There are lots of articles written by people supposedly ‘in the know’ about all sorts of things, but of late, many think the dollar is going to collapse, leaving those with them, or having saved in them, out of luck. It is absolutely true that: (1) The dollar is not backed by anything but “The Full Faith and Credit of the United States Government,” (2) The dollar has lost over 95% of its value or purchasing power in the last hundred years, (3) The U.S. Government has long term, committed debts, of close to $200 trillion, in the form of future, promised payments for Social Security, Medicare, Medicaid, federal retirement and pensions, food stamps, etc. (4) The current U.S. debt is over $21 trillion, which is over $64,000 for each U.S. citizen. I know, you might say that is certainly indicative of a dollar collapse, and maybe the above statistics are a dire threat? Number three above, is not an official future debt figure. The ‘official’ future debt commitment is $70 trillion, but that is patently absurd.
Do I believe that the buck is on a slippery slope, sure to end up becoming worthless? Yes, but not in the near future, and here’s why. The debt has not been reached quickly, when as an example, the German Reichsmark went from a U.S. quarter, to being totally worthless, and a wheelbarrow full needed to buy a loaf of bread. That happened in less than five years. That was after WW I when the Treaty of Versailles required Germany to pay for the damage it caused during the war. That was of course impossible, because Germany lost the war and had nothing of value left, and especially its Reichsmarks. Germany started the presses and began to pay with their Reichsmarks, which quickly became worthless. Most other un-backed currencies reaching zero, and they all have eventually, happened pretty quickly, and were generally caused by losing a war, government acting insanely in its economic policies, or being overthrown even. Zimbabwe’s ‘dollar’ went the way of all flesh in a matter of a few years, and I have a $20 trillion Zimbabwe note. When un-backed currencies go to zero, it’s often comical to watch, because it’s so obvious what’s happening.
The U.S. un-backed dollars, paper or computer entries, have been issued by the strongest government on Earth. Printing an unlimited amount of them, as happened in Germany, cannot happen here because of a three tier government, all interlocked, and a Federal Reserve System. Let me be the first to admit that the fed, while maybe it should not exist, does exist, and prevents out of control spending and printing. There are a lot of things wrong with Swampoodle, but it has hung together for over 200 years, even though it has been said that the average length of a nation’s supremacy is but 200 years. The dollar lost 50% of its value during WW II, proving my above point. We had no recourse, but to fight that war. Every other currency took a severe hit during that war, and America was not alone. That war has been over for 74 years, and the buck is still the World’s “Reserve Currency,” meaning that things like oil, silver and gold are priced in dollars, and other world prices are comparable to, and measured against the dollar. The dollar shows no sign of losing its supremacy. Our current President, Donald Trump, is causing the dollar to strengthen admirably, even though his Presidency is only 500 days old. The stock market, since he took office, is up over 5,000 points, the unemployment rate of 3.8%, is at a virtual all time low, and there is actually a labor shortage. Food stamp consumption has gone down hugely, hundreds of regulations have been abolished, the Supreme Court has a 5-4 conservative advantage, and will increase at least by one judge during the Trump administration, if not more. There is a federal hiring freeze, and lots of other happenings, which to me anyway, indicate that “Make America Great Again,” seems to be happening, making the dollar even more stable. For now at least, the buck is on high ground, even though it is officially losing 2% of its value every year. Save in a currency losing 2% a year? I don’t, but hundreds of millions do, and I can’t stop them.
Some things could happen to make the dollar go lower, but not collapse. Republicans could lose control of the House and Senate in November, making America’s path to greatness slow, but as long as Trump is President, he could veto bad legislation, and it is impossible for such a veto to be over ridden, so close would the legislature be if Republicans lost control. We could get into a war, but I seriously doubt that it will happen. There could be a pandemic world-wide, which possibly could affect all currencies. Natural disasters in the U.S. could make government help by printing so many dollars, that there might not be buyers of our debt.
When America issues un-backed dollars, it creates debt, BUT that debt is not irresponsibly created. The debt has to be sold to willing buyers, who think U.S. debt is a good investment, paying a reasonable interest rate. Investors are another key to the dollar’s stability, because our debts are sold to investors in the form of government bonds, currently paying close to 3% interest. Municipal or poorly rated bonds are risky, and the riskier they are, the higher interest rate they offer. United States Government Bonds are well respected around the world, and are denominated in dollars, making the dollar stable. As opposed to dozens or more governments around the world, whose governments are full of racketeering, crime, and total irresponsibility, such as Venezuela, their currencies go south pretty quickly. I cannot even imagine ours doing anything even similar to a Venezuela. Our relative freedom, allows people to write books and columns exposing government mistakes and foolishness, which make government change direction many times. This cannot happen in a socialistic nation, and there are far too many in the world today. I could not write a column condemning a government action in China or Russia, because we are relatively free, have a Constitution admired and copied world-wide, and we generally keep to our Founder’s ideas who wrote it. Thank you Tom Jefferson!
I am a history buff, and read 50 or 60 books a year, and not novels. I am amazed at Donald Trump and what he has accomplished. Had he lost the election, I would probably have gotten out of dollars pretty quickly. I think we now have a Trump Party, seemingly taking the place of the Republican Party, as recent primary elections have proven. Is the dollar going to collapse any time soon? I think not. Will it eventually go the way of all paper currencies and become worthless? Yes, but I do not believe that day is anywhere near. Do I save in dollars? No, I save in real, honest, not dependent on government, historic money, which is convertible into any currency now, or any time in the future, no matter what happens to our or any future government; and that is gold and silver. I can find no argument against it. Don Stott – 1-888-786-8822