October 6, 2009
When the dollar gets too weak, and stays weak for a long time, it becomes simply another currency out in the world market. And other nations abandon using it as the preferred medium of exchange for international sales transactions -- meaning that the United States loses out on the free wealth transfer that is a consequence of having our national currency be the international medium of trade. To be sure, the United States still has a propitiously large economy, but one of the props of that economy is the strength of its currency. This is a signal of a decline in that part of our wealth -- an unwelcome piece of news indeed.