What's the real reason behind the weak dollar?

I thought since I never really get to use my BS in Economics, and because one of my blog readers inquired today about it, I thought I would discuss the weak US Dollar.

Consider the following:

http://www.huppi.com/kangaroo/L-gold.htm
http://answers.yahoo.com/question/index?qid=20070921064243AAKLJuv
http://www.slate.com/id/2170745/nav/tap3/

The US Dollar, like pretty much every other first-world country, uses fiat money (http://en.wikipedia.org/wiki/Fiat_money), which is money backed by government demand for it as legal tender. Most people realize that, when you invest in the US gov't, all it's going to do is spend a ton of money and issue more bonds to pay off the initial debt.

Some would say it's similar to a ponzy scheme: http://en.wikipedia.org/wiki/Ponzi_scheme
The difference is, the US Government isn't going anywhere, or at least when it does it'll probably take 99% of the world's population with it. The downside is, people (at least today and yesterday) think that the dollar is going to sink further, so no one wants them . . . not right now, at least.

The upside is, people will start BUYING U.S. goods because they are now cheaper than goods in Europe and even Canada, which will boost the economy.

Bottom Line: Since its inception, the Federal Reserve has skirted many a depression with merely fluctuating the federal funds rate http://en.wikipedia.org/wiki/Federal_funds_rate (the only real power the Federal Reserve has).

It's the opposite of a gold standard of money:
(http://en.wikipedia.org/wiki/Gold_standard), and gives the US gov't a means of injecting or restraining its own volume of money.

Libertarians (like myself), don't like the idea of fiat money . . . however, I'm more a pragmatist than a libertarian, and I see fiat money, (or gov't-backed money), a necessary evil in the world today to ensure there is neither a depression, or hyperinflation.

Tomorrow may be the day when Wall Street dwellers start jumping from buildings, but I doubt it. Everyone needs to take a deep breath, and go buy something. No, I mean save. Err, whatever you want to do.