When someone says, “Such-and-such is terrible, but it’s not all bad. There’s a silver lining,” we are inclined to think they are being objective. After all, it seems like they are looking at both good and bad, seeing both sides of the issue.

However, the article on Tuesday’s front page of the Technician called “Dollar value drops, effects are not all bad,” (Maggie Luckadoo, Jan. 15) focused on all sides of the issue except the important ones.

Instead of explaining why the value of the dollar has fallen almost 31 percent in the past year (compared with gold), more than half the article is dedicated to gossip about what a falling dollar might do to those who want to study abroad. Don’t get me wrong, studying abroad is important — I would just expect an article about the falling dollar to mention why it’s falling.

The dollar is in a tailspin. Compared with the Euro, the dollar is down 8 percent since August. Although I think it will rally or slow its descent over the coming months, the long-term outlook for the dollar is rather bleak. As long as the causes destroying its value remain in place, the dollar will continue to lose more value relative to other currencies.

The causes for the dollar’s decline are primarily inflation and weak productivity.

Inflation is an increase in the money supply. Since the Federal Reserve controls the supply of money (through the printing press, lending standards and credit market manipulation), it is completely responsible for causing inflation. When the supply of money rises, relative to the amount of goods available, the prices of those goods must also rise until equilibrium is reached.

It’s just supply and demand. Whoever gets to spend the newly created money first — before the greater supply causes prices to rise — benefits from inflation at the expense of everyone else. Don’t let the news reports and government propaganda fool you. The Fed does not exist to “control” inflation, but to cause it for the benefit of the government.

When the supply of money is increasing, there is only one way to stop prices from increasing too: productivity. More productivity means more goods to trade for dollars. This causes the supply of money relative to goods to decline and then prices tend to fall. For example, as Intel and AMD develop methods to produce faster computer chips in greater quantity, the price of computing power continually falls. Unfortunately, U.S. productivity is way behind inflation.

In the case of massive inflation and skyrocketing prices, to say the “effects are not all bad” is really to say “the effects are not bad for all people.” It is true that exporters and students who come to the U.S. to study abroad benefit from the dollar’s weakness, at least for a while. But most Americans are greatly harmed — their incomes and savings accounts are literally being wiped out.

Remember: there is a silver lining. As inflation drives up the cost of college tuition, books, gasoline and food, keep in mind that the “effects are not all bad.” Government contractors, a few exporters and a handful of foreign students out there benefit from your loss.

Tell Nash how the dollar’s loss of value has affected you at [email protected]