America has large trillions of debts, does not always have a positive impact on the internal affairs of other states, and has a highly militarized economy. For these and other reasons, many experts have repeatedly predicted an imminent collapse of the US national currency, but each time these predictions did not come true. Could this continue forever and when does the dollar fall?
General view of the dollar
Currently, the dollar is the most stable world currency. Its long peg to gold at the end of the last century, as well as the strong US economy, made the dollar a substitute for foreign exchange reserves for some countries. In the dollar, they are actively making settlements not only in America, but also in other states, including Russia.
During the Cold War, the USSR had real opportunities to bring down the dollar and the US economy, which was on the verge of collapse after the dollar default in 1971 and the oil crisis in 1973. The CPSU Central Committee officially considered this issue.
And therefore, if the American currency falls (especially if the collapse is significant), such a situation will inevitably lead to a strong blow to the economies of these countries. Even if all branches of their national economy were steadily developing in an ascending order.
However, the above-described alignment of affairs can occur only in the event of global upheavals in America itself. For example, if suddenly creditor countries (at least 2-3 major ones) ask the United States to repay debts; moreover, not in dollars, but, for example, in gold. The American currency is practically not backed by gold or other unconditional values, therefore, the collapse of the US economy in such a situation is more than likely.
When to expect the dollar to fall?
It is hardly worth waiting or even trying to predict the exact date of such a destructive situation like the one described above. Nevertheless, the dollar rate (like the rate of any other currency) falls very often even on a day. And such jumps are much easier to predict.
Many factors can predict the fall of the American currency. Below are the main ones.
1. Instability of the US economy. The deterioration of the state of the national economy of the country means a reduced interest of domestic and foreign investors in investing in various objects (for example, companies or securities) belonging to this state. This means that investors do not need to buy money from this country in order to invest in its facilities. Since money largely obeys market laws, a reduced demand for them will contribute to a decrease in their prices (purchasing power, the exchange rate of a given currency in relation to others).
2. Management of inflation and rates on deposits in banks. With a high refinancing rate or low rates, it becomes more profitable to keep money in other currencies. Therefore, the demand for the dollar is falling and, at the same time, its rate.
3. Rising prices for raw materials (including oil). America is an importer (consumer) of oil and other raw materials. Therefore, the rise in prices for raw materials means weakening of the American budget, and at the same time of the American currency.
The jump in oil prices is a good indicator that the dollar is about to fall. At the same time, the price of oil is growing faster than the dollar depreciates.
4. Natural disasters and major terrorist attacks confidently undermine the purchasing power of the currency of any country, not just the dollar.
In addition to the above, there are many more factors that negatively affect the dollar. However, these situations are most easily seen on the markets and used for their own purposes (for example, in trading on the foreign exchange market).
