Never before in my lifetime have I witnessed a threat so great to the U.S. dollar! And never before have I seen complacency about its decline so widespread!
The dollar has now plunged to a 4 1/2-year low against the Japanese yen ... a nine-year low against a basket of currencies ... and still ANOTHER all-time low against the almighty euro.
It is falling rapidly in terms of how much it can buy in steel, copper, paper, and virtually every commodity under the sun. Its value has just suffered the worst one-month plunge against producer goods in 14 years.
It's the dollar disaster I've been warning you about for many months. It's here. And it's getting uglier.
On Friday, as oil prices surged by a whopping $2.22, the dollar suffered its worst one-day decline against crude oil since June.
Just this morning, as gold has surged to $478, the dollar has plunged to the lowest level against gold since May of 1988 — a time when the Dow was trading near 2,000, the Nasdaq was at 375, and George H. W. Bush of Texas was on this way to victory against Michael Dukakis of Massachusetts.
But the dollar's decline is not just a matter of economics. It reflects — and impacts — America's stature in world trade, America's geo-political influence, and, ultimately, America's military might.
The decline in the dollar is potentially both the symptom — and the cause — of a massive, pervasive and potentially devastating sea change in the balance of world power. And yet, despite this ominous threat, our globe-trotting leaders are saying little, and doing NOTHING to stem its slide:
In London last week, Treasury Secretary Snow virtually blessed the dollar decline, causing another steep dollar plunge on world markets.
In Frankfurt a few days later, Federal Reserve Chairman Greenspan dumped on the dollar even further, telling the world the obvious — that international investors will reduce their dollar assets due to the size of the U.S. current account deficit.
And in Berlin this weekend, the United States and 19 other major nations ended a two-day meeting without ONE, SINGLE WORD of support for the U.S. dollar.
Will the dollar go straight down? Of course not. A temporary dollar rally could begin at almost any time, lasting a few days or even a few weeks. But even if it does, don't let it fool you. Until we change our ways, the dollar's decline will not end and will not slow down. It will get worse — much, much worse.
Time For Action
I'm fed up.
I can no longer sit back passively and watch our currency — and soon our country — sink into an abyss.
That's why, last Tuesday, I went to the Mansion on "O" Street in Washington, D.C. to officially relaunch my father's Sound Dollar Committee, with these words:
"I am pleased to welcome the small but growing community of individuals in Washington that have already been battling for a sound and honest budget for many years. Thank you very much for coming today.
"I am also pleased to welcome members of the press.
"And I offer an especially warm welcome to the individual investors here today who subscribe to my investment publications. Thank you for coming on such short notice — and for your loyalty over the years.
"We are here today to rejoin a battle which the Sound Dollar Committee began four and half decades ago ... when my father, J. Irving Weiss, decided to create a small, non-profit, non-partisan organization called the Sound Dollar Committee — a committee which enjoyed the support of some great Americans:
"Former president Herbert Hoover ...
"Presidential advisor Bernard Baruch ...
"Leonard Paul Spacek, the managing partner of Arthur Anderson and a leading advocate for shareholder rights ...
"Dean Alfange, a founder of the liberal party in New York, and ...
"General Leslie R. Grove, the man behind the Manhattan Project and the construction of the Pentagon — a man who saw the link between a sound dollar and a safe homeland.
"These were individuals from all sides of the political spectrum and all walks of life. Yet together, they changed history ... and the budget WAS BALANCED."
"I was only 13 at the time, but I remember those days very well. I remember our excitement when the Sound Dollar Committee won that battle. But I also remember our disappointment when we lost the war. In the years that followed, all our efforts were reversed, and today, nearly five decades later, we face dangers that are far more serious and far more urgent.
"The budget deficit is now near a half trillion and growing. The trade balance, which was in the black in 1959, is PAST the half trillion mark, the worst in history even in proportion to GDP. And the dollar, which was very stable back then, is falling virtually non-stop.
"Yet, unlike 1959, we hear few voices of protest. And unlike 1959, there's no reasonable hope for a balanced budget in the near term.
"Before he died, Dad and I talked about the future many times. And he made me promise that when the time is right, I would revive the Sound Dollar Committee. Now, the time is right.
"Now it is time to give a new birth and new life to the Sound Dollar Committee, and I am pleased to introduce the first members of our Advisory Board:
"Robert L. Bixby is Executive Director of The Concord Coalition, a nonpartisan, grassroots organization dedicated to fiscal responsibility. The Concord Coalition was founded in 1992 by former U.S. Senators Warren Rudman and the late Paul Tsongas. Now, former Senator Bob Kerrey serves as Co-Chair of the organization. I am honored to have the support of the Concord Coalition and the opportunity to support their effort as well. I look forward to our continuing friendship.
