The dollar is faith-based. There's nothing behind it but Congress.
But now the world is losing faith, as well it might. It's not that the dollar is overvalued—economists at Deutsche Bank estimate it's 20% too cheap against the euro. The problem lies with its management. The greenback is a glorious old brand that's looking more and more like General Motors.
There's no business value in financial safety when the government bails out the unsafe.
James Grant in the WSJ