THE CRUMBLING DOLLAR

Samuelson, Robert (2005) 'Bottom dollar" NEWSWEEK, 3/21, 40-48.

It is a trend that began with the huge tax cuts and increased spending
under this current administration. To pay for this strategy, the government
sells more treasury bills on the spot market. Mainly China and Japan have
been buying American dollars.

There is only one trend. The dollar keeps sinking. There will come a
turning point when other nations and large investors from other countries
believe that the USA is no longer a good investment. Then a tipping point
comes. People rush to sell dollars for a better currency. Interest rates go up
to try to tell the investor that they can get more money by buying US
dollars. At interest rates go up, the economy in the country goes down.
People have less to spend because their jobs cut salaries or they lose
their job.

We are in new scenario. America took a nose dive in the 30's but we did
not have (in real dollars) the debt that we have today. So the common
currency becomes the euro not the dollar. Ultimately, the US outsources just
about everything that can be outsourced and we become more like a 2nd or 3rd
world country.

Political factors can also contribute to loss of faith in the dollar. A
good example was 9/11 or a long delayed war in Iraq.

We have developed a co-dependency with other countries that could be
less stable. Some suggest that China is on the verge of overcapacity.

The dollar sinks as does the country of the United States.