QUESTION:   Why is the U.S. Dollar falling drastically?
ANSWER:       Simple.  Incessant inflation caused by excessive creation of money out of thin air.

The situation is exacerbated by rampant borrowing and spending.  The monetary system is an upside-down pyramid scheme, and the debt is now so large, and spending and borrowing is so out-of-control, collapse of the pyramid is most likely inevitable.

http://finance.yahoo.com/currency

USD to EURO:

USD to Chinese Yuan:


USD to Japanese Yen:

 
USD to Swiss Franc:

USD to British Pound:

USD to Canadian Dollar:

USD to Australian Dollar:

USD to Brazilian Real:


USD to Danish Krone:

 USD to Norwegian Krone:


USD to New Zealand Dollar:

USD to Russian Rouble:

USD to Singapore Dollar:

NOTE:  Rising demand of GOLD is raising GOLD prices world-wide, and most other currencies have inflation too, but the jump in price in U.S. Dollars is much larger than other major currencies due to the falling U.S. Dollar.

$U.S. Dollar price increase = 293% increase in 5 years (from $335 to $980):

EURO price increase = 198% increase in 5 years (from 320 EUR to 633 EUR):


British Pound price increase = 233% increase in 5 years (from 210 GBP to 490 GBP):


Canadian Dollar price increase = 181% increase in 5 years (from 540 CAD to 975 CAD):


Australian Dollar price increase = 193% increase in 5 years (from 545 AUD  to 1050 AUD):

 

As of Aug-2008, the federal government reported that inflation was 5.37% and about 4.0% on average for year 2008.



However, the federal government changed the way it measures inflation in 1983 and 1998.
Remember the double-digit inflation of the late 1970s and early 1980s ?
Based on the pre-1983 measurement method, inflation today is really 15.6% !

 

On top of that, taxes and fuel costs are not included in the CPI (Consumer Price Index) calculations, despite federal taxes as high as 31% for some people.
Consider the following:

• A postage stamp in year 1950 was 3 cents; in year 2008, it costs 42 cents (1,400% inflation = 4.74% per year for 58 consecutive years).

• A gallon of 90 Octane full-service gasoline cost 25 cents in 1950; today it costs $3.84 (1,536% inflation = 4.91% per year for 58 consecutive years).

• A house in 1959 cost $14,100; today's median home price is $213,000 (1,511% inflation = 4.88% per year for 58 consecutive years).

• A dental crown in year 1990 cost $200; today it costs $1,100 (550% inflation = 11.3% per year for 18 consecutive years).

• An ice cream cone in year 1950 cost 5 cents; today it costs $2.50 (5,000% inflation = 7.1% per year for 58 consecutive years);

• Monthly government Medicare insurance premiums paid by seniors was $5.30 in 1970; its now $96.40 (1,819% inflation = 11.34% per year for 28 consecutive years; up 70% in the past 5 years);

• Several generations ago a person worked 1.4 months per year to pay for government; now the average person works 5 months per year to pay taxes;

• In the past, one wage-earner families lived well and built savings with minimal debt, many paying off their home and college, and educating children without loans. How about today?

Based on that, what do you really think the real inflation rate is ?
What ever it is, it is too high, and it is likely to get worse.
Already, inflation has been positive for 52 consecutive years (since year 1956):


Incessant inflation, year after year, for 52 consecutive years, is actually exponential inflation, since the percentage this year is really more than the percentage of the previous year, which is more than the percentage of the previous year, etc, etc., etc.  That is why the Consumer Price Index sky-rockets after 1956. It's like compounding interest, except in reverse, by eroding the value of the currency, instead of preserving it. That is, the year-to-year inflation does not reveal the exponential nature of perpetual inflation every consecutive year, as does the CPI chart, which does reveal the exponential nature of perpetual inflation.
For example,  see what $100.00 shrinks to for the current (as of AUG-2008) 5.37% inflation, after N years:

Notice above what  5.37% , 9.8% , and 15.6% inflation does to $100.00 in only 4 years.

Prices (above) adjusted for inflation (in 2008 U.S. Dollars)