This may be the wrong day for
me to comment on the decline
of the U.S. dollar.  Or it may
be the ideal day to do so, I
shall let you decide.  For those
of you who do not know, just
over three years ago, I nearly
perished in an accident.  It
was a long convalescence and
has complicated my life greatly.
With an approaching weather
front, every bone, joint and
muscle in my body aches. I
feel like a truck has dragged
me several miles.

There are several economic
weather fronts approaching.
Reports from the UK Telegraph
and other sources of a recent
meeting amongst key nations
like France, China and the oil
kingdoms.  They apparently
are talking about replacing the
U.S. dollar with a basket of
other currencies, called SDR,
for oil transactions.

The mere rumor of this meet
sent gold to new record levels.
On Tuesday, the COMEX
price index was $1045 per
Troy ounce.  Wednesday it
still crept higher and this
morning crossed the $1050
mark.  Since 2001, the dollar
has lost some 67% of it’s
buying power, nearly half of
that in just the past year!
In the same time frame, gold
has tripled in value.

Why is all this happening?
The answers are numerous
and vary in ease.  The most
simple answer is that other
nations are losing confidence
in the United States.

We are spending ourselves
ever deeper into debt.  We
have inflated the money sup-
ply dramatically the past year
or so in response to the
financial meltdown.  Citizens
are defaulting on mortgages
and credit cards in alarming
numbers.  The government
continues to plan to spend
even more money than it al-
ready has.

Private and commercial debt
are each in the $3 Trillion
dollar range.  The Federal
debt is approaching $12
Trillion.  Thrown in the states,
local governments and that
ever enigmatic realm of
‘obligations and contingencies’
(moneys borrowed from Social
Security, etc...) adds another
$50 to $100 Trillion dollars of
debt, depending who is crunch-
ing the numbers.  That’s a lot
of crunching!!!

So is it any wonder that China
and other countries, who own
substantial sums of our debt
(China holds the note for about
$800 Billion dollars of our debt)
are getting nervous about our
prospects for fiscal responsi-
bility?  What have we done
lately to demonstrate that we
will eventually fix the problem
and get back on a rational
program?  NADA!  Absolutely
not one blessed thing!

People just do not ‘get it’.
Here in Detroit, MI, we saw
this week a classic example.
As part of the Obama stimulus
bill, Detroit got $15 Million
dollars to distribute amongst
those needing help with rent
or mortgages.  Checks for
$3,000 would be issued to
applicants.  Thousands of
people applied, far more than
have a hope of receiving any
cash.

Local radio station, WJR, had
a reporter at the scene where
folks were waiting in line to
file applications.  He posed a
question to one woman in line,
“Where does the money come
from?”  She replied from the
city or state.  “Where did they
get the money?”  She guessed
it came from Obama.  “Where
did HE get the money?”  She
basically answered that he’s
got it because he’s the presi-
dent.  LOL!

While I lament here in my achy
body, my mind reels from the
general lack of economics
which exists in America.  Our
education system has com-
pletely failed in teaching sound
economic principles.  Unless
you are amongst those who
attended the handful of good
colleges, like Hillsdale, or are
self-taught reading the works
of von Mises or Hayek, then
you probably have few clues
how our economy actual works.
Even more fundamentally, how
our currency is created.  

The simple reality is that we
are printing money faster now
than ever before.  It still is not
enough to pay our bills or even
actually stimulate economic
growth.  WHY?  Because as
each new dollar is printed, it
devalues the rest already in
circulation.  That’s why the
flight to gold, and silver, are
in full swing.  That’s why China
and others are thinking about
a post-dollar world.

The money machine cannot
keep going on forever.  At
some point, one of two out-
comes will occur.  Somebody
in the Federal Reserve will
turn off the printing press and
raise interest rates, causing
our sluggish economy to be-
come even more sluggish.
Or, the whole thing crashes
down on our heads.

Our last bout with inflation was
some 30 years ago and it got
very ugly.  It took Fed chairman
Paul Volker and President
Reagan nearly 3 years to turn
things around and end the slide
into the abyss.  Volker may still
be around but Obama is no
Ronald Reagan.  At least not
yet.  Maybe he’ll get religion
and have a ‘come to Jesus’
moment and choose sound
economic policy over the re-
distribution of wealth/poverty.

Some truly believe that Obama
actually is working to destroy
the dollar, as it will open the
door to social justice.  This is
pure folly, as social justice
translates to Socialism.  That
alone is enough to frighten
those nations holding dollars
as reserve currency. 

So, it's a bad day to be me
and a bad day to be the U.S.
dollar.  Both of us are on the
verge of being crippled.  In
my case, I'll feel better once
the weather changes.  For
the dollar, well, we'll see
which way the wind blows.