GENEVA

LETTING THE DOLLAR slide is a return to what in economics is called a “beggar-thy-neighbor” policy. The United States has been depreciating its currency to boost American exports and to pump up an economy that otherwise is sick with bad debts and empty houses.

Another way to achieve the same goal would be to increase tariffs on foreign made goods entering the U.S., but as that would be regarded as hostile or against international trade agreements, the U.S. does the more modern elegant version of the same shell game, and lets the dollar slip into irrelevance.

The weaker dollar is a disaster for European industries that want to sell into the U.S. market. In effect, their goods have increased in price by almost 50 percent, making them uncompetitive with similar U.S.-made goods. Think of the depreciated U.S. dollar as a subsidy for American industries, notably those that either export or that compete domestically with European-made goods. In terms of foreign relations, it is an act of arrogance and hostility, especially when unilateral.

On a personal level, for Americans living abroad with savings or earnings denominated in dollars, the recent depreciation of the dollar has been akin to a pay cut of 50 percent. For any older American who has retired abroad but has savings in dollars, their costs have almost doubled in recent years.

Admittedly, the U.S. need not run its economy based on the interests of retired Americans living in Europe, but the weaker dollar also makes it very expensive for average Americans to travel. I would say that the U.S. is a poorer nation when its emaciated currency makes it prohibitive to go abroad. Add that loss to the intellectual deficit.

Another take on the same issue is this: Working Americans (like me) abroad are part of the export industry. Their goods and services, priced in dollars, are now cheaper for their importers than before. For certain Americans who live in Europe and earn money in euros or Swiss francs, the appreciation of those currencies against the dollar is a windfall, for example, whenever they consume goods denominated in dollars or are back in the States.

A family returning to the U.S. for summer vacation, which has its savings in euros, will find it a lot cheaper than before. They are among the winners. But that fix is a short-term high. Eventually their European companies will feel the squeeze of not being able to sell in the American market, and their corporate earnings will fall. The first to lose their European jobs will be the experts in the U.S. market, often expatriate Americans.

Longer term, the U.S. is at risk to lose the dollar as a reserve currency, which lets it fund its debt by issuing bonds and settle transactions in world markets. One reason the price of oil has shot past $125 a barrel isn’t because of huge changes in the fundamentals of petroleum supply and demand, but because oil producers are thinking in currencies other than the dollar — such as the euro — and changing posted prices accordingly.

Abroad, running down the dollar is also the monetary equivalent of voting with your feet, and Europeans and Asians are heading for the doors. That might not matter if the U.S. had trade or budget surpluses, but it does not. To balance its subprime books, the U.S. must hock its economic future in the monetary pawnshops of Asia — selling dollar bonds to the South Koreans, Chinese, Taiwanese and Japanese — just to make budgetary ends meet.

The failure of the dollar as a reserve currency will end the inflatable luxury of consuming at the expense of the rest of the world — and paying with our own form of Monopoly money. Think of Russians 20 years ago with their non-convertible rubles, stuck buying cars from Volgograd or vacations in the Crimea. That’s the future of any nation that ruins its currency.

The rest of the world has marked down the U.S. dollar because investors have little long-term confidence in the ability of the U.S. government to honor its obligations, be they political or fiscal. Nor does it help that a presidential campaign, which will cost more than $1 billion and consume two years of televised ads, has failed to address even rudimentary issues of international economics, except with jingoist phrases.

Another reason for the dollar’s decline is that American regulatory arrogance, in matters fiscal and monetary, has made U.S. assets undesirable aliens in the portfolios of foreign investors. Business executives or central bankers in Europe, the Middle East, or Asia no more want to hold dollar-denominated assets these days than they want to leave their fingerprints at John F. Kennedy Airport or explain their Arab genealogy to an immigration officer in Miami.

Just when American investment and commercial banks may need foreign capital to survive (note that Treasury Secretary Henry Paulson personally pleaded with Middle Eastern investors to bail out troubled financial institutions), other departments in Washington are letting dollars disintegrate — making it that much harder to place any long-term American paper.

Among our trading partners, as well as domestically, a weak currency leads to political discord and isolationism, which is not in the interest of Americans at home or abroad. Runaway inflation and a collapsed currency preceded the worst excesses of the French revolution and enabled the rise of Nazi Germany on the ruins of so-called Weimar Germany. We think Weimar “can’t happen here,” but it can.

Matthew Stevenson, a former banker, is a Geneva-based writer ( matthewstevenson@freesurf.ch), most recently author of An April Across America.