Even the most casual observer of the financial scene knows by now that the good old U.S. greenback has been on about a six-year slide versus many of the world's other currencies. But what causes a currency to move up or down? Is a decline always a bad thing? Does the dollar's slide matter as much to the rest of the world as it does to us? And can the market thrive with the dollar in full retreat?

In his Biography of the Dollar, Craig Karmin, an almost 10-year veteran of Wall Street Journal reportage, provides us with enough information to come up with informed responses to these and other knotty questions about the buck and its relationship to our complex economy. For instance, after curling up with Biography for the few hours it takes for a thorough read, you'll know about OPEC-member Ecuador's unusually close monetary ties to the U.S.

A mixed bag
And you'll also understand why the dollar's slide has led in part to an upward spiral in the prices we pay for oil and other commodities. You'll have an improved sense of why most Asian nations have labored mightily to prevent their own currencies from strengthening excessively against the dollar. And you'll fully comprehend why an anemic dollar has been a godsend for the varied likes of Caterpillar (NYSE:CAT), Manitowoc (NYSE:MTW), DuPont (NYSE:DD), and FedEx (NYSE:FDX).

Karmin's little book is anything but a typical economics treatise. Indeed, by introducing us to a host of folks across the world -- each with differing interests in the dollar and its movements -- Karmin both breathes life into currency movements and provides us with a host of perspectives to use in judging where the dollar may be headed and whether it faces serious challenges to its role as the world's dominant currency.

For instance, there's John Taylor Jr., the founder of New York-based FX Concepts, a hedge fund that has made him one of the true success stories in the high-wire act that is currency trading. Taylor, once a Princeton roommate of ABC's Charlie Gibson, manages about $13 billion using an elaborate model that he's developed to benefit such past or present clients as Coca-Cola (NYSE:KO) and Eastman Kodak (NYSE:EK).

Funny money
And then there's Larry Felix, the head of the U.S. Bureau of Engraving and Printing, the proud parent of the approximately $760 billion in currently circulating U.S. currency. A major part of Felix's function, in addition to generating new bills, involves thwarting the printing of funny money -- counterfeit bills that have become so sophisticated that they're often difficult to distinguish from the real thing, even by Felix and his team. Indeed, the fake bills often emanate not from someone's garage or basement, as you'd imagine, but from shenanigans conducted by other governments.

Karmin also takes us to Ecuador, which several years ago, in the face of hyperinflation and general economic turmoil, abandoned its own currency, the sucre. In its place, and without prior discussion with U.S. officials, it inserted the American buck. In describing how dollarization -- along with surging oil prices -- has benefited this poverty-ridden South American nation, the author introduces us to a cast of characters in Quito and Guayaquil who, as you might imagine, have varying views on the wisdom of the country's currency change.

Daunting creditors
Finally, we wing off to South Korea, where we get to know Heung-Sik Choo, who oversees the Bank of Korea's foreign reserves, a job he's held for a couple of decades. But only recently, as the nation's holdings of dollar reserves have expanded to about $250 billion, has his job become really challenging.

Of course, the overriding theme of this section of Biography is the increasing concern within the U.S. about the number of Asian and Middle Eastern nations that steadily translate their growing pile of dollars into purchases of U.S. debt. Our country therefore has become progressively more beholden to this band of creditors, who could easily have a negative affect on our currency.

To Karmin's credit, he allows us to see both sides of most dollar-related issues without attempting to identify a right or wrong orientation. At the same time, he paints an intriguing and thoroughgoing picture of the buck's history, its international influence (and intrigue), its trials and its tribulations. I recommend this enjoyable, easy read for Fools who believe that an understanding of economics in general and currency considerations in particular is becoming a progressively more important part of their investment tool kits. 

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