Dollar Is Falling While Gold Prices Are Hitting The Roof

August 22 00:00 2011

New York, August 22 ( – People on the streets of America are wondering about what has happened to the dollar. The past few weeks have been devastating for the purchasing power of the dollar. The once distant Australian Dollar has sharply risen against the US Dollar. Even currencies like Canadian Dollar, Japanese Yen and the Swiss Franc are strengthening against the dollar every day. About half a century ago, the whole world pegged to the Dollar at the Bretton Woods conference. What happened to global confidence? Why does everyone think that the Dollar is going to nosedive?

What Happened To The Dollar?

Dollar is suffering from a classic malaise that has been ailing economies worldwide for centuries. This malady is called debasement. Right from the Roman empire, debasement of currencies by the governments has led to the fall of those currencies. If you don’t want to go that far, look at the Zimbabwean crisis of 2008.

In simple words, the government is printing to much money. And each new dollar that is printed without corresponding growth in real assets gets its value by stealing from other dollars. Hence every dollar bill printed makes the one in your pocket worth less and less.

Gold has been the currency that survived when Fiat currency broke down 3000 times in history. It is for this reason that investors are making a beeline at the Gold market to prevent loss of value by holding dollar bills.