Another day, another dollar.

Today's dollar ain't what it used to be. It ain't even what it used to be yesterday. We have a hunch it ain't what it will be tomorrow, either.

Yesterday, the dollar fell against the euro and the yen. Don't be alarmed, dear reader; the small rise in foreign currencies was nothing important. The news from Europe is that traders are betting that the European Central Bank will raise rates, and/or that the U.S. Central Bank will stop raising them. 

More important was the news from Washington and Asia. In this morning's trading in Asia, gold jumped over $500 an ounce. It is almost twice as expensive as it was when we recommended it to you more than five years ago. A double in five years? What's so great about that, you're probably wondering. Google went from $85 to $428 (yesterday) in a matter of months.
 
It is not pride that causes us to remind you of gold's rise, but modesty. We have good reason to be humble. We know nothing of the future, and very little of the past. But what we do know is that every other time mankind has tried to replace gold with paper, people ended up craving gold more than ever. We see no reason why the present experiment should produce a different result.

The latest numbers issuing from Washington reinforced our faith in the customary outcome. George W. Bush will go down in history not as a great war president, we predict, but as a great debt president. In his few years in office, the feds have borrowed more than $1.05 trillion from foreign governments and banks. This is more than all the rest of the nation's administrations put together, since 1776 to 2000. 

Last month, the U.S. national debt passed the $8 trillion mark. This year's budget deficit alone, added $319 billion to the country's obligations. While we do not know what the future will bring, nevertheless we can put two and two together. According to the government's own accountants, deficits will rise to $873 billion per year within 10 years. Two years more and they will be at $1 trillion per year, with a national debt edging up to $20 trillion. By 2017, annual deficits are supposed to reach $2 trillion per year.

These figures are not hard to come up with. You merely project current population and income trends into the future...along with already-legislated boondoggles, such as health and retirement programs. You end up with big numbers.

You also end up with a national currency that has question marks all over it. Eventually, those questions will be answered. Already, since being cut loose from gold, the dollar has lost more than half its purchasing power. It is bound to lose a lot more.

The price of gold will go over $1,000 an ounce, says Newmont. Maybe so.

*** Yesterday's decline in the dollar was laid to the housing industry. Fewer bricks and less mortar were sold last month than analysts had hoped for. Buyers were so scarce that inventories rose to a 19-year high. 

On the other hand, the piles that did sell, sold for high prices. Go figure. The median house sold for 17% more than a year ago - the biggest increase in 26 years. 

Obviously, something's gotta give. Inventories and prices cannot rise together for very long. We will take a wild guess: prices will go down before inventories do. 

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.