I am not an economist.  In fact, I've never even taken a course on micro or macro-economics.  I am an avid reader, a coffee connoisseur, occasionally a cultural critic--my background, for pete's sake, is in British and American literature.  This probably means that I shouldn't be writing on the economy but I am going to any way.  Because really, when someone like Allen Greenspan admits he has made a mistake and has put too much faith in the free-market system--then I think that I too can write about the economy.

Here's the thing.  When the economic crisis hit a number of weeks ago, I got nervous.  I am living in Sofia, Bulgaria on a Fulbright fellowship.  It's generous but I am not going to get rich off of the monthly stipend which by the way I receive in dollars. I wondered are things going to get really tight?

When I arrived in Bulgaria in August the dollar was already pretty weak and I thought how much worse can it get?  My fear was that the American dollar and the Bulgarian Lev would begin to reach parity--already it seemed to me headed that way as I watched the exchange rates come closer and closer together over the summer leading up to my departure.

On the first week of August, the exchange rate was 1 US dollar to 1.25 Bulgarian leva.  Yeikes! The Iraq war and our inept president aside--it wasn't looking like a great time to be an American abroad: the dollar was incredibly week and less than a month later it is confirmed that yes indeed our country is being run by yahoos.

Now here comes the part that I never imagined I would write.

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How is it possible that when our economy is in ruins and we are nationalizing banks, talking about billions of dollars in bailouts and home foreclosures are threatened that the dollar can become steadily stronger abroad?!?  This all seems very counter intuitive to me.

So if your background is in literature, coffee and German like mine is you might be trying not to think to much about the economics behind all of this.  I know on some level I am.  But because this whole thing has also become a train-wreck and just like a bad crash, I can't look away the question haunts me: how can the dollar get stronger and stronger?

I wondered if maybe it wasn't but even all of the foreign exchange shops across the city have been offering better and better exchange rates over the last month.  So however strange this may seem, I did some research and here's a snap shot of what is happening:
<ul>
	<li><span class="result_msg"><span class="result_val">September 15th: 1</span> US Dollar = <span class="result_val"> 1.38780</span> Bulgarian Lev </span></li>
	<li><span class="result_msg"><span class="result_val">October 15th: 1</span> US Dollar = <span class="result_val"> 1.43032</span> Bulgarian Lev </span></li>
	<li><span class="result_msg"><span class="result_val">October 24th: 1</span> US Dollar = <span class="result_val"> 1.52499</span> Bulgarian Lev </span></li>
</ul>
Okay, there was some fluctuation between September 15th and Friday, October 24th where the exchange dipped below 1.38 exchange rate offered on Sept. 15th (and this survey that I've done is clearly not scientific) but on a whole over the last month and a half the dollar has been getting stronger and stronger.  It's strange to think that as our economy slides into a recession that the spending power of the dollar becomes better abroad.

This is all very good for me.  Heck, it means that I can justify buying the big jar of nutella rather than the smaller one now. And I thought I was going to have to cut back... Instead, I've caught myself thinking: oh, now my rent is less, my utilities are less, groceries are less and so on.

But I don't really understand how this is possible.  It seems however that this is something I should want to know more about because frankly,if nothing else, it seems that this current crisis has taught us to question where our money and our good times are coming from.  So really, what's going on?

Well, I've asked a few friends and an economist (who is also a friend) and what follows is my understanding of the basics.  The economy started to sour in the US and then banks started to fail.  This made investors in the US weary of investing abroad and so they began to reinvest their dollars in the US.  As a result, the dollar is gaining strength abroad.

So here's the funny thing, I just took a break to make a cup of coffee and then I hit refresh on the NYT homepage.  They currently have a headline article up about the <a href="http://www.nytimes.com/2008/10/25/business/25currency.html?hp">soaring dollar</a>.  So if you are looking for a more nuanced explanation of exchange rates, the dollar and the global economy you might want to read that article.  And don't worry it's actually very accessible--even to an English major like me.