But like much conventional wisdom, this isn't true. Nor is it true that the dollar, to use one favorite recent word, has "collapsed."

You wouldn't know it, however, from recent headlines. This week's Economist magazine, known for its cool-headed discussion of economic events, has this on its cover: "The Panic About the Dollar."

Others see in the dollar's slump a metaphor for America's future — one of decline and waning influence in the world.

To be sure, the dollar is down almost 40% against the euro since 2001. Against the pound, it's off almost 44%. It's even down against the yen, by nearly 13%.

But put in perspective, these declines are neither dangerous nor even undesirable. Over the long-term, the dollar is well within normal bounds. After years of rallying due to massive flows of investment into the U.S., the dollar has simply come down to Earth.

To say it has "collapsed" or "plunged" is simply wrong — as the chart above shows.

Look at the dollar weighted against all its trading partners, not just a cherry-picked few, and you see the dollar hasn't plunged at all. It's about where it was 10 years ago — during the Internet boom.

It rose sharply in the late 1990s, thanks to the outsized returns offered in the U.S. markets compared with elsewhere. Today, after the Nasdaq meltdown in 1999 and 2000, a recession and 9/11, the flood of investment isn't as great.

True, the dollar has weakened against specific currencies — the euro and yen are recent standouts — but that weakness must also be put into context.

The dollar strengthened in the late 1990s due to Mexico's peso crisis, the Asian financial crisis and Russia's market meltdown and ruble collapse. All of these sent capital fleeing to the U.S.

Meanwhile, U.S. stock markets were roaring. Anyone anywhere with surplus cash protected it by investing in America.

Those who think a strong dollar means a strong economy have to explain why, from 1997 to 2002, a time of record dollar strength, the U.S. economy experienced a number of problems — including a stock collapse and recession. Those conditions no longer prevail today.

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 IBD