Dollars and Deficits

Someone like me. I live in England, but my income and assets are exclusively in US dollars because I'm an american citizen working for an american company. As the dollar falls, my income and net work are worth less in exchange for goods and services here, which are all priced in pounds sterling.

The American people suffer the most from the Dollar depreciation, most notably by making it harder to pay off the Government debt causing the depreciation without domestic inflation. Domestic Wages are losing value, whether the Fed recognizes the hidden Inflation or not, and it takes more taxed labor hours to pay the initial debt aggregation. lgl

About the falling dollar, I literally say "So what?"

The dollar fell by 50% in the late '80s, and pretty rapidly too.

How many people remember?

Who has suffered the most from the decline in the value of the dollar over the past two years?

Anyone/entity which holds (US$) dollar denominated assets. A weaker dollar is inflationary.

William

who knows what is the bottom of value inflation?

Currency depretiation in the middle or long term will mean that foreign governments will seek ways to change reserves from USD to others. If the US will still want to borrow cash by selling US bonds, they will be forced to increase US interest rates, which will definately pressure mortage holders and consumers alike.

The American people suffer the most from the Dollar depreciation, most notably by making it harder to pay off the Government debt causing the depreciation without domestic inflation. Domestic Wages are losing value, whether the Fed recognizes the hidden Inflation or not, and it takes more taxed labor hours to pay the initial debt aggregation. lgl

Unlike many developing nations, the US gov'ts debt is demoninated in dollars. So the US gov't just has to raise dollars to pay off its debts, it's the bond holder who is unlucky enough to get paid back in dollars that won't buy as many Euros or Yen as before.

Boonton,
Believe your analysis is too simplistic. The accumulation of Public debt ensures higher Prices for foreign supplies and materials. Business passes this increase along to the Consumer, until Sales start to be affected. Business starts to cut Production Costs to the Bone; realism states the only truly variable conduit for such Cost-cutting lay in suppression of Wages. Labor faces higher living expenses, higher taxes, and frozen Wages. lgl

Companies like General Motors, with $300 Billion of debt, are on a knife's edge with this sort of dollar swing.

On the one hand, EBITDA should grow with the falling dollar.

On the other hand, a small change in I might swamp the E. As might a small change in the availability of credit.

Having the world's reserve currency has many benefits, including comparatively easy financing for companies like GM.