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SUNDAY, NOVEMBER 22, 2009
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Recession Will Pass, but Dollar May Be Doomed

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(Newser) – The American economy is heading out of recession, but the long-term fate of the dollar may not be so bright, writes the Wall Street Journal. Growing numbers of economists and investors, including Warren Buffett, say that stimulus spending and rate cuts will boost inflation and weaken the greenback. At the same time, emerging economies like China and Brazil are using the crisis to diversify their reserves out of the dollar.

A weakening of the dollar would have to take place over many years; China, which holds more than $1 trillion, is still buying US debt and would suffer huge losses if it started selling its reserves. But anxious investors said yesterday's White House prediction of a $9 trillion budget deficit to 2019—$2 trillion more than first projected—is the latest sign that the American currency is in trouble.

The Obama administration projected a $9 trillion budget deficit over 10 years yesterday, $2 trillion higher than previously thought.
The Obama administration projected a $9 trillion budget deficit over 10 years yesterday, $2 trillion higher than previously thought.   (©MOmilkman)
Increasing numbers of economists and investors are bearish on the dollar.
Increasing numbers of economists and investors are bearish on the dollar.   (©Tetsumo)
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There has been a lot of disappointment with the way the US credit crisis was handled. The dollar's loss of influence is a steady and long-term trend. - Claire Dissaux, managing director at a London currency investment firm

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dontlikeyou
Aug 26, 09 7:29 AM CDT
Losing the dollar will be worse than any recession. Imagine that you have 10,000 dollars saved up. Then, over the course of a few months, the bankers which rule the world change the exchange rate so that the dollar is valued at only 1/3 of its former value or less. Suddenly, your $10,000 is worth about $3000. Its as if the bankers have gone in and stolen your other $7000. And that is exactly what they are doing. The international bankers who influence our politicians are "stealing" the nation of America from its very people. --- We can thank Bush and now, Mr. Obama. Reply
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odowd80
Aug 26, 09 8:38 AM CDT
That would actually be pretty sweet for me. Between the house, cars, and student loans, I owe about $180K. That, and most Americans are in the hole.
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UrUndertaker
Aug 26, 09 8:57 AM CDT
This is news to you? The Dollar was doomed the moment that GW Bush overextended the country by the worlds top 4 growing economies and you act like it is new to you. Brazil, Russia, India and China, a group referred to as the BRIC group all had a meeting to which the US was denied a part back in June where they all decided who would be next on top of the pile just as the US did way back when they took control of 90% of the worlds gold after the World Wars, WWII to be exact....Go read the old news....http://www.nytimes.com/2009/06/17/world/europe/17bric.html
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reasonator
Aug 26, 09 3:35 PM CDT
It's not just Bush's fault. It been the bad fiscal policies of ALL our leaders since at least FDR. And odowd80, It's Ok with you that the dollar crashes because YOU'RE in debt. First, the dollar crashing is not going to help your debt, your life will be even worse off, and second that's the most selfish and ignorant statement I've heard yet on newser.
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Snowleopard
Aug 27, 09 12:35 AM CDT
dontlikeyou: firstly, the dollar isn't going to drop to a third of it's value. Look at what happened to the pound when it's currency devalued. they pushed up interest rates to make it a sound investment again. secondly, a dropping of the U.S. dollar might be the best thing possible for this country, since it would make U.S. exports more attractive, and would help our trade deficit.
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