The dollar has been shoved off a cliff and no one knows where it will land.
Recently, the Wall Street Journal broke down the relationship between the dollar and oil and revealed the ugly truth; that consumers are getting gouged at the pump because of the Bush Administration's policies, not Saudi greed:
“Since 2001 the dollar price of oil and gold have run almost in tandem. The price of gold has risen 240% since 2001, while the price of oil has risen 270%. That means that if the dollar had remained “as good as gold” since 2001, oil today would be selling at about $30 a barrel, not $100. Gold has traditionally been a rough proxy for the price level, so the decline of the dollar against gold and oil suggests a US monetary that is supplying too many dollars”.” (“Oil and the Dollar” Wall Street Journal)
There it is in black and white. Bush's dollar policy has taken us where Bin Laden never could; the edge of ruin. The consumer is getting clobbered, the country is slipping into recession, and the greenback is hanging by a thread.
There's another reason to believe the dollar won't rebound, too, that is, that Fed chairman Bernanke is deliberately undercutting the dollar to stimulate the economy. … Unfortunately, there are roughly $6 trillion in US dollar-backed assets around the world which could be quickly dumped on US shores if Bernanke goofs up and foreign holders of USDs start selling their paper on the open market. That would trigger a round of Wiemar-like hyperinflation in the homeland that would terminate the dollar's position as the world's reserve currency as well as America's role as the global superpower.
[Excerpt of an article by Mike Whitney, ICH]