Magazine article Newsweek

A (Dollar) Sign of the Times: It's Not Easy Being Green

Magazine article Newsweek

A (Dollar) Sign of the Times: It's Not Easy Being Green

Article excerpt

Byline: Daniel Gross

NEWSWEEK's financial columnist Daniel Gross covered a number of economic calamities in 2007. He writes here about the U.S. currency plunge.

In late June, with no local currency in my pocket and a case of jet lag that only a doppio espresso could cure, I stumbled into a familiar London storefront. I whipped out my Starbucks card, which still had about $8 left on it. But when the barista rang up my coffee and newspaper, his smile crinkled into a frown. "I'm afraid you're all out," he said. "That'll be another 40 pence. Cheers!" I had just been punked by the weak dollar.

In 1971, Treasury Secretary John Connally told foreign counterparts that the dollar is "our currency, but your problem." Well, 2007 may have been the year the slumping dollar became our problem, too. Thanks to several macroeconomic factors -- a slowing economy, the Federal Reserve's accommodative interest-rate policy and a lack of confidence in the U.S. financial system due to the subprime debacle -- 2007 was a bad year for the greenback. The dollar last summer hit a 27-year low against the British pound and a 31-year nadir against the Canadian dollar. The trade-weighted dollar index -- a measure of strength against six major currencies -- was off 38 percent from its 2002 peak.

The long-term decline threatens the dollar's status as the world's reserve currency, which it has enjoyed since World War II. The dollar is the currency in which German department stores pay Vietnamese garment factories, Indian distributors purchase Saudi Arabian oil and black marketers around the world conduct business. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.