The Dollar: Where Has It Gone?

For those of you who have never read Steve Forbes' editorial that he puts out in his monthly "FORBES" publication, I highly recommend it. His views on U.S. Monetary Policy are, in my opinion, dead on, and I would be all for making him the next Chairman of the Federal Reserve.

Mr. Forbes accurately points out that of all the organizations and/or individuals responsible for the current recession, a large chunk falls squarely on the shoulders of the Federal Government and the Federal Reserve. As the country stared at a recession at the turn of the millennium, the government determined that loosening credit was a quick way to get the economy rolling again. The decision at the time was a sound one. The only problem was that no one turned off the spigot once things got rolling. Everyone became addicted to cheap money, homes were selling, people were making large purchases, the Fed continued to print money, the stock market rose dramatically, everything seemed great.

But cheap money meant a cheap dollar and the potential for rapidly rising inflation. Again, not a big deal because everyone was making more, spending more, and living high. But too many spent more than they should have. Lenders made loans no sound bank should ever make. We have all heard the rest.

The problem is that the Fed continues to print money at record paces hoping that it will keep the economy moving. But oil prices continue to climb and the value of the dollar continues to sink. By continuing their cheap dollar policy the fed and the government are simply delaying a day of reckoning which recent history has shown will come whether we want it to or not.

I will grant you that Steve Forbes has his personal slant: he is embedded with wall street and close to many of the individuals who perpetuated the situation we are now it. But he does not excuse them, nor does he pretend that he is an objective journalist. Rather he is exactly what he maintains to be: a smart, educated, driven, wealthy, entrepreneur who understands far more about our economy than members of congress who are attempting to make policy.