The decline in the valuation of the US dollar is a side effect of the decision to diversify thier financial holdings. Once the middle east made that decision, one of the floors supporting the US dollar was removed. China has to follow the middle east’s lead.

I conjecture that it’s not just energy prices in themselves that push the dollar down, but also America’s listless response to the oil run-up, e.g. our failure to facilitate domestic exploration; it’s not just near-term economic fundamentals that push down the dollar, but also the perception of how the US is positioning itself for the future.

$100 a barrel oil has caused the middle east to diversify their US currency based holdings. With that kind of wealth coming in they had to spread their investments around. Once they started to make that move, the ripple effects caused others to change from their “steady state” belief in the US dollar. The trend was changed.

The middle east changed their accepted investment trend away from US dollars to a basket of currencies. The rest of the world had to adjust.

The IBD editorial concludes:

The weak dollar, by making U.S. goods more competitive overseas, will sow the seeds of future growth through booming exports, more domestic jobs and a new surge in investment from overseas to snap up bargains in the U.S.

That’s not a cause for concern, but of celebration.

Wonderful! I have a strategery: let’s make the dollar drop further so we can celebrate even more.
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The dollar advanced because the world believed that America would lead the way into the future. The dollar is dropping because the world increasingly disbelieves that.

Afaic American decline is obvious, but it is neither inevitable nor irreversible. Nor is it accidental. Who benefits? On the left, there are obvious culprits: trial lawyers, social-service apparatchiks, NGO nannystaters, deathwish Greens, and so on. Watching Bush, Rove, DeLay, Lott, Rice, Miers, etc leaves me in no doubt that a similar rogues’ gallery exists on the right.