[SteveA]

Ok one more quick example to show why the dollar is so volatile:

Let's assume the feds increase or decrease an interest rate. This may or may not affect the money supply. The underlying issue is how many people are borrowing money.

If a short term increase in demand for borrowing dollars occurs a large increase in them is easily created by the central banks ("printing up money"). So paper wealth is created via mere social perspectives and the intregity or lack of it in central banks.

The value of a wide range of physical products to people is much less subjective. A house provides a relatively fixed amount of comfort and value to people, no matter what the exchange rate to a dollar is.

Are houses really physically worth more now than they were 5 years ago? Obviously not. So people aren't "richer" in any tangible sense now than they were 5 years ago. In fact, it's easily argued many people are less "rich" now because so many have had loans taken out to buy homes, so the percent equity people have in their homes has very likely dropped in the last 5 years.

So despite the increase in housing values, people actually own a smaller percent of their homes, while banks own more.

Also, property taxes have increased along with this. Inflation tends to push people into higher tax brackets and sure enough if people aren't forclosing on loans at a record rate (I don't even have to check the numbers to verify this stuff really. There's really no other way things could go).

So consider all those things when you believe the dollar is a stable reference of value. Oh and check out the currency they had in Iraq and see if that has remained stable as well. But I'd bet food, houses, car and gold are still respected as valuable in Iraq.