Craig Karmin's new book, "Biography of the Dollar," explores a world that most of us in America take for granted - the world of currency. So, what's so important about the currency? My answer to that is simple- everything.
A free-flowing, stable currency is what makes all trade possible- both domestically and internationally. A lack of confidence in the underlying value of a currency can bring entire economies to a screeching halt. The results can be devastating- life savings are wiped out, hyperinflation can take root, debt is defaulted on, investment dries up. It can take decades for economies to recover.
If you're like me, you probably haven't given much thought to these issues. Because, as Americans, they seem to be such remote possibilities. But are they . . . ?
Karmin's book does an excellent job of informing the reader of how the US Dollar is created, distributed and used not only in the United States; but, throughout the world. Karmin covers many aspects of the Greenback- from printing (it costs 5.7 cents to print one) to foreign government's hoarding (60% of the dollars in circulation are overseas) to lending and interest rates (thank China, not the fed, for keeping US consumer borrowing rates low).
Karmin also brings to light the intense pressure that the Dollar is under every day from seemingly all sides:
-the U.S. Government's unwillingness to balance the budget, -Asian and Middle Eastern countries growing less interested with "subsidizing" the value of the Dollar, -the solidifying of the Euro as an alternative global currency, and -the U.S. consumer's never-ending desire to "borrow-and-buy" their way through life
All of these factors have already played out to a certain degree in the declining value of the Dollar over the past couple years. Will the trend continue and how far will it go? Those questions are explored as well.
I highly recommend that anyone read this book- it is an eye opener without getting technical (economist-types will miss their I-L-S-M diagrams)- and it poses all the right questions to get American's thinking about the implications for the future- whether that be as vital as national security or as trivial as the cost of a hotel room in Paris.