The Dollar

Yesterday, the dollar was at 78.63, the lowest since 1971 when President Nixon abandoned the gold standard. This creates losses for those who hold Treasury bills, like China. They have lost an estimated $90 billion so far this year. 

Today, the Federal Reserve Chairman emphasized the need to 'begin planning now for the restoration of fiscal balance.'  He is concerned that about our long-term situation.  Our actions or lack of actions will have a direct effect on the confidence of financial markets.  Also, our total debt has contributed to a spike in long term interest rates. I wonder if these words are meant to help raise the dollar. One would argue that everyone is in the same boat as us and so the dollar will be okay.  My thought is that China is not in the same boat and has the opportunity through investing in their infrastructure to have a strong financial foundation.  The strongest financially will have the most influence on the world.