Collapse of the U.S. dollar for dummies?

Discussion in 'General Chat' started by sixfigureblogger, Jan 15, 2008.

  1. #1
    I keep hearing from time to time about the decline of the U.S. dollar and speculation that it will ultimately collapse. I have no clue what all of this means and am wondering if there is anyone out there that can explain this in laymans terms? :)

    Also, if the U.S. dollar does officially collapse, what next? :eek:
     
    sixfigureblogger, Jan 15, 2008 IP
  2. soniqhost.com

    soniqhost.com Notable Member

    Messages:
    5,887
    Likes Received:
    96
    Best Answers:
    0
    Trophy Points:
    240
    #2
    The dollar trades in value against other currency when the dollar goes down the purchasing power of people buying goods from overseas goes down but helps our exports because it makes our goods cheaper since foreigners value of their currency increase.

    I don’t think the dollar will collapse because of how the dollar is used in business transaction world wide and how countries like China which run a fixed exchange rate with the dollar need to buy U.S. Dollar and sell Chinese Yuan in order to maintain that exchange rate.


    I hope that helps
     
    soniqhost.com, Jan 15, 2008 IP
  3. sixfigureblogger

    sixfigureblogger Banned

    Messages:
    412
    Likes Received:
    7
    Best Answers:
    0
    Trophy Points:
    0
    #3
    I think I sort of get it, but it still seems like mysterious stuff. What determines the value of our dollar? I wonder what would happen if the buying power of the dollar reached a penny?

    I was looking on wikipedia and it has a table that shows the equivalent amount of goods, in a particular year, that could be purchased with $1.

    http://en.wikipedia.org/wiki/United_States_dollar#Value
     
    sixfigureblogger, Jan 15, 2008 IP
  4. soniqhost.com

    soniqhost.com Notable Member

    Messages:
    5,887
    Likes Received:
    96
    Best Answers:
    0
    Trophy Points:
    240
    #4
    Its a pretty complicated market (the currency market) which depends on a host of factors in valuing the dollar against other currencies, such as deficits, state of economy, interest rates in the USA, interest rates in other countries, inflation and so on.
     
    soniqhost.com, Jan 15, 2008 IP
  5. htmlindex

    htmlindex Prominent Member

    Messages:
    11,748
    Likes Received:
    284
    Best Answers:
    0
    Trophy Points:
    315
    #5
    That'd be absolutely awesome! I wish it tanked big time so domaining would be a lot more affordable, I could buy some nice names then :)

    Die US Dollar, Die...hehe :D
     
    htmlindex, Jan 15, 2008 IP
  6. tzau

    tzau Well-Known Member

    Messages:
    522
    Likes Received:
    6
    Best Answers:
    0
    Trophy Points:
    110
    #6
    yap, if trend will continue as it goes now, I'll buy you Americans cos mine euro will be worth 10USD :D

    Laptops worth $1k for 100€. huh :D cant wait lol
     
    tzau, Jan 15, 2008 IP
  7. dairyman

    dairyman Notable Member

    Messages:
    7,224
    Likes Received:
    274
    Best Answers:
    0
    Trophy Points:
    205
    #7
    The present weakening trend in US dollar is only a part of the global phenomenon. There is always an up and down for any currency. But this time, the dollar is on a prolonged period of depreciation. But this will not last long and will recover.
     
    dairyman, Jan 16, 2008 IP
  8. philposters

    philposters Well-Known Member

    Messages:
    1,084
    Likes Received:
    40
    Best Answers:
    0
    Trophy Points:
    165
    #8
    I hope it would.
     
    philposters, Jan 16, 2008 IP
  9. wisdomtool

    wisdomtool Moderator Staff

    Messages:
    15,826
    Likes Received:
    1,367
    Best Answers:
    1
    Trophy Points:
    455
    #9
    Recovery won't be that simple and may take longer than what you think as the deficit keeps growing and the Fed keeps cutting interest rates. This has the effect of putting a ceiling to any rebound on the dollar. I do not expect the dollar to recover anytime soon. Iran's move of using the Euros if endorsed by the rest of OPEC can cause even more issues for the USD.
     
    wisdomtool, Jan 16, 2008 IP
  10. webwork

    webwork Banned

    Messages:
    1,996
    Likes Received:
    47
    Best Answers:
    0
    Trophy Points:
    0
    #10
    What if they peg their currency to the Euro and dump the dollar?
     
    webwork, May 8, 2008 IP
  11. wisdomtool

    wisdomtool Moderator Staff

    Messages:
    15,826
    Likes Received:
    1,367
    Best Answers:
    1
    Trophy Points:
    455
    #11
    Such processes won't be instantaneous and will take a fair bit of time.

     
    wisdomtool, May 8, 2008 IP