Old-fashioned parents know how important it is to teach their children the “value of a dollar.” Uncle Sam doesn’t seem to have learned this lesson though, which has grave implications for our future standard of living.

For most of this decade, the Federal Reserve has pursued a policy of having a “weak” dollar, a dollar that’s cheap in relation to other currencies. Current Fed Chairman Ben Bernanke prevailed on former Fed Chairman Alan Greenspan to adopt this policy, and Bernanke is now continuing it. And if continued much longer, a weak dollar policy—combined with overspending and bad tax policy--will irreparably reduce America’s standard of living.

Inherent in the idea of standard of living is the level of our present and future consumption. America’s “standard of living” is generally considered a measure of how easy it is for us to satisfy our material desires. There are many ways we might look at this--how many televisions or computers we have per household, how much health care we consume on a per capita basis and how many families in our nation live below the poverty level. But however our standard of living is measured, current monetary, fiscal and tax policies will diminish it if we stay on our current path.

Now, clearly some people benefit from a weak dollar. Farmers and other exporters who sell abroad benefit because their products are cheaper (and thus more attractive) on world markets. But because we purchase so many more foreign goods than we export, a weak dollar policy is very bad for consumers and decreases our purchasing power.

Over the last 20 years, America’s appetite for foreign goods has increased multifold. And it is not that easy just to “buy American.” In many cases, there may not be an American choice in a particular product category and if there is, the “American” product may still have significant foreign content in it. This means that as the dollar weakens, our purchases of foreign goods cost much, much more. We will see our household purchasing power decline in future years as effects of the weak dollar policy filter through our economy.

Another effect of a weakening dollar is that investors fear holding assets in dollars. And so the steadily weakening dollar has produced capital flight from the U.S. which harms our economy, as investors seek assets denominated in other, stronger currencies. This leads to a downward spiral as dollars become less and less desirable.

U.S. per capita gross domestic product (GDP) has fallen over 25% since 2000 when measured in euros (a more stable gauge of value than the weak dollar), according to top Wall Street economist David Malpass. Germany’s GDP has overtaken America’s GDP on a per capita basis. And America’s standard of living relative to the rest of the world is falling off a cliff -- with President Obama’s policies giving it a two-armed push over the edge.

Spending plays a major role. The Obama budget also includes record shattering federal spending increases and trillion dollar annual deficits, doubling the national debt in five years, and tripling it in ten. The Administration’s own budget numbers now show total Federal debt reaching $23.3 trillion in 2019. That debt will exceed 100% of GDP by 2011, giving us the honor of the 7th highest government debt-to-GDP ratio in the world. As Judy Shelton recently reported in The Wall Street Journal, that puts us in the company of Zimbabwe, Lebanon, Singapore, Jamaica, Japan, and Italy.

To put our national debt in perspective -- a country cannot even join the European Union unless its government debt-to-GDP ratio does not exceed 60%. This means that even if we wanted to join the EU, our economic fundamentals may soon be seen as too weak.

The Government Accountability Office (GAO) projects that under current policies, the federal debt will climb to almost 300% of GDP by 2040. Even during World War II, the national debt peaked at 113% of GDP. This was only a temporary condition and at least we vanquished Nazi Germany and Imperial Japan in return for spike in the debt. Now, huge debts are a way of life in America. Obama’s budget busters include increasing federal welfare spending by one third in just his first two years, with total welfare spending soaring to $1 trillion by 2014 and $10.3 trillion over the next 10 years, according to the Heritage Foundation.

Consider also the effect of taxes. President Obama’s budget provides for increasing the capital gains tax rate by 33% at the start of 2011. The top federal income tax rate would also increase by almost 30% if a health care reform bill similar to the one passed by the House this weekend becomes law. These prospective tax increases on earnings in dollars would cause further capital flight, increasing the downward spiral of the dollar and our standard of living.

These soaring tax rates and crushing deficits will lead to a continued decline of American living standards. Based on the nonpartisan Congressional Budget Office’s GDP and inflation assumptions, continued declines in household wealth holdings are projected from 2009 to 2014, with real U.S. per capita GDP falling to below 2000 levels. So much for the Obama recovery.

But the hit to our standard of living could be much worse than even these numbers show. The economy has performed substantially worse this year than was assumed in the Obama budget, with our growth lower and unemployment at a much higher level. Economists predict that these negative trends will continue in the near future. -- This means future deficits and debt will be far higher than the administration projects.

Unlike our government, Americans have drastically cut back on their discretionary spending in response to frightening economic conditions. In some cases, Americans have done this because they are unemployed and can’t afford to spend, but many others have done this out of fear of what may be to come. We may think that it is appropriate for Americans to learn to consume less. But even if we chose now voluntarily to reduce our consumption of cars, electronics and houses, we still want to be able to afford to purchase them in the future.

The decline of America’s standard of living can be reversed with a dramatic change in course to pro-growth economic policies. But American voters need to wake up, or face declining standards of living far into the future. While a Susan B. Anthony dollar may be larger than a euro in size, it will take change to our fiscal and monetary policies to make the value of our dollar approach that of the euro any time soon.

Mallory Factor is the co-chairman and co-founder of the Monday Meeting, an influential meeting of economic conservatives, journalists and corporate leaders in New York City. Mr. Factor is a well-known merchant banker and speaks and writes frequently on economic and fiscal topics for news stations, leading newspapers and other print and online publications. Mr. Factor appears  on "Fox & Friends,"  "The Strategy Room" and other Fox News Channel programs. He is a frequent contributor to the Fox Forum . Contact him at mallory.factor@malloryfactor.com.

Mallory Factor joined FOX News Channel (FNC) in 2013 and currently serves as a contributor.