Does the US dollar have any value today since we have such a huge deficit?
The value of the US $ is determined in the foreign exchange markets. It’s the value of the US $ expressed agains another currency, for example against the Chinese Renmenbi: currently the US $ buys about 6.83 Renminbi, a year ago it was about 7. The government issues Treasury Bonds to finance its expenditures. Currently the US government pledged a total of 12.8 trillion US$ to pull the economy out of the current recession. This is about 90% of the GDP in 2008! This does two things: firstly, it creates inflation in the US and secondly, it will devalue the US $ against the currencies of the countries which are buying the Treasuries. The biggest investor in Treasury Bonds is China which over time bought about 744 billion $ worth of Treasury Bonds. A lot of economists agree with you that it is not healthy what the government does; not because it sells Treasury Bonds to China, but by creating so much debt to finance such a huge government intervention in the first place. Instead of selling T