Geoff Arnold's Blog

Back on November 5, 2004, I wrote a little piece entitled “Follow the bouncing ball” about the tumbling US dollar:

What will this mean for the US economy? Unless the budget and current account deficits are slashed, the probable consequences are rising interest rates, rising inflation, a depressed housing market, and recession. We’ve seen this before: it’s called stagflation. Welcome to the 1970s. Even the oil prices look familiar….

I pointed the reader at an online tool for displaying currency rates, and quoted the BBC correspondent that “It looks like the dollar has further to fall.” Interestingly, the dollar actually staged a bit of a recovery for a couple of years, before resuming its slide. Here’s the graph:

So why am I revisiting the topic today? From today’s Washington Post: talk about a sign of the times:

NEW YORK — “Euros Only” reads a handmade sign in Billy’s Antiques & Props on East Houston Street in Manhattan. But that’s really just an attention grabber. Actually, owner Billy Leroy explains, the store will accept Canadian dollars and British pounds, and U.S. dollars, too….
Leroy began accepting euros after a buying trip to a Paris flea market in November, when the exchange rate meant he couldn’t afford to purchase his usual volume of dressers, mirrors and wax figurines. This is his way to raise euros back home….
U.S. currency is the only legal tender money in the United States, but parties can agree to satisfy a debt by other means….
However, some people in the United States don’t appreciate stores here dealing in foreign currencies. “I get mail saying I’m un-American,” said Leroy, the antique shop owner. “But it’s American to adapt.”