Some states in the USA have shown continued growth. The State of Texas, for example showed over 21,000 new jobs in September, for a total of 217,400 in the past year. The Texas annual job growth rate was at 2.2 percent, surpassing the national rate of 1.2 percent. High prices for oil are having a positive impact on the economy of Texas.
But in other places around the world, that we have recently visited, there is negative news for the American economy.
Two weeks ago, I visited Amsterdam on business. I was surprised when merchants, restaurants and even hotels refused to accept dollars. In some cases they were adamant, hostile and even rude. One man said: “Your dollars are worthless here. The dollar only goes down, down, down.” One restaurant almost threw us out, when after a meal, we said we only had dollars to pay. After a long haggle, and calling the restaurant owner from his home, did they begrudgingly accept our dollars, and then only with a firm message not to try to pay with dollars in Holland.
Note the following news report, which unfortunately has become typical of the news relating to the U.S. Dollar.
NEW YORK (Reuters) - The dollar slipped against the Euro on Friday, ahead of data on U.S. capital flows, which could shed light on how comfortable foreign investors are with holding on to dollar-denominated assets in the midst of a long-term decline.
In August, the outflow of long-term capital from the United States swelled to $69.3 billion. While the median economist forecast in a Reuter’s poll predicted a rebound to $70 billion in inflows, some analysts warned that another outflow or surprisingly weak inflows could cause more damage to the dollar.
"If foreign capital flows are indeed drying up the long term structural implications for the greenback are very negative," said Boris Schlossberg, senior currency strategist with DailyFX.com in New York.
The Euro was up 0.2 percent from late Thursday, at $1.4652, a cent away from record highs of $1.4752 hit last week, according to Reuter’s data.
"The concern that the U.S. is failing to attract sufficient foreign capital flows at the current dollar and interest rate levels remains more prevalent than ever," Commerzbank Corporates & Markets said in a research note.
Reports such as this caused us to research trends in the dollar, and we found some disturbing trends relating to international ownership and “retreat” from the U.S. Dollar.
NATIONS THAT HAVE REDUCED DOLLAR HOLDINGS OR WHICH HAVE SUGGESTED THAT OIL BE PURCHASED WITH EUROS’ OR ALTERNATIVE CURRENCIES, INSTEAD OF DOLLARS.
- NORTH KOREA
- SAUDI ARABIA
Furthermore, foreign central banks reduced dollar holdings by $48 billion between July and September of 2007.
Banco del Sur (an in process banking system for 7 Latin American Nations) has suggested that it will try to "de emphasize" dollar holdings in Latin America.
The strength of the US economy after World War II enabled the US dollar, backed by gold, to become the world’s reserve currency. When the US abandoned the gold standard in 1971, the dollar remained supreme, and its position was further boosted in 1974 when the US came to an agreement with Saudi Arabia that the oil trade would be denominated in dollars.
Most countries in the world import oil, and it made sense for them to accumulate dollars in order to guard against oil shocks. Third World countries had even more reason to hoard dollars so as to protect their fragile economies and currencies from sudden collapse. With everyone clamoring for dollars, all the US had to do was print fiat dollars.