The dollar sank to an all-time low against the euro Wednesday with new reports showing consumer prices heading higher and construction of new homes plunging in March to the lowest level in 17 years.The problems effecting the United States economy are quickly spreading to other countries. What we all need to understand is how the sinking dollar is playing a major role in this worldwide downturn.
Inflation also rose overseas. The euro reached $1.5968 after the EU's statistical agency Eurostat said that annual inflation rose on higher prices for transport fuel, heating, dairy products and bread. It was the quickest rise in 16 years.
Oil is paid for in dollars. With a declining dollar it takes ever more dollars to purchase a barrel of oil. The higher oil prices are fueling a worldwide explosion in commodity prices. That in turn is leading to higher prices for everything including food.
Those higher food costs are causing political turbulence and riots throughout the world. I know that is a very simplistic explanation but it is one that can be easily understood by most people. How did we get to this place economically? A major part of this problem started with banks and mortgage companies that felt loaning huge sums to those that could not afford it was a good idea. Those bonds were sold worldwide and losses related to them just keep coming.
Those most hurt by those losses are the poor and middle class with the executives of those companies raking in millions. Does that sound at all fair? We need a fundamental change in our policies and our thinking. All too often people vote based on where they hope to be economically instead of where they are. that often makes getting where you want to go impossible. The middle class needs to understand that they are helping in their own demise.