Saturday, March 29, 2008
What Seems to Be The Problem With The Dollar and Why has it lost 50% of its value in less than a decade????
Well, to understand the dollar you need to understand the concept of Supply and Demand. Supply and Demand Determine the Value of Something and its price:
Why The Dollar is Vulnerable:
1. The Dollar is made of two things that are available to anyone: Paper and Ink. Thus there is, technically, an unlimited supply of "paper money".
2. The Dollar is Losing Its Popularity as "The World's Currency" . Nations like Russia, China, etc... are now doing business in their own currencies (not dollars). What kept the dollar afloat was the number of nations that paid for their oil in "petrodollars". These nations (IE: Russia, Venezuala, etc..) have abandoned the "petrodollar. This has created an increase in Supply.
3. The Euro: This currency also created less demand for American Greenbacks and effected SUPPLY.
4. The Reality is, the amount of dollars in circulation can stay the same (which they are not, our government is "borrowing" more and more of them to fight its wars and Keep its Social Programs Running. Now it has taken on a new role, printing money to keep our banks afloat. This dramatically increases the amount of Greenbacks in Circulation and reduces the value of the dollar.
The Dollar is Doomed and will continue to loose value. This will effect:
1. The Stock Market: Stocks are Traded in Cold Hard Cash. They are also bought and sold in dollars. The corporations that trade on the exchanges collect their revenues from clients in dollars. The Market will collapse.
2. The Housing Market: Relies on borrowed money. New mortgages will became increasingly difficult to obtain and interest rates WILL begin to spiral out of Control. They have to- as the dollar goes down, rates are what makes up the difference.
3. The Bond Market: As the interest rates increase to offset inflation then existing Bonds paying a lower rate are sold for less; or discounted. Eventually, they too will become worthless because of "Default" or non-payment.
IF you are invested in Mutual Funds, Savings or Checking, Money Market, or any Cash Based INvestment than you need to Read Our Free Report: