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Downfall Of The Us Dollar

doraemon By doraemon on
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For years the United States Dollar has been the reserve currency of the world. In the absence of the gold standard, the countries of the world have used the Dollar standard. Dollars have been used for purposes of trading and settling obligations. However, the dollar has been weaking as of late. Here are some of the reasons this is so.

Here are some reasons that the Dollar has been declining.

1) Overprinting of Dollar - Each new Dollar gets its value from the money already in existence. It essentially steals its value from the money already in circulation. This is what causes inflation. The more the Federal Reserve prints more Dollars, the more inflation is created.

2) No real value is created - Money nowadays is supposed to be equated in terms of goods and services. Money is supposed to represent value created by the economy. If you look at the United States now, there is not as much value created anymore. Most manufacturing has already been moved to countries with cheaper labor such as China and India. The same could be said of some jobs in the service industry such as sales and customer service which has been relocated to off shore call centers. Pretty soon, the United States cannot manufacture anything anymore.

3) It is not real money - Money in the old days was valuable on its own without the need to be backed up by governments or by banks. This was because gold and silver on its own has intrinsic value. Even if the United States government would be dissolved tomorrow, the gold and silver you hold in your hands would still be able to be traded for goods and services. That cannot be said of Federal Reserve notes which are not really worth anything.

4) Rise of the Amero - There have been several reports that a North American Union would be formed and would create a new currency called the Amero. If you check the value of the Canadian Dollar versus the US Dollar, they are almost the same now so this idea is not far fetched. Also if you check the lack of protection of US borders from illegal Mexican immigrants, this sets a precedent for borderless trading similar to the European Union.