Mainstream commentators have been slow to realize the trouble in which the U.S. dollar is mired. After all, it's the world's reserve currency. It's been that way since World War II, which encompasses most--if not all--of the lifetimes of opinion makers who reach such conclusions.
It's difficult to reach beyond our own personal experience and touch abstract concepts of economics and even history, despite our common sense telling us that our lives, cities, nations, economies, and even our planet is in a constant state of flux.
The United States will always be the most powerful country on the planet--we'll always have democracy, we'll always have the best economy, the best standard of living, and the best equipped military, and the dollar will always be on top. Not by any action of ours, mind you, but by the sole virtue of that's how it's always been in our limited frames of reference.
It's a bias that's built into our psyches. When we're young, we can never imagine growing into adulthood. As adults, we can't fathom getting old. It's only when you're old and confronting your mortality when you look back and think, "I wish I only knew" and regret you didn't consider your impermanence when you were prioritizing your life. You didn't consider it because it was outside your personal experience, even though you were aware it happens to everybody. Deep down you thought it would never happen to you. When you were young, you would always stay young because that's all you'd ever been to that point.
Remember in 2007 when everyone though the stock market had reached a permanent plateau? Or in 2005 everyone though the housing market would go up forever? Or in 1998, when everyone thought Internet stocks would never fall? Guess what--they did. It was inevitable, yet people found ways to fool themselves.
The same is true with the U.S. dollar. Signs of impending collapse in Internet stocks and housing were there in 1998 and 2005, respectively, but few realized it because the opinion makers failed to put things in the proper context. Like aging and death, it was out of their personal experiences and not something pleasurable to ponder. It was more satisfying to enjoy it as if it were never going to change.
That sentiment exists in 2011 vis-a-vis the U.S. dollar. The Star recently editorialized that "despite what the doomsayers have been saying about the U.S. dollar, it is still the world's most trusted reserve currency and the one the world turns to in an emergency."
I could be considered a dollar doomsayer, but I don't challenge the assertion that it's still "the world's most trusted reserve currency" because it's the ONLY reserve currency. That's like saying the uncle's whose guts you hate is your favorite uncle because he's the only one you got. It's true, but that doesn't speak favorably about your relationship with him, does it?
I also agree that it's the one the world turns to in an emergency. The dollar surged after the global economy collapsed in 2008, only to plummet soon after. We're seeing that play out again given all the troubles with the Euro.
Of all the currencies the dollar is the most trusted. But all fiat currencies are in trouble, and that's really the point that we dollar doomsayers are trying to make.
Even before the current economic crises, which our leaders tried to fix by printing billions of dollars out of thin air, the dollar lost 95% of its value since we went off the gold standard.
The official inflation rate in 2011 is not quite 3 percent. By the way, shouldn't we in the media have some healthy skepticism about what statistics the government produces that may benefit them? If we used the methodology in place that we used in 1979, the inflation rate is closer to double-digits, according to CNBC. I guess that makes them dollar doomsayers, as well.
The warning signs are here, just like they were in 1998 and 2005 and 2007. But that's never been enough to convince most people.