The U.S. Dollar Sure Doesn't Buy What It Used To: $100.00 in 1900 Worth $3.48 Today!!!

The Stealth Tax That's Destroying Our Standard of Living...

The U.S. Dollar Has Lost -35% Of It's Purchasing Power Since 2002!...

The Dollar In 1970 Is Only Worth 18 Cents Today...

The Purchasing Power of The Dollar Declines -82% in The Past 40 Years...

Government Spending As A Share of GDP Is Skyrocketing...

Spending as a share of GDP in the last 3 years is higher than at any time since 1946.

In 3 years the debt has increased by more than $4 trillion thanks to stimulus, cash for clunkers, mortgage modification programs, 99 weeks of jobless benefits, record expansions in Medicaid, and more.

The forecast is for $8 trillion to $10 trillion more in red ink through 2021.

If that happens, the U.S. dollar will no longer be the world's reserve currency.

U.S. Dollar Purchasing Power Drops -20% in the Past 10 Years...

U.S Dollar - Safe Haven No More?

For years, whenever significant political or financial turmoil reared its head anywhere on the globe, investors would turn to the U.S. dollar as a safe haven.

Yet as the chaos in North Africa has grown over the past month, investors have largely shunned the dollar and sought shelter elsewhere. They have turned to other traditional islands of stability, buying Japanese yen and the Swiss franc.

What has especially raised eyebrows has been the move by investors to buy euros, a currency traditionally seen as a riskier prospect than the dollar, especially with the euro zone's debt problems still largely unresolved.

This has sparked a debate over whether the dollar has lost its safe-haven status.

"Over the last 20 years, people have always moved into the dollar on any sort of uncertainty in the global economic space, but what we've seen over the past two weeks is actually a terrific move out of the dollar," says Douglas Borthwick, a managing director at Faros Trading in Stamford, CT... 

So for now, the argument goes, there are better safe havens available to investors than the U.S. currency.

Even on individual days when events have sent a scare through the financial markets, the dollar hasn't benefited.

On January 25, when the protests in Egypt first flared up, the euro advanced more than two cents to almost $1.39.

This contrasts with other episodes of flight-to-safety currency buying in the past. During the 2008 global financial crisis, the dollar rose by roughly +24%.

Analysts at BCA Research also point out that some investors also are looking to gold as a more appealing safe-haven investment. "We would agree with this assessment," the analysts wrote.

Gold rose +5.7% in February, its biggest monthly gain since April 2010. With investors increasingly wary of the ability of the U.S. to solve its fiscal problems and the Fed perceived to be "printing dollars" as part of its quantitative-easing strategy to support the economy, there's less confidence that the U.S. dollar is "safe" in the sense, Mr. Borthwick says.

"It's the knee-jerk reaction that matters," he said. "Nowadays the knee-jerk reaction is buy euros and not to buy dollars. The mindset of buying euros is a complete switch."

Source: Wall Street Journal

Quantitative Easing Explained...

Market Forecast - Ken Taubes @ Pioneer Investment Management

Executive Summary

We believe the U.S. economy will grow by 3% to 4% in 2010.

While consumption may remain muted in light of continued deleveraging among consumers, exports, inventories and fixed investment could experience strong gains. Robust emerging market growth and the weakened dollar, together with high levels of corporate profits, productivity and cash (relative to this stage of the economic recovery) should help bolster GDP growth.

Inflation may threaten if appropriate monetary and fiscal measures are not implemented during the next several years, but should remain dormant in the near term, given the ongoing deleveraging.

Finally, we believe the U.S. dollar may remain stable over the next year. Its declining value relative to currencies of countries with strong growth, current account surpluses and solid fiscal budgets may be offset by its potential to appreciate against the euro and the yen, whose countries face lower growth than the U.S. and have comparable, if not higher, levels of government debt/GDP.

Following record returns in 2009, credit markets should cede market leadership in 2010 to equities, which we believe offer more attractive relative value and should benefit from the global recovery and high corporate operating profits. Over the next several years, however, we continue to find credit markets attractive when compared to developed market government debt, the quality of which will decline as deficits mount. In addition, as the economy recovers, we foresee a cyclical rise in yields, which will favor fixed income credit.

We also believe investors, where appropriate, should talk to their advisors about the advisability of making a discrete allocation to inflation-sensitive products to protect themselves against potential long term inflation.

Ken Taubes
(c) Pioneer Investment Management
http://www.pioneerinvestments.com/

Ken Taubes is the Head of Portfolio Management U.S. and is a Portfolio Manager of Pioneer Investments’ U.S. Core and U.S. Core Plus strategies. He has over 25 years of investment experience, including more than 10 with Pioneer Investments, and is well known within the investment industry.

Chart of the Day: Gold & The U.S. Dollar

Chart Courtesy of www.ChartOfTheDay.com

"Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man's suit at the conclusion of the Revolutionary War, the Civil War, the presidency of Franklin Roosevelt, and today." - Peter A. Burshre

"Thanks in part to mounting U.S. deficits and a weak U.S. economy, the U.S. dollar continues to trend lower. After all, a virtual collapse of the banking sector does have its consequences. For some perspective, today's chart illustrates the current trend in the US dollar (blue line) as well as that other world currency, gold (gray line).

As today's chart illustrates, the performance of the U.S. dollar has varied inversely to that of gold since the latter stages of the credit bubble. It is worth noting that the U.S. dollar is currently testing resistance of its downtrend (red line) while gold makes record highs."

http://www.chartoftheday.com/20091125.htm?A

How the U.S. Dollar Has Plunged vs Foreign Currencies (FX) in the Past 10 Years

Back in 1999…

An average house cost $129,000. Now it’s $180,000 (+40% increase)...and that’s after the real estate market crashed. 

 A gallon of gas was $1.15 and now it’s over double that (actually +143% higher) at $2.80!

A loaf of bread was $1.26 and now it’s $2.39 (+90% higher).

A dozen eggs cost 88 cents, now $1.49 (+69% higher).

A postage stamp was 32 cents and now its 44 cents (+38% higher).

What can we thank for the higher prices over the last decade? As strange as it sounds in the current deflationary environment, inflation stole your dollar’s value over the last 10 years.

The Dollar’s Purchasing Has Lost 21% of Its Purchasing Power During This Decade

The reality is that the costs of EVERYTHING you touch are going up astronomically and the dollars in your bank account buy less and less all the time.

What’s worse is that while the costs of goods are on the rise again…unemployment is hitting its highest levels in 26 years. That means that companies can’t raise salaries to keep up with the ever-rising cost of living.