For years, the US dollar has been on the decline (basically ever since leaving the gold standard in 1972), and unfortunately, the situation has grown even more dire in recent years. Thanks to a global pandemic a few years ago, as well as an increasingly large push to produce products overseas, the end of the reign of the US Dollar may be growing near.
Read on to learn all about the difficult economic times which may be approaching for the US Dollar, and, as a result, for all Americans.
Why Is the US Dollar in a Decline?
In 1972, US President Nixon decided to allow the US dollar to leave the gold standard due to a depression that was sweeping the nation. While, at the time, it didn’t seem like a big deal (and it seemed necessary), this was the beginning of a large period of printing US dollars and a massive period of inflation.
As a result of the fact that the government could now begin printing money on a whim, the US dollar quickly began to decline in value, a process which was sped up with the printing of trillions of dollars during the COVID-19 pandemic and various bank and airline bailouts.
The US dollar has become increasingly weak in buying power, especially when compared to other popular currencies like the British Pound, EU Euro, and the Japanese Yen. This has caused much speculation at the IMF (International Money Foundation) that the US dollar should no longer be the world’s pegged currency, and it is believed that in the coming years, they will change the currently pegged currency to something else.
Other Factors Affecting the US Dollar
Besides massive amounts of inflation, the US had also greatly increased its debt, a factor that has granted more economic power to other countries where the governments now have more buying power due to their lack of debt.
Additionally, the US has increased outsourcing to many countries like China, Thailand, and Vietnam, meaning that many US dollars are being shipped out to other countries at a concerning rate. And these countries, because of their mass amount of production, are gaining lots of control over the US dollar as we become increasingly dependent on them for everyday products.
Not only is the US outsourcing the production of products, they are also outsourcing higher-end necessities, such as banking and financial firms, which, again, has led to the fact that the US dollar is almost solely being controlled by forces outside of the US, a situation which is precarious at best, which has led the IMF and other global powers skeptic of the USA’s ability to stop the inflation of their currency and regain control.
What Happens When the US Dollar is No Longer the Pegged Currency?
Of course, the economists, namely the famed Richard Bove, have not given an expected date when the US dollar will be removed as the pegged currency, just the fact that it will be. But what will happen to the American economy when this does come to pass?
Nothing good, we can say that. The US dollar is already quite volatile in value, and a worsening economic situation is expected. The US dollar will fall even more in value and may cause more issues with the economic debt as the government tries to alleviate rapid inflation.
There is already a recession in the United States, and the worsening condition of the dollar will only increase this recession, possibly sending the US into a mini-depression. Obviously, we can’t say this for sure, but we do speculate with some level of certainty that rough economic times are coming for Americans.
What Can You Do?
No one likes to hear that a depression might be coming their way, especially in a nation of over 378 million people. The good news is that there are several things you can do to prepare for a worsening economy and possible depression.
1. Save money
Start putting some extra money aside. This might be difficult, especially if you want to buy some new clothes or eat out frequently, but we promise it is better to go without now in order to be able to keep your mortgaged home later.
2. Invest in Other Currencies
For Americans, it can be difficult to make worldwide investments due to banking restrictions, but do what you can. This can mean investing in cryptocurrencies like Bitcoin or possibly looking into index funds like the Vanguard Emerging World Markets fund. While these won’t keep you out of trouble entirely, they can help lessen the blow if the US dollar takes a massive hit.
3. Pay Off Debt
The last thing you want to be dealing with during a recession or depression is any high interest debt you may have on hand. Focus your efforts on paying these debts off ASAP so you won’t have to worry about them when your financial situation worsens.
4. Consider Possible Side Jobs Now
While it is never fun to supplement your regular job with a side job, during a depression, it can be difficult to find any job as the competition in the market will increase. The best way around this is to get a side job now, so if you lose your main income later, you will already have something to soften the blow.
5. Increase Your Skills
During an economic recession or depression, many people will be scrambling to increase their skills, especially if they lose their job. The last thing you want to do is be behind the crowd, so take the time to increase your skills now so you can be ahead of the game later.
Overall, the prospect of a worsening recession or coming depression can be scary, but there are ways to prepare in advance. Things are looking dire for the United States on an economic level, so if you are an American reading this, it is probably time to take some steps to increase your economic security now, before the depression arrives and makes it more difficult for you to do so.
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