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?
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
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
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.
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
yap, if trend will continue as it goes now, I'll buy you Americans cos mine euro will be worth 10USD Laptops worth $1k for 100€. huh cant wait lol
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.
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.