What made the dollar drop in value?

[TNDemo]

In a non-egghead way, explain to me why this happened.

[ret5hd]

1. They printed (created out of thin air) too much of it.

[Truth2Tell]

4. Bingo. End of thread. nt

[SergeyDovlatov]

9. printing money to fund the war

[SergeyDovlatov]

10. Exactly right. End of thread n/t

[Warpy]

2. Massive, reckless tax cuts to the rich combined

with massive military overspending have drained the treasury. At the same time, the manufacturing infrastructure has largely been gutted and now even white collar jobs are being looted by third world countries, thanks to more tax law stupidity. Most of those countries are still protectionist, so those jobs are gone forever. The loss of manufacturing means we have to buy those goods offshore, which adds a whopping trade deficit to the federal deficit.

Basically, the country has become a hollow shell and the world has voted "no confidence" via the currency markets.

This is the Reaganism/globalism end game.

[no_hypocrisy]

3. The Treasury secretly printed excess fiat as they stopped

publishing the M3 in March, 2006 (I believe), so financial institutions and governments, and us, could not know how many dollars were in circulation.

[Captain Angry]

5. The economic reason.

When the United States imports a car, dollars are sold to buy that foreign currency. This reduces demand for the dollar, increasing the demand of the foreign currency.

Extrapolate that over our very consumer-centric behavior and lack of manufacturing/production, and you can imagine what happens to the demand curve.

Our dollar is cheap enough that it is causing foreign citizens to buy products from our stores, vacation at our beaches, etc. Foreign companies are taking the opportunity to purchase US assets and companies as well.

When the dollar is strong and foreign currencies are weak, some of our citizens go to Europe for instance, US companies buy foreign companies.

It's cyclical. Right now, we're down. Companies in the USA are going to have to hire locally to avoid the foreign currency exchange difference since a lower labor cost is offset by that weak dollar.

I can't wait for President Obama to start implementing some programs that will put people back to work in a big way. That will get the cycle rolling again.

[SergeyDovlatov]

17. Occam razor. All other things being equal, the simplest solution is the best.

Injecting more dollars into economy is simple enough explanation.
Moreover, classical economics definition of inflation is exactly that. Inflation ::= Increase of monetary supply.

Since price inflation usually lags behind monetary inflation, people seem to talk about monetary inflation and price inflation as two distinct things as opposed one being consequence of the other. Likely because productivity growth and supply / demand shifts can hide the inflation.

[davidwparker]

6. * did, because he's a moron. A COMPLETE MORON.

[Xenotime]

14. I was going to say that too..

And contries have figured out that we have been scamming them all these years.

[iamjoy]

7. Supply And Demand Made Simple

say you have (and want to sell) the only chocolate bar on your block. (mmmm...chocolate...aaaahhh)

Now, lots of people want that chocolate bar, and there's only one. So, you can sell that chocolate bar for a very high price - in a sense, to the highest bidder. You use the money to buy other things you don't make. You decide that's a good thing, and make more chocolate bars. Now, there's enough for everyone on the block to have one. You don't make as much on each chocolate bar, but you're still doing pretty well. You trade more of your chocolate for other things you need that you don't make, and really start amassing stuff you don't need, but you buy because you can. You still aren't satisfied and make even more chocolate. But now, your customers are pretty satiated. There's a lot of chocolate on your block, so people aren't willing to buy as much of it. You still need the money for all your stuff, so you take the lower price and keep making more chocolate.

Excuse me, I'm going to go get a snack. Guess what I want to eat...

[sinkingfeeling]

8. Debt. National debt.

[Viva_Daddy]

11. The WHY of it

But WHY would the Administration want to devalue the dollar? That is the question. I think they wanted to devalue the dollar to promote exports as well as to create conditions that would allow the government to repay the massive national debt with devalued dollars (ie. "cheap money"). All this spells INFLATION folks! You might want to consider buying gold, if you are lucky enough to have some savings.

[SergeyDovlatov]

12. How else are you going to fund 3 trillion dollar government not counting emergency war appro ...

not counting emergency war approriations.

Do you think republicans would agree to raise taxes to fund their favorite war?
Inflation also helps to pay social security benefits. Since COLA lags behind actual inflation and thus means that you are surrepticiously cutting the benefits without anyone noticing.

[sendero]

13. As a government...

... we are simply spending more money than we are taking in, in a very big way.

It is unsustainable, and the world knows it. We are only able to do it as long as we can get foreigners to buy our treasury debt, and they are already showing signs of fatigue in that regard.

The country is in debt up to it's eyeballs at every level. The government,
businesses, individuals. Everyone's been on a spending spree and the bill is coming due at exactly the worst possible time, when demand for oil is growing worldwide and the big oil fields are going dry.

This country is in an economic mess easily comparable to the great depression and in fact probably worse. Most people just haven't figured it out yet, or they "hope" it will go away.

It isn't, not for a long time.

[Karl_Bonner_1982]

15. Several things...

We were importing everything for a while, and not many foreign investors were coming here. Interest rates were low. And we were running big deficits. All of these can depreciate our currency.

[Summer93]

16. Stimulus check

So that check for $300 that I just received from Uncle Sam is worth a lot less that the paper it is printed on?