A sure-fire way to devalue a product is to flood the market with supply. This applies to cars, milk, gold, oil, and, yes, money. The more money you print, the less that money will be worth. It's a simple matter of supply and demand. The federal government is currently following a deliberate policy of devaluing U.S. currency. This is not the primary intent of balooning deficits, but it is the primary effect.

Current forecasts hold that the deficit for the current fiscal year will exceed $1 trillion. This is a grim milestone. Consider that the federal budget deficit has surpassed $500 billion just twice. Consider further that the budget forecasts don't take into consideration Barack Obama's reckless scheme for a $1 trillion wealth transfer that he deems a "stimulus package." It certainly will stimulate the wealth creators, just not in the manner intended. Ditto for the overall economy, for which one indicator of strength is the stability of the dollar.

The U.S. Dollar Index, which measures strength of the dollar versus other currencies, plunged to its lowest level on record last year. The dollar is slowly gaining strength against other currencies, but for how long? Certainly a deficit that exceeds a trillion dollars will not boost the dollar. This will have negative consequences. A weak currency makes foreign investment expensive for Americans. It makes it attractive to foreigners investing here, which is obviously not entirely a bad thing. It's just interesting that the same people who lament foreign ownership of Anheuser-Busch, the Chrysler Building, and Holiday Inn support the very policies that bring about foreigners gobbling up iconic American companies and landmarks.

Bigger government is one legacy of the Bush Administration that the Obama Administration will continue. The result of this will be a currency with less purchasing power. Bigger government can be financed with tax increases, which in a recessionary economy are neither prudent nor politically expedient. Bigger government can be financed with budget cuts, which judging by President-elect Obama's gargantuan stimulus package and other schemes doesn't seem likely either. The third way to finance bigger government is debt, which will be financed by neither taxes nor cuts but by printing more dollars.

Apparently, we can afford four more years.

Or is it that Mr. Obama wants to show us just how much we can't afford four more years?

Excellent post, Dan. This issue is one of the most important and, sadly, even most conservatives seem completely oblivious to it. (One hopeful sign, perhaps: top headline at Drudge right now, channeling Ron Paul, sarcastically screaming "Let's Print More Money!")

One note in addition to yours: the fact that the dollar has most recently been gaining strength against other currencies does not mean that the dollar is getting any stronger, or that its underlying basis is any more sound. It just means it is stronger relative to these other currencies. And one way that can happen - and is happening, imo - is for the other currencies to be devalued even more than our own.

So, when are the adults coming back to take over Washington and Wall Street?

They were supposed to be in charge for the last 8 years. They regressed to the point where they need to be potty trained again.

Anyone notice positive numbers in 1998, 99, 00 and 01? What changed? War. Terrorists are sinking our economy with the quagmire, not food stamps and TANF. I know you all hate poor people and think they are lazy, but that is just ignoring the war elephant in the room. If you are conservative, you should all applaud Iraq trying to kick us out. Apparently you don't have to kill people to kill a country.

"Part of our stimulus package is going to involve revamping all federal buildings so that they're energy efficient. If we -- if we do that effectively then over the long-term we are going to save billions of dollars in energy costs for the federal government and for taxpayers."

What an A-hole

"Obama has tried to reach out to Republicans by proposing that about 40 percent of the stimulus—roughly $300 billion—go to tax cuts, including about $100 billion in breaks for businesses to encourage new investment and job creation."

Can you believe the nerve of this guy? Cutting the taxes of each person that posts on this board. What a shame.

Even Obama's fellow Democrats know that his plan is not doable and are bracing not to support it.

Probably because they're just run of the mill left leaning Democrats and know a dangerous plan when the see one and he's a way left radical socialist ideologue who has zero experience with this kind of thing.

It's going to be fun watching this show.

This is just classic:

“The difference is that I try and apologize if someone can show me my view is wrong. I should have apologized about the hitler thing, but we all make mistakes. I have never seen asdf admit fault or error, which I can't really expect from a person of his caliber.”

And this:

“What an A-hole”

horses-azz, you must be living in your own alternate universe or Private Idaho because not only do you not apologize or acknowledge your continuous stream of blatant mistakes, misconceptions and untruths, but when cornered you lower to insults and cursing.

I think you’ll find most who post here to be honest in their assessments and are willing to admit when they’re wrong. This is typically what differentiates realistic conservative thought from idealistic liberal thought.

I don't know what you see when you look in the mirror or what you hear when you speak, but you often demonstrate textbook behavior of the ultimate liberal loon.

Original thought? I think most of us are subject to learned views and behaviors. Out of the learning process come logical truths that usually become apparent as they can be backed up by history and facts. So as for my “regurgitating conservative talking points”? Guilty. But who doesn’t regurgitate (or use as a basis for original thought or opinion) when the facts are in and the principles are sound?

“What an A-hole”

Obvious sarcasm.

"when cornered you lower to insults and cursing."

No, when insulted with rude and baseless remarks do I revert to your kindergarten mindset.

"but you often demonstrate textbook behavior of the ultimate liberal loon."

Not everyone (including myself) fits into your perfect little categories of radicalized idiots. I am actually more of a fiscal conservative than the person you voted for as I am against the bailouts, I am for lower taxes, reduced gov. spending, reduced deficit, true free trade, against subsidies, and so on... like I said, your insults are baseless and ignorant.

I am for some form of social welfare based on what happens to countries without it. Look at Mexico right now. They don't have social security or welfare programs, while crime and murder are rampant.

http://www.borderfirereport.net/michael-webster/mexico-is-world-leader-in-gruesome-violent-killings-in-08.html

I still haven't seen you apoligize for being a racist, where you are blatently wrong. That to me is pretty low caliber. Nor have I ever seen you post a link to your opinions.

Horse: Mexico does have a social welfare program--America.

That's funny because it is so sad.