Don't underestimate impact of debt problem

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Don't underestimate impact of debt problem

Published Thursday, December 27, 2012   |  261 Words  |  

Many people have little or no understanding of the factors affecting the success or failure of our country. In particular, they fail to recognize the serious magnitude of the debt problem.

The U.S. dollar is the reserve currency of the world. That means the dollar is used as the medium of exchange in purchasing commodities -- either minerals or agricultural products. If someone wants to buy oil from another country, it has to acquire U.S. money to buy the oil from the seller.

This administration has been devaluing the currency by printing scads of money; hence the price of commodities has risen. This has resulted in calls to drop the dollar as the reserve currency and substitute a new fiat currency, supposedly underwritten by the U.N. or the World Bank. So far that hasn't been the case, but a number of countries have entered in to private agreements to use their own currencies between themselves and avoid the need for U.S. dollars.

The world is quickly looking for a way to bypass the dollar. If the dollar loses its place as the reserve currency, our cost of importing commodities will rise drastically. Inflation will seriously increase. It could become hyper-inflation, destroy personal savings and put our government in default, unable to pay for Social Security, welfare and the many programs that have been promised.

We must reduce our current debt and restore world confidence in our currency.

Edwin T. Wood

Hilton Head Island