The Future of the US Dollar

I don’t know if it’s just me, but I am starting to question whether the US Government truly advocates a strong dollar policy.

Aside from the fact that the fed is printing money like it’s going out of style, it seems like the rest of the goverment is out to bring down the rest of the financial system. While no one can say that the economic situation wasn’t dire, the government is highly overreacting to every little glitch.

Now don’t get me wrong. I am not giving the banks a free pass for their greed and mistakes. I am just saying who is the government to critisize banks about policies and spending when they are in the same boat. How can you critisize a bank for leveraging itself and poor risk managment practices when the government does the same type of businesses everyday?

I’ve been noticing over the past few weeks that more announcements are coming about how government is going to regulate everything. Now that they have infused all this capital into the private sector, they want to instruct the private sector on how to conduct their business. While I agree that if I was an investor, I would want to call the shots, I think that this is just complicating matters. The money never should have flowed from the government to private companies in the first place. All that is happening is money is being printed and invested into companies and the government, who can’t keep it’s own accounting straight, now wants to tell all these companies how to run themselves.

Companies and banks are responsible for how this mess started and had they been forced to suffer the consequences, it would have been ugly, but at the end of the day we would know how much damage there was and be able to rebuild right away. With the government just dumping buckets of dollars into these companies, they are able to shuffle everything around and hide their problems and the same risk that was there before the bailout continues.

The government is actually being terribly incompetent at accomplishing anything. At this stage it looks like they are accomplishing things, but what they are really doing is making things much worse. We have progressed from condeming poor business practices to supporting them with money. What does this say for the world image for the united states and the dollar? Does the US Government honestly think that stumbling around blindly and offering a low rate of return for such high risk is going to last? Foreign investors have been supporting US debt for years and it’s going to come to an end unless the returns get much higher.

In any case, I think the investors around the world are going to be less forgiving in the future. That doesn’t speak well for the future value of the US Dollar.