There was an unsettling factoid in the news this week. Zimbabwe’s dollar tumbled to a record low. Want an American dollar? It’ll cost you 25 million Zimbabwe bucks.The inflation rate there is 100,500%.
It’s one of the few places left, judging by the news stories today, where the American dollar still feels like it has some “oomph.” Beyond that, we old-timers are waking up with bad dreams of needing a wheelbarrow to take our dollars to Starbuck’s just to get a cup of cheap joe.
We’re all getting a lesson these days about the value of our currency in relation to other countries. It’s one of the main reasons why the price of oil has skyrocketed; it’s paid for in dollars.
There are, we’re also told, some good things from a falling dollar, as NPR reported last night in profiling a company that makes fire suppression equipment and is finding it easier to compete overseas.
“I think a weaker dollar, if it doesn’t spiral out of control, is part of the solution here,” Barry Eichengreen, an economic historian told the Wall Street Journal today (reg. required). He says the weaker dollar may help cut the enormous trade deficit in the U.S.
This is the type of thing that gives headaches to mere mortals. Our economy stinks, partly because of the decline of the dollar, and yet the stinking economy’s dollar may be the cure for the stinking economy.
Is it any wonder that a consumer sentiment survey, released today, showed continuing despair?
“There was nearly unanimous agreement among consumers that the economy was now in recession,” said Richard Curtin, director of the University of Michigan surveys of consumers.
President Bush tried to boost sentiment today with a speech in New York. “In the long run. I’m confident our economy will continue to grow because the foundation is solid,” he said. But how are we to take comfort anymore from someone who a week ago said he hadn’t heard anything about the possibility of $4 a gallon gasoline? A week later, $4 gasoline hit California.
“It has all the earmarks of a bubble,” MPR’s economic expert Chris Farrell said of the price of oil.
“The days of $50 a barrel oil have gone the way of a 10-cent loaf of bread,” said Dan Laufenberg, chief economist for Ameriprise Financial.
(Photo: Patrick Hertzog/AFP/Getty Images