US Dollar will depreciate by 50%?

It is not impossible and would not be the first time in history. The US$ Index, which measures the US$ exchange rate against a basket of foreign currencies, dropped by 48% between March 1985 and January 1988. Since March of this year it has already lost 15% against the Euro and 11% against the Japanese Yen.

This is increasingly becoming a concern. Not only are Americans getting poorer (a UN Human Development Report shows that the quality of life in America dropped from number 5 to number 13 worldwide), but also the international community is getting concerned because the US$ is still the predominant reserve currency.

On the other hand, the benefit of a weak US$ would be that it makes US exports more competitive in the international markets (exports rose by 5.7% between April and July and the trade deficit fell by more than half since 2006) and will inflate the way out of the national debt.

Timothy Geithner, as the current Treasury Secretary, seems not to be unhappy with the slide of the US$ for these benefits, although he said a few days ago that “it is very important to the United States that we continue to have a strong dollar”, with the aim not to further jeopardize the status of the US$ as a reserve currency.

The reality is that most currency experts expect the US$ to fall further, but maybe not as much as 50%.

It certainly will, but just how many years it will take is the question.

No government wants an inflation rate of 0. Central banks hate that.

Suppose the inflation rate is 2%, which is generally considered on the low side. It would then take 20 years for the dollar to depreciate by 50%. With an inflation rate of 4%, it would take about 10 years.

Don't you remember your history stories about Franklin buying 3 big rolls for a penny?
http://www.ushistory.org/franklin/info/index.htm
How much would 3 big rolls be now? How much would that penny be worth today?
http://www.measuringworth.com/uscompare/