For the first time in my memory (and I’m 61 as I write this) the American Dollar and the Canadian Dollar are at equivalent value. I heard this on NPR as I drove to Betty’s lunchcounter in Shepherdstown this morning for a late breakfast.
Frankly, I was stunned. I remember growing up and working as a kid in my father’s drug store in Connecticut and his sign on the cash register not to take Canadian coins. When I asked him why, he would tell me that four Canadian quarters were only worth seventy cents… and we took a loss when we sold things and collected Canadian money in the mix.
At different times in my life an American dollar was worth 1.25 Canadian, or 1.40 Canadian, etc. But it was never worth the same (and heaven help us it was never worth less.)
Now, with our current economy, which Bush seems to think is just the greatest on Earth, the value of the American Dollar is no different than that of the Canadian Dollar. What’s more, the Euro is taking over world markets as the standard trading currency, when the American Dollar had always been the International Standard.
What does it all mean? Is it a reflection on the value of all things American? I’m glad Paul Krugman’s column is free again… I’m sure this is something he will address in the short run.
Meanwhile I’m saving the Canadian coins I pick up.
What does it all mean? Is it a reflection on the value of all things American?
Perhaps. Welcome to soon-to-be The Weimar Republic of America.
From my read, many Monetary analysts are agreed that on Tuesday, by lowering rates to forestall the credit turmoil, Ben Bernanke openly shot the dollar. Inflation ahead, it won’t be hidden.
In fact, some analysts opine, Americans have been relying on the savings of the rest of the world; writing checks to maintain a shop-til-you-drop lifestyle while keeping fingers crossed that these checks would not be cashed. Add these to the exported toxic derivatives (worhless bonds) that Warren Buffett warned in 2003 were fWMDs; financial weapons of mass destruction.
Here’s the view of a purist.
Money: Everybody wants IT
PS: an explanation on derivatives, what went wrong is posted in Friday’s News Bucket link to MSNBC article here
“At different times in my life an American dollar was worth 1.25 Canadian, or 1.40 Canadian, etc. But it was never worth the same (and heaven help us it was never worth less.)”
I don’t think that’s accurate. The Canadian dollar was worth the same as an American dollar in 1976, if I’m not mistaken. Definitely within the lifetime of someone aged 61. I do think you’re accurate in saying that the US dollar has never been worth much less than the Canadian dollar, so we could be entering new territory there.
“The American Dollar had always been the International Standard” is also not quite accurate. It’s only been the international standard for a century or so, if that. Not very much time at all in terms of human history, just the span of a single life really. Americans have a pretty short memory. Actually, the international currency standards have always changed periodically, usually every century or two. Before the dollar, it was the English pound. A few centuries before that it was the Florentine guilder. It always changes, and the global economy has always survived without any real damage. On the contrary, each change, after a transitional period, has resulted in an even greater period of economic expansion. Which will happen this time as well. In fact, that’s already happening. As the US declines, other areas are picking up the slack and beginning to boom.
What does it all mean? Nothing crucial, mostly that life goes on the way it always have. Just that the American empire is fading away the way dozens of other empires have. History will continue, life will go on, and a new standard will emerge. Nothing to get panicked about. The real problem is that Americans seem to think that they’re special people, and that they are somehow destined to always be on top. But no one stays on top forever. There’s nothing to panic about, as long as you didn’t make the assumption in your economic planning that the US dollar would always be number one.