By Cireal Americanus
Over 2007 the Dollar has declined 12% against the Euro, 7% against the Yen, 8% to the Pound, 15% to the Canadian dollar, and 10% to the Swiss frank. This means the dollars “strength”, i.e. buying power, has steadily declined locally and abroad.
WHY IS THE DOLLAR’S VALUE DECIINING? The U.S. is currently running a $700 billion dollar “Trade Deficit”. This means that we bought $700 billion dollars more in goods and services from foreign countries than they bought from us. This dollar surplus causes it’s value to decline against the currencies of countries with stronger “Export Markets”.
WHAT DOES A WEAK DOLLAR MEAN? Simply put, the weaker the dollar, the more you pay for imported goods such as Italian shoes, Swiss watches, German Cars, or Foreign Oil. This also translates into higher prices for domestically produced items, i.e. Bread, Milk, clothing, etc.. These higher costs are results of higher fuel costs for transportation, harvesting and increased costs of raw materials from foreign suppliers, e.g. New Zealand wool for sweaters.
In addition, with each decline the dollar makes, tens of thousands of dollars are bled from your retirement savings. That “Magic Number” that retirees need is getting higher by the day, mainly because of the rising cost of imports thus driving up the overall cost of living. As a result, the amount you planned to retire on could already be too low, forcing you to work longer or lower your standard of living in your retirement.
WHAT CAN WE DO? As consumers, we need to simply think more about the goods and services we buy.
Questions we should ask before you buy:
Do I need this product? (examine needs vs. wants)
Do I need this particular product? (the white shirt made in the U.S. vs. China)
Where was this product produced?
Can I purchase this product through U.S. suppliers?
A bit of thought before purchasing can help your wallet today and protect your retirement tomorrow.