Ok, take a long view. For two decades, from 1980 to 2000 many commodities (measure it anyway you like) declined significantly. Pull up a gold chart from that period if you want a sobering look at a bear market...
There is no way one can make the argument that the dollar gained significant purchasing power during this time.
Measuring the value of the dollar vs. the value of other currencies is the best way to measure it's value.
Think of it this way, when somebody sells the USD/buys the Australian dollar, the influence of commodities is already built into this transaction. All of the coal, gold, copper, wheat, etc. produced by Australia contributes to Australian wealth and the measure of that Australian wealth is then exchanged for a measure of US wealth, the dollar. Same is true for Euros, Yen, whatever. Commodity value is already baked into currency value, resulting in slightly higher Canadian and Australian currencies when commodities are high. But since these economies (and commodities in general)represent only a fraction of total world gdp, rising commodities prices do not prove a collapsing dollar.
Now if commodities represented something like 50% of global gdp, and the US was poor in resources and poor in general, then I'd agree, for all intents and purposes, the value of our currency would be collapsing.
Back to your original assertion: "The dollar is sucking wind and getting worse with every QE2."
I've thought as well as I can on the matter, and what I see is that the dollar is in the same range it's been over the last 4 years, and rising cotton/wheat/oat prices do not disprove that, imo. I agree that for many countries, primarily poor ones who import grains, rough times ahead. |
