What it Takes to Bring Down the Mighty Dollar

The US dollar is the world’s reserve currency. It is considered as one of, if not the most important currency in the world. All currency pairs are, by default, anchored to the USD. As a superpower, the USD gets lots of advantages. It is the most commonly used currency in international transactions. It is also considered as a safe-haven currency. Another advantage is the more affordable goods and services for imports because there is no need for currency exchange. Now, while unlikely, it is possible for the USD to collapse. So what does it take bring the mighty dollar down? Read on to find out.

Critical Currency Collapses

Currency collapses have occurred sparingly across the history of modern money. Since the 1900s, great nations have experienced abrupt currency collapses. In a blink of an eye, the value of a currency becomes worthless, bringing an economy to a crash. Countries like Zimbabwe, Argentina, Ukraine, Venezuela, Germany, Iceland, and Hungary are just some of the examples of nations that underwent devastating currency collapses.

The Dollar Dilemma

The US dollar is a currency whose collapse is highly improbable. For one, it is the currency of the biggest and most significant economy of the world, the United States of America. Despite the its slowing economy since 2001, it still surpasses Europe and Japan in productivity. This growth is the driving force behind the dollars steady performance. On the other hand, it’s greatest weakness is the fact that its value is only valid as a government fiat. If the people suddenly decide to not believe in the value of the US dollar then it’s done for.

Down with the Dollar

Now we know that the dollar is a strong currency but it has vulnerabilities. There are numerous circumstances that it could happen. Here are just some. If the Federal Reserve abruptly spikes the interest rate because of high debt, high inflation, and high consumer prices, then the dollar will definitely suffer. Another scenario is if the US economy enters into a recession that doesn’t doesn’t affect the rest of the world that much, it is possible for majority of the market to abandon it. Yet another situation is the interference of another world power. Europe or China can reinstate a new standard to monopolize the reserve currency space. Now, the possibilities are endless, however, all are unlikely. This is because the world economy is at a volatile balance. Displacing the dollar would take a toll on everyone. Not to mention the damages to businesses who runs in the US and the US customers who reside there. So don’t worry yet. The mighty dollar is here to stay.