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What exactly makes the value of the dollar go down?


When the price of everything else goes up.


Although easily confused, inflation (more currency chasing fewer goods) should not be confused with devaluation (demand for currency on global markets).


Our dollar is a Fiat Currency with no inherent value!

As such, the value of our currency is determined through the interplay of our money supply (disguised through Federal Reserve monitary manipulations) and the actual demand for our currency on global currency markets.

Some countries hold floating exchange rates, and others may maintain fixed exchange rate policy against the United States dollar (no longer a good idea) or other major currencies. These fixed rates are usually maintained by a combination of legally enforced capital controls or through government trading of foreign currency reserves to manipulate the money supply.

Under fixed exchange rates, persistent capital outflows or trade deficits may lead countries to lower or abandon their fixed rate policy, resulting in a devaluation. However, devaluation would reduce trade deficits which depends on fulfilling the Marshall-Lerner Condition: the sum of exports and elasticity of imports (in absolute value) must be greater than 1.

In an open and free market, the perception that a devaluation is imminent may lead speculators to sell the currency in exchange for the country's foreign reserves, increasing pressure on the issuing country to devalue its currency. When speculators buy out all of the foreign reserves, a balance of payments crisis occurs. Oops!

In practice, the onset of a financial crisis has typically occurred after the real exchange rate has depreciated below the nominal rate. The reason for this is that currency speculators do not have perfect information. Speculators often find out that a country is low on foreign reserves well after the real exchange rate has fallen. Under these circumstances, the currency value will collapse quickly. This is what occurred during the 1994 economic crisis in Mexico.

The routine process of inflation (more "printing press" currency chasing fewer real goods) sh

Porkenstein AKA Pork, Porky, Porkens:

As Linda said, Inflation mostly. However, that really is just semantics since inflation pretty much is a synonym for a weakening dollar.
Low unemployment is the most obvious cause of inflation, improvements in technology/productivity, private and public debt...


Employment (or lack thereof) has nothing to do with inflation of the money supply or the devaluation of a currency.

Porkenstein AKA Pork, Porky, Porkens:

I think you are mistaken. Might want to break out that economics 101 textbook again and look up NAIRU. I'll save you the trouble and quote Wikipedia...
The term NAIRU is an acronym for Non-Accelerating Inflation Rate of Unemployment. It is a concept in economic theory significant in the interplay of macroeconomics and microeconomics. This "full employment" unemployment rate is sometimes termed the "inflation-threshold unemployment rate": if actual unemployment falls below the NAIRU, the inflation rate is likely to rise quickly (accelerate).[


What goes up must come down before it gains in value again.


Is this the yo-yo currency theory? ;-)


China's increased influence in the suppy and demand chain .


That is certainy a part of it.


I think it's the decline of goods manufactured in the United States for the Global Market. The less you have to sell the less outside money you can take in. It's called supply and demand if you don't supply anything and only demand no matter how much money you print it will become worthless.

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