For generations of Americans raised on the supremacy of the American Dollar and the U.S. economy, a forecast this week from the International Monetary Fund was stunning. It predicted that China's economy will surpass that of the U.S. in five years.
Industrialization and cheap labor in emerging economies, like China’s, coupled with two years of a domestic financial crisis may have weakened the U.S. economy. But some also wonder whether U.S. monetary policies have played a part too.
"One of the fundamental problems with the U.S. economy right now is the Federal Reserve thinks the answer to all our economic problems is printing money," says Stephen Moore, a senior economics writer and editorial board member at the Wall Street Journal. "We haven't created new jobs from all of this printing of money, but what we have produced is inflation in prices."
Printing money, or “quantitative easing” as Federal Reserve Chairman Ben Bernanke has termed it, increases the supply of money but critics say it can potentially lower the value of almost anything that can be purchased.
And, it can devalue the currency -- something that critics contend has already happened. For example, a dollar is worth 11 cents less today against the euro than it was last year.
While that makes the export of U.S. goods cheaper abroad and helps the country’s trade imbalance, for Americans it makes the cost of buying foreign goods -- from food, to cars, to Middle East oil -- more expensive.
But not everyone agrees that pumping money into the economy has caused inflationary pressures or weakened the dollar.
Speaking in New York Tuesday at a conference organized by the International Monetary Fund, Treasury Secretary Tim Geithner said, "A strong dollar is in the interest of our country, and we'll never embrace a strategy of trying to weaken the currency to gain economic advantage at the expense of our trading partners."
Geithner's view is echoed by Brookings Institution economist, Barry Bosworth, who recoils at suggestions that the devaluation of the dollar is a a policy or a threat.
"There's been no collapse of the American dollar ... the dollar was declining up to the financial crisis and then shot up in value and we're still not back to where we were before the financial crisis started," he said.
Indeed, while the dollar has lost value against the euro, it has held its own and even gained value against the Japanese yen.
And while the cost of fuel and other commodities may be going through the roof, inflation here at home has barely made its mark in other common household goods.
According to figures compiled by the Wall Street Journal's Market Data Group, $1 last year is the equivalent of a $1.02 today. So, a pair of shoes that cost you $100 in 2010 would cost you $102.48 today.
Those figures may help to ease the concerns of many Americans worried about inflation and the dollar's devaluation, but the Fed Chairman has his own immediate plans for easing the nations concerns.
Wednesday, Bernanke will hold a press conference -- the first in the history of the Federal Reserve.
Doug McKelway joined Fox News Channel (FNC) in November 2010 and serves as a Washington-based correspondent.