The Falling Dollar

Larry Kudlow writes at The Corner about the need for John McCain to support "King Dollar" to try and prevent the total collapse of what was the world's most respected currency:

If Sen. John McCain wants to run as a candidate of change, and if he’s truly interested in distancing himself from President Bush, he should reverse the declining fortunes of the Bush wartime dollar. America’s prestige is on the line.

Right now the greenback is in virtual freefall. It’s a disorderly drop. As a result, U.S. inflation rates are rising across the board as the global commodity boom leaks into higher domestic inflation.

Inflation is the cruelest tax of all. It robs consumer and wage-earner purchasing power. It erodes business profits. It reduces the real worth of investor portfolios.

It’s also the single biggest cause of recession, and it may well be tipping the economy into negative territory.

For the first time in a decade I’ve become genuinely worried about inflation. Over the last year and a half, inflation has climbed from 1.5 percent to nearly 4.5 percent, and in the past three to four months it has trended sharply higher.

But there’s another side of the dollar story that’s equally important. The falling U.S. greenback has become a symbol of American decline.

Folks are making fun of the dollar. Our enemies around the world are pointing to the unreliable dollar as evidence of American weakness. It’s as though the administration’s neglect of the dollar is “peso-izing” or “Latin-Americanizing” the greenback.

Read the rest of it here.

My daughter is leaving for Italy in a couple of weeks where she'll be performing with her college band. In preparation for the trip I encouraged her to go and get some Euro traveler's checks as soon as possible. Every day she waits the dollar weakens a bit further and the Euros become more expensive. Conversely, if she buys the Euros today she'll make a little money (or at least won't lose more money) as will happen if she waits. She'll certainly be in for a shock when she buys them - the Euros are about $1.51 to the dollar right now.