Your Money's No Good Here

If there was ever a sign that the U.S. Dollar is losing steam, this is it: stores in New York City are now accepting Euros as payment, alongside the dollar. Part of this is due to the fact that a lot of Europeans are taking advantage of the bargain prices they can get in the U.S. because of the current exchange rate, so they're crossing the Atlantic and living it up in NYC. Meanwhile, it is increasingly expensive for Americans to travel to Europe, so many are staying closer to home.

About 20 years ago, when I was in the Navy, I remember things being a lot different. The U.S. Dollar was king. I traveled to a lot of different countries at the time: Spain, Italy, Israel, Bahrain and France...and no matter which country I was in, the merchants, restaurants and taverns all accepted the U.S. Dollar. In Italy, the U.S. Dollar was actually preferred by many merchants over the Italian Lira. You would not get your change back in U.S. Dollars, but the exchange rate the merchants gave was actually much better than anything you would get at a bank or on the base.

I was raised in Minnesota, but even so, it was nearly impossible to spend the Canadian Dollar on our side of the border. It was practically worthless. No stores or banks in my hometown would take it. Now, not only is the Canadian Dollar being accepted in many border states, but it's practically worth just as much as the U.S. dollar, if not a little more, depending on the exchange rate for the day.

The sad fact is the American dollar just isn't worth what it once was, and in fact it's getting a bit of a bad rap in Europe. This isn't good news if you like to travel, or if you invest in companies which are based in a European Union country. Your money just won't go as far. Some investors are trying to cover all their bases by actually investing in foreign currencies, which probably isn't a bad idea. If you invested in the Euro or in a European-based company before the dollar started going South you are probably counting your blessings right about now.

This helps illustrate the importance of diversifying your investments. Foreign investments should be part of your portfolio, and bargains can still be had for American investors in Central American and Latin American companies.