Times have changed since then for several reasons, 1.) The very issues in question haven't gone away, rather, they have become more severe with increasingly disastrous implications gaining in probability. 2.) Respectable people in the mainstream with established credibility are starting to make the same observations and express their concerns. 3.) We're starting to hear rumblings from Asia, Russia, and even South America that maybe it's not such a great idea that their reserves be so fully invested in U.S. dollars and the time may have come to reduce risk to the dollar through diversification.
Today it's easy to find articles on the Internet and other media from people growing increasingly concerned about the condition of the U.S. Dollar. Here are links to just a few...
Warren Buffett - perhaps the most successful investor of all time.
Why I'm not buying the U.S. dollar. America's growing trade deficit is selling the nation out from under us. Here's a way to fix the problem -- and we need to do it now.
By Warren E. Buffett,
...Both as an American and as an investor, I actually hope these commitments prove to be a mistake. Any profits Berkshire might make from currency trading would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar.
But as head of Berkshire Hathaway, I am in charge of investing its money in ways that make sense. And my reason for finally putting my money where my mouth has been so long is that our trade deficit has greatly worsened, to the point that our country's "net worth," so to speak, is now being transferred abroad at an alarming rate.
... In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4 percent more than we produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own. Why I'm not buying the U.S. dollar
By Warren E. Buffett,
...Both as an American and as an investor, I actually hope these commitments prove to be a mistake. Any profits Berkshire might make from currency trading would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar.
But as head of Berkshire Hathaway, I am in charge of investing its money in ways that make sense. And my reason for finally putting my money where my mouth has been so long is that our trade deficit has greatly worsened, to the point that our country's "net worth," so to speak, is now being transferred abroad at an alarming rate.
... In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4 percent more than we produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own. Why I'm not buying the U.S. dollar
Bill Gross - managing director of Pimco, the worlds largest bond fund handling several hundred billion dollars. He offers some very good points here but I must say, his recommendations at the end leave me a little confused.
From the link: John Snow and Allen Greenspan have finally bowed to the inevitable. Instead of blocking the lane in defense of a Shaq Attack slam dunk, they have politely if somewhat obfuscatingly stepped aside. "Put it down brother" they seem to be saying but it's the dollar and not a round ball that they're referring to. The dollar has gone down. The dollar is going down. The dollar will continue to go down because it's the easiest way out (for the U.S.) to begin to rectify its imbalanced finance-based economy. Balance the budget? Fugitaboutit. Raise interest rates to historic norms? Fugitaboutthattoo. "Let the market decide," Snow says. "Likewise," chimes Greenspan, warning that sooner or later foreign lenders will not be so exuberant in their purchase of U.S. Treasury bonds. Perhaps they'll be a little less irrational with their money he might have thought but that's a word he doesn't use anymore. And so the market's most crowded trade-short the dollar - will inevitably become a little more crowded, perhaps irrational itself at some point. There is a whiff of crisis in the air.
Too Much!
Allan Greenspan - Chairman of U.S. Federal Reserve
Given the size of the US current account deficit, a diminished appetite for adding to dollar balances must occur at some point," Mr. Greenspan told a banking conference in Frankfurt.
"International investors will eventually adjust their accumulation of dollar assets or, alternatively, seek higher dollar returns to offset concentration risk, elevating the cost of financing the US current account deficit and rendering it increasingly less tenable."
The deficit has ballooned to more than 5% of gross domestic product, or $166bn in the second quarter of the year, driven by Americans' appetite for imports and flows of money into US financial assets, particularly bonds.
The dollar has been sliding against other major currencies for a couple of years but its fall has accelerated since the re-election of President Bush this month as markets refocused on the current account and budget deficits. The large tax cuts of Mr. Bush's first term have driven the government's budget deficit to record levels.
Speech to G20
Ron Paul - Congressman 14th District of Texas (My opinion - One of the very few honest politicians alive.)
Congress has become like the drunk who promises to sober up tomorrow, if only he can keep drinking today. Does anyone really believe this will be the last time, that Congress will tighten its belt if granted one last loan? What a joke! There is only one approach to dealing with an incorrigible spendthrift: cut him off. Congress wastes hundred of billions of dollars every year on countless agencies and programs. Rather than raising the federal government's credit limit, Congress easily could mandate cuts in the existing bloated budget.
Raising the Debt Limit- A Disgrace
W Joseph Stroupe - Editor in Chief Global Events Magazine
President Vladimir Putin has stated both publicly and privately that invoicing Russia's crude-oil and gas exports to the European Union in euros instead of in dollars makes very good sense for both Russia and the EU.
... If Russia is perhaps positioning itself to make even a partial exit from the dollar in the pricing of its petro-transactions, then the Asian and other economies don't want to risk being left out in the cold, unprepared, seeing the value of their own huge dollar reserves undermined by a steep or chaotic decline in the value of the dollar. They cannot afford to ignore Russia's moves. Hence as Russia moves to decrease the percentage of its own holdings of dollars, so are the big Asian economies, as well as many other economies around the globe. No one wants to get burned in the event Russia moves to the euro. Additionally, as the dollar continues to weaken and crude oil continues to rise in price, having the dollar as the preferred international currency for petro-transactions will become more of a liability, especially for the big Asian economies, which are heavy importers of crude oil. This fact will tend to further undermine Asian, as well as the rest of international support for the dollar. Crisis towers over the dollar
... If Russia is perhaps positioning itself to make even a partial exit from the dollar in the pricing of its petro-transactions, then the Asian and other economies don't want to risk being left out in the cold, unprepared, seeing the value of their own huge dollar reserves undermined by a steep or chaotic decline in the value of the dollar. They cannot afford to ignore Russia's moves. Hence as Russia moves to decrease the percentage of its own holdings of dollars, so are the big Asian economies, as well as many other economies around the globe. No one wants to get burned in the event Russia moves to the euro. Additionally, as the dollar continues to weaken and crude oil continues to rise in price, having the dollar as the preferred international currency for petro-transactions will become more of a liability, especially for the big Asian economies, which are heavy importers of crude oil. This fact will tend to further undermine Asian, as well as the rest of international support for the dollar. Crisis towers over the dollar
