U.S. Dollar Trades Lower, But Not From Trade

I receive an emailed health newsletter called the “Daily Dose” from Dr. William Campbell Douglass II. It offers what seems to be good alternative choices to the there’s-a-drug-for-everything-so-you-don’t-really-have-to-do-anything-but-swallow group. Of course, as usual when a person has some knowledge, that person branches out and thinks that he/she knows everything about everything else. A recent case in point was Mr. Douglass’s article entitled “Dropping dollar is dragging the US down with it.”

Mr. Douglass states that the U.S. Dollar is losing purchasing power because of “the free-trade policies… on Bill Clinton’s watch”, specifically NAFTA. Now, blaming that on one person is ludicrous. After all, where was Congress during all of this? Sleeping? Well, probably intellectually, but that’s another story.

I don’t like to say it, but Mr. Douglass got it wrong on this one. The U.S. Dollar's decline is due SOLELY to massive money-printing - actually its modern-and-much-more-efficient alternative: credit expansion. It is not due to trade per se. Mr. Douglass does finally sorta admit something like this when he states that the “United States government is spending like the proverbial drunken sailor.” (It does a lot of this with borrowed money.) And what would those expenditures be? Well, there are – among other things - the war in Afghanistan and the war in Iraq and the war in... Well, you get the idea.

Trade is not the culprit. How that trade is financed, could be. To read more about how trade is beneficial, check this out.