?