The Dollar Declines As Foreign Dependence Increases

The dollar has lost a big chunk of its global purchasing power since the end of 2001 -- an average of 37%, as measured by one index that tracks the greenback against other major currencies.

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On some level, the dollar's shift has to be about basic supply and demand. The price of anything usually will decline if there is an excess of it in the marketplace.

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The boom in the developing world occurred in large part to supply the goods U.S. consumers wanted at low prices. As a nation, we borrowed heavily in the last decade to sustain our lifestyles, and sent trillions of dollars abroad to pay for imports, including oil.

The cumulative U.S. trade deficit -- the amount by which imports exceeded exports -- was a whopping $4.4 trillion from 2000 through 2007.