Originally Posted by
hippifried
Again, I think you have to go back to Aug. 15, 1971 to find the real culprit here. That was the day that Richard Nixon, by executive fiat, debased the dollar. It ended 25 years of stabile growth & started the inflationary spiral that we're still caught up in, even during the recurring recessions. The purchasing power of the currency is now less than 10% of what it was, & it's all artificial. There's no standards. There's no way to judge value, & the rate of currency decline (inflation) is set by the whims of international speculators who aren't regulated by anybody. Every currency in the world is in decline, & "FOREX" is just where you bet on the rate. It's not even real money. It's all derivatives. You have to use derivatives for any kind of international trade because you don't know what the exchange rate might be tomorrow. Whenever somebody mentions "the value of a dollar" anymore, the first thing that comes to mind is "compared to what?".
What to do? Simpliify. Start negotiating a new agreement on the lines of Bretton Woods, without the gold peg. Can't go bck to a gold standard because there's no reserves. I think that was the fatal flaw in Bretton Woods to begin with. But if you fix the exchange rates by pegging the currencies to each other, inflation could become manageable. Right now, it's not, & you can blame everything that's happening today on the financial industry trying to hedge against it.