Do you know why the dollar is less value that euro?

The world is full of fiat currencies. By fiat I mean the buying power of the currency is controlled by the government issuing the currency. Buying power is determined by the strength of the economy, the size of the economy, and by faith, that is, the faith the people have in the currency. All of these points have a hell of lot to do with the government's fiscal and monetary policies.

The U.S. dollar index is almost at a historic low. At 84 it is far from the high of 160 and not too far from a low of 80. The reason is our politicians are idiots when it comes to fiscal and monetary policy making (Americans are crazy as well for letting them get away with it year after year).

Our current account deficit is almost $800 billion (which means the world outside of the U.S. has to take in about $3 billion U.S. dollars everyday to support us since we are importing that much more than we are exporting and I am including financial assets as well as products), our budget deficits when we include what the politicians loot from Social Security is $600 billion a year, and our total National Debt is $8.3 trillion. We are increasing our National Debt by about $1 trillion every year and a half.

For the above reasons our economy will run into problems in the next year or so and with all the debt we have, people outside the U.S., are starting to think that hording dollars and dollar denominated instruments like U.S. government bonds may not be the smartest thing to do. There are some who are selling dollars, since more are selling than buying; the dollar is going down, and not just against the Euro, but all major currencies.

There is another real problem with this and it is the reason I started out talking about fiat currencies in general. That problem being that with a lousy dollar, what currency is going to take its place? The Euro, they have more problems then the Dollar, the Yen, Japan has problems as well with debt. What is left, the Yuan, people don't put a lot of trust in it since it is the currency of a Communist nation, moreover, the Chinese economy is still in its infancy. The Pound, the U.K. economy is not big enough to handle an expansion in the Pound which is the same problem with the Canadian dollar or the Brazilian Real, etc.

The world has a huge problem, the only economy big enough to be the world's dominating currency is the U.S., which has spent itself into a future of a falling standard of living. There is no currency to stand up to the plate so to speak. All currencies are weakening; the dollar is just weakening a little bit more. And it is all down hill from here.

The so-called experts love to explain why oil is up. Then they will explain why gold is up, then zinc, then copper. What most likely is going on is that these commodities are all responding to the fact that all fiat currencies are weakening.

You had better be putting your money somewhere, where it will be protected against falling fiat currencies and that is especially true if the currency you are holding are U.S. dollars.

You had also better be getting ready for a decline in your standard of living. There are so many out there, Americans, who struggle everyday to pay their bills. The reason why is the fact that we are not making as much as we used to, and many things are going up in price each month: leading to a continuing decline in our standard of living. If you can't pay your bills, you are not alone, a lot of people are feeling the pinch nowadays.

Let's all cheer our politicians: Republicans and Democrats who got us all into the mess we are in.