The dollar and other currencies was based on gold, then the "full faith and credit of the US gum-mint(sic)". The thinking was the US would always have, produce, or create something the world needed. Now that's in jeopardy because the world can get what it wants from anyone. What we can do is export war with extreme efficiency better than anyone, for now. In short we don't have anything that the world can't get better elsewhere.

The value of the US dollar, in the long term, goes down because of an expansion of the money supply. The natural tendency for a currency with a fixed supply (like gold) is for prices to go down, as goods are manufactured with increasingly more efficiency. We all this this trend, despite the expansion of the money supply, in very high-growth industries such as technology (plasma TVs went from $10,000 each to $1,000 each as mass manufacturing becomes cheaper and cheaper.) The reason is because productivity grows much faster than the supply of money. This deflation rewards society with increasingly higher standards of living. However, this is not the case for most products and services because the Federal Reserve expands the money supply much faster than the increased productivity. As more and more capital accumululation takes place as a result of lower prices and more savings, labor becomes more and more productive, which in turn results in more output per worker, allowing for lower prices and increased consumption and leisure. However, capital investment can only be increased if adequate savings are available to finance it. Savings, of course, can come into existence only as a result of under consumption and self-sacrifice. When governments expand the money supply, they don't create new purchasing power, they simply cause prices to go up, requiring more dollars to buy the same basket of goods, despite the fact that the basket of goods was made with increased productivity. What happens is a reallocation of purchasing power from those who are saving money to those who receive the new money. New purchasing power can only come from additional production, and the resulting and deflation from increased productivity. Deflation is a natural part of economic growth under an honest money system. In short, the dollar goes down because the money supply increases faster than the added productivity of the economy backing the dollars. Or simply put, the US dollar is subject to an inflation tax levied by the Federal Reserve, a private company with no regulation, oversight, or transparency.