What's in a dollar?

The US Dollar, USD, was once the world's leading currency. The US controlled the currency market because everyone trusted the value of the USD. This past weekend I watched a movie, The Counterfeiter, which depicts a Nazi concentration camp set up for making counterfeit money-the most important and desired being the USD.


If only that held true in today's society. The USD has decreased in value, 21% since 2002. This has occurred in large part by the government's decision to bail out big banks. Banks were in debt because they had invested in sub prime mortgages and other things in the real estate market deemed now as "toxic." The rescue plan involved $700 BILLION, little to none of it being readily available from our government. People felt that if the government was having to bail out banks, then no one could really be trusted with their money. The stock market began to decline rapidly, banks who decided to help other banks by taking on some of their debt--if the bank was to go under, soon found themselves faced with the unthinkable, paying the debt of some of the largest banks in the US.

With the government taking on the debt of banks, it's only going to hurt the citizens in the end. Just because the government decided to intervene, doesn't make the debt any less prominent. If the government isn't able to pay off the debt, will confidence in them and their ability to keep us "safe" waver? I think so. The whole shebang was bonkers, think of it, the government, choosing to meddle in business, thus creating a smaller separation in what they're able to do regarding personal business practices. They've got their hand in it, they can now do what they want with it... It was just too good to be true and too fastly done, even if it was a time sensitive issue.

http://www.huffingtonpost.com/2010/01/19/freefall-excerpt-its-not_n_427509.html

Since the government had to borrow most, if not all, of the money used in the bailout plan, they created a downhill spiral. More debt was created by the government, while trying to pay off the debt banks acquired. The US also has a lot of debt to other countries and some countries owe the US. Obama has promised that these countries, namely China, will be paid back, but the debt we've acquired hasn't been paid for years AND we haven't been getting the money we're owed. Obama claims that our political system is strong and that's why investments have gone up in the US since our "crisis," but I've got to disagree. Investments have gone up because the USD is down, meaning that it's cheaper for foreigners to buy in the US. If you wanted to look at it from a more political standpoint, you could even say that other countries would love to have a hand in the US piggy bank, so that they have a say in what goes on here.
http://www.nytimes.com/2009/03/15/us/politics/15prexy.html

The question remains - can we pay all that we're borrowing back, or will we simply continue to borrow? Many feel that since the US has never failed to repay debt, only changed the way debt has been paid off, that the US will bounce back. Mhmmm... If you take Japan as an example, they tried to boost their economy by creating large amounts of debt, thinking that once things were better they'd be able to pay it back. This didn't work out so well for them, their debt in 2002 had reached 154% of GDP. It's projected that this year for the US our debt will be 60% of GDP.
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/09/AR2009010902325.html