Dollar woes show high cost of low prices

by J Scott Christianson, Columbia Daily Tribune Columnist

If you don’t know who Gisele Bündchen is, you probably suffer from the same malady I do: being hopelessly fashion-challenged and fashion-world ignorant.

It turns out Bündchen is the world’s richest supermodel, earning more than $30 million in the first six months of this year for her modeling services. But she recently made the economic news when she reportedly refused to be paid by Procter & Gamble Co. in U.S. dollars because Bündchen has lost confidence in the value of our currency.

You know your currency is in trouble when even supermodels are refusing to accept it.

A reduction in the value of the dollar has been on the horizon for some time, as year after year we have racked up ever larger trade deficits. Last year the U.S. trade deficit hit $764 billion, about 6 percent of the gross domestic product. This deficit has resulted in foreign interests purchasing U.S. debt at the rate of nearly $2 billion a day.

The last time the dollar hit such lows money could not be exchanged quite as easily as it can now. In a world where money can move across the world electronically in a matter of seconds, billions of dollars can be changed into euros or yen with the press of a button. The ability to quickly change currency could trigger a run away from the dollar and a run-up of inflation here in the United States. Controlled by computers with pre-programmed “stop-loss” orders to protect…