How much money do you have in your wallet or purse? Eight dollars? Twenty dollars? Three hundred and fifty dollars? If you are carrying US dollars, you might not have nearly as much money as you think - whatever the amount..
If you are planning to travel to Europe or Japan, that $100 in your hand will certainly not buy its equivalent in Euros or Yen. Currently, one US Dollar is worth .73 Euros and .83 Yen. Hence, to buy 100 Yen (the monetary equivalent of $1), it will cost you nearly $1.20. Only a few years ago, the situation was quite the reverse. The once strong US dollar used to be a great asset for Americans traveling abroad, entering the currency markets or purchasing products from other countries. Now, that purchasing power is gone. The only upside is for American companies that export their products abroad as other nations can purchase these goods with more leverage against the dollar.
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How much more will the US dollar slip in value? This will largely depend on the actions of the US government and the ability of the rest of the world to climb out of the current recession (or semi-depression depending on where you stand). The current US deficit is now more than $14 trillion. As the baby boomers, the largest wage-earning and taxpaying segment of the US economy, have entered a five-year stage of retirement beginning with those born in 1945 this year, it is difficult to see how the deficit can be paid down to a reasonable level without massive spending cuts - which would devastate the middle and lower classes. Considering the unwillingness of American politicians to do anything that might jeopardize their re-election bids, that will likely not happen.
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In short, the US government is in financial trouble. If it drastically cuts the federal budget to pay down the debt, it will cause misery among the people and likely worsen the American economy. If it does nothing, the debt will continue to increase and the value of the US dollar will continue to sink in cycles for the foreseeable future.
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If someone has an answer to this financial conundrum, President Obama, world leaders and business owners would like to hear from you. Barring a solution, the current recession will be with us for a long time to come.
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(To gauge the deficit and the 'actual unemployment rate' check out the US Debt Clock at the following site: http://www.usdebtclock.org/)
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J Roquen