"Robert Greenstein is the founder and Executive Director of the Center on Budget and Policy Priorities. He is an expert on the federal budget, often testifying on Capitol Hill or appearing on national news and public affairs programs. Indeed, yesterday was a perfect example. Thank you, Bob, for granting an interview on Public Radio International about this event today, and thank you very much for your support for the Sound Dollar Committee.
"I am Chairman of Weiss Ratings and Weiss Research, two firms that have been leading advocates for investors and consumers. We have over 200,000 subscribers and customers nationwide, and I'm pleased that some of you are here today.
"The Sound Dollar Committee is not here to duplicate the lobbying efforts of other individuals and organizations that are fighting the budget battle. And we are not seeking to re-invent the wheel with respect to their valuable research and proposals for a sounder budget.
"Rather, the Sound Dollar Committee's primary contribution is to rally a group which is one of the primary victims of fiscal irresponsibility ... and potentially one of the greatest beneficiaries of an honest budget: INVESTORS.
"Investors don't have to wait until the next election to protest against policies that may harm them. Nor do they have to come to Washington and bang their fists on the desk of some faceless bureaucrat. All they have to do is pick up the phone or click on a mouse, issuing one four-letter command: SELL.
"That single act can send a very strong message to Washington: 'Wake up! Get moving! Start immediately to put our budget on a sounder path!'
"Indeed, in recent weeks, investors in dollars have already begun to sell, and the U.S. dollar is already falling. Plus, in the not-too-distant future, investors in bonds may also start to sell, and when they do, U.S. bonds could be the next to fall.
"This may cause an acute crisis — in the short term. But if it takes a crisis to shake some sense into Washington, it may actually be a blessing in disguise — for the long term.
"So if you are among those already fighting for an honest budget in Washington, I have good news for you. There are hundreds of thousands of investors that are willing and anxious to support you. The goal of the Sound Dollar Committee is to help them do just that — to bring together investors who want an honest budget and those who can show us precisely how to achieve one.
"If you are among those investors, I have THREE recommendations for you:
"First, as long as our government remains on its wayward path, stay away from long-term government bonds. This is not a protest. It's self-defense.
"My second recommendation: Don't assume Washington will get the message. When you register with the Sound Dollar Committee, we'll show you how, and we'll make sure your message goes to the right place at the right time.
"Our most urgent priority right now is to stop the deficit from getting even worse. So from now on, every time anyone in Washington says they want to spend more on a new program or cut more from the government's income, our message to them will be:
YOU ... MUST ... PAY ... AS ... YOU ... GO"You must find other new revenues or other new savings to finance them. This is basic, common sense, and I'm pleased to see it has the support of nearly all serious budget experts — from both parties.
"Now for my third recommendation to investors: Stay on alert and monitor our government's progress. If the government is failing to make any headway, the Sound Dollar Committee will say so very frankly and without pulling any punches — on our website, with our e-mail you can sign up for, and at events like these.
"But then, someday, hopefully not too far away in the future, if we see a real, fundamental turn in the right direction, we'll be among the first to let you know.
"By that time, I'm afraid U.S. Treasury bonds will have fallen sharply in value, which is bad for those who own them, but good for those who don't. You should be able to pick them up at bargain prices. If I'm right, you will be able to lock in a rich yield for years to come, and when bonds bounce back in price, you could enjoy a substantial capital gain.
"Never forget: As investors, you are among the most influential constituents for an honest budget. Without you, even the most well meaning experts in Washington might find themselves debating the issues in an ivory tower. But with you, we can make that critical connection between your real concerns and their real results.
"For investors, the U.S. budget deficit, the U.S. trade deficit, and the falling U.S. dollar are a personal emergency, with a potentially devastating impact on your portfolio. And for all of us, the budget deficit, the trade deficit, and the falling dollar constitute a national emergency of broad dimensions.
"Due to the accumulation of budget deficits and trade deficits over the years, our nation's reliance on foreign investment is now the greatest since October 26, 1776, when Benjamin Franklin departed from Philadelphia for Paris to solicit financing for the American Revolution.
"This is not some distant crisis on the far horizon. It is here and now. Most of my readers already know how to defend themselves. They hedge with investments that go up when the dollar goes down. But that's just not enough any more. Now it's time to fight back, and I'm counting on you to join me.
"Today, we launch our Sound Dollar Website at
www.sounddollarcommittee.orgVisit it as soon as you can. Then, follow the easy instructions to send your message to your representatives in Washington to immediately stop the deficit from getting even worse."
Good luck and God bless!
Martin
Martin D. Weiss, Ph.D.
Editor, Safe Money Report
Chairman, Weiss Ratings, Inc.
martinonmonday@weissinc.com