The U.S. dropped the gold standard long ago. That means that one dollar is no longer redeemable at Fort Knox or the other gold reserve (I can't remember where it is but I think in Pennsylvania). Anyway, it means that the dollar is worth exactly what people will pay for it (kind of circular logic, I guess). My dad explained it like this:

I have apples, and you have rabbit skins. I want rabbit skins and you want apples. The rabbit skins have no set price, they are simply worth what you and I think they are worth. Thus, I will give you a certain amount of apples based on what you and I agree on. The same thing works between countries with the exchange rate constantly fluctuating depending on whether the countries are doing well or not. It works as well inside of a country.

Companies are going to pay exactly as little as they can to their employees and charge as much as they can get away with from their customers. It's just that way. However, they must keep their prices "reasonable" so that people will buy it. If it's overpriced, it isn't sold. With inflation (people getting more money, so things get more expensive and the dollar is thus worth less for the same product), the value of currency drops because it takes more of a certain currency to get the same thing that used to be cheaper. This is how the economy works.

bob