What has been happening is that the printing machines have been churning out mountains of cash with gay abandon as if there will be no day of reckoning for the US, and Helicopter Benanke swore he would always make cash fall from the skies to paper over any financial crisis. Dick Cheney has said the humongous debt of the US "doesn't matter". And, of course, the majority of Americans who have been living a comfy-comfy life so far swallow it all hook-line-and-sinker!
A time was when the dollar was falling until the US managed to make a deal with the Saudis and their neighbouring Emirates that, in exchange for US presence and US protection against invasion and internal insurgency, those Arabs would sell their oil exclusively for US dollars. That agreement bolstered the reserve currency status of the greenback and even made it recover somewhat against the Euro --- for a while, that is. No doubt, the US now wants the greenback to be backed by oil. No wonder the US is very interested in oil-rich areas like Iraq, Iran and Venezuela and etc.
However, right now, the perception is that the dollar is a dwindling asset, and that gold is best store of value like it has always been since early times. Unfortunately, oil is only regarded as a temporary store of value. Hence the current trend of many countries and individuals switching out of dollars into gold and gold equities. As for the dollar to be backed by scientific and progressive innovations, oh well, that is an iffy or rather a pie-in-the-sky sort of thang, doncha think?
BTW, Iran will soon be trading oil for Euros instead of dollars --- a move that will, if allowed to take hold overtime, kill the reserve currency status of the greenback, and with it, the influence of the US worldwide. It appears that an attack on Iran is in the offing pending the outcome of diplomacy. If the US is smart enough, perhaps the US will get Israel to do the dirty work..........................
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