Every time you pick up the newspapers these days you read that the dollar is falling. Most people, except those in financial circles, are not paying any attention to this. The main reason is they don't understand it.
Perhaps I should explain it in a question-and-answer format:
Q. Where does the dollar go when it falls?
A. It falls below the West German mark, the Swiss franc and Japanese yen.
Q. Why is it falling?
A. Because speculators in London, Zurich and Frankfurt are pushing it down.
Q. Is there anything worse than the dollar falling?
A. Yes. It could be plunging or sinking.
Q. Why is the dollar falling at the present time?
A. Because the money speculators are worried about it.
Q. Why are they worried about it?
A. Because the United States has a huge trade deficit, no energy policy, and Arthur Burns, chairman of the Federal Reserve, just lost his job.
Q. Why would Arthur Burns losing his job make the dollar fall?
A. Because nobody knows what his replacement, G. William Miller, will do when he becomes head of the Fed.
Q. What should he do?
A. Rescue the dollar and keep it afloat.
Q. Why can't we make a dollar that won't fall?
A. We could, but the cost could bankrupt us.
Q. How far will the dollar fall?
A. Until it bottoms out.
Q. Then what will happen?
A. It will start rising again, particularly if the West Germans and Japanese dredge it up.
Q. Why would they want to do that?
A. The lower the dollar falls the harder it is for them to sell their goods in the United States, and the easier it is for the United States to sell their goods in the rest of the world. A strong currency has a lot of weaknesses.
Q. Where does the British pound stand in all this?
A. The British pound is rising while the dollar is falling.
Q. How do you explain that?
A. The British have oil in the North Sea.
A. It's easier to float a pound on oil than it is a dollar on water.
Q. Can we go back to the dollar?
A. We can, but since we've been talking it's dropped two more cents.
Q. What caused it to do that?
A. Someone in Paris just read this article and called his banker in Brussels and told him to sell the dollar and buy Norwegian kroner with it.
Q. How did the Norwegian kroner get into this?
A. The West German mark and the Japanese yen are considered by the Belgians to be overpriced, so they're buying the Norwegian kroner instead. They may not keep the kroner for long.
Q. What will they do with them?
A. Probably buy gold in Amsterdam as a hedge.
Q. What can I do to keep the dollar from falling?
A. The first thing is to let it slide, then prop it up and finally pump some life in it.
Q. How do I do that?
A. You have to get through to the gnomes in Switzerland.
Q. Gnomes in Switzeland? What do they have to do with all this?
A. They're behind the whole thing. When you see the dollar fall you can bet there's a gnome in Switzerland dropping arock on George Washington's head.