Currency Concerns: Is The U.S. Dollar Stable?

“The chief value of money lies in the fact that one lives in a world in which it is overestimated.”
– H. L. Mencken

US-dollar-collapseThe internet can be a source of reliable news and information, but there is no arguing that the cybernet is also filled with “Clickbait” from advertisers hoping to push products or simply secure a few cents a lead, hundreds of times a day. And when it comes to clicks, fear and panic reigns.

Lately, it seems that there is much fear and panic being created around the dollar. Is the end near, and should you liquidate your assets and buy gold? While we don’t claim to have a crystal ball, we’ll explore these concerns today with a fresh viewpoint.

Is the Dollar Collapsing?

First, let’s get “the bad news” out of the way. Financially speaking, there actually IS a LOT to be concerned about these days:

  • The stock market has been propped up by cheap credit and unnatural market conditions, with some analysts predicting a larger crash than what we saw in 2008-2009 is imminent.
  • Markets in China and the US have shown significant volatility in recent weeks.
  • Banks lack liquidity, with the Federal Reserve making FDIC insurance promises that it cannot back in a worse-case scenario.
  • Inflation is often worse than reported, with sectors like health care increasing at an alarming rate.
  • The federal debt is higher than it has ever been, approaching 18-1/2 TRILLION dollars and exceeding 154k per taxpayer, according to org
  • There are many murmurs that the traditionally-safe haven of bonds may be about to come apart at the seams. (Listen to “Bye Bye Bonds” on the Prosperity Podcast.)
  • After a few years of eager gains, some predict that housing prices will make a correction as well, especially in the event of a stock crash or further credit challenges.

Add to that, every alarmist, patriot and doomsday prepper you meet (and the websites they frequent) are advertising gold and other precious metals, expecting a complete collapse of the current system.

However, it seems that rumors of the dollar’s demise are greatly exaggerated. Not only is the dollar NOT “collapsing,” it is actually strengthening compared to most other currencies.

Our marketing person, Kate, got curious about this when she realized her travel dollars were stretching further and further compared to just a few years ago. Sure enough, a ten-year comparison of the U.S. Dollar against other currencies found that it has strengthened and gained value when compared with many (though not all) currencies. Over the last ten years and especially the last five years, the dollar has gained value in relation to:

  • the Euro
  • the British Pound
  • Australian Dollar
  • Canadian Dollar
  • Mexican Peso
  • Russian Ruble
  • Japanese Yen
  • (and the list goes on.)

How is this possible? How can the dollar be getting stronger when we know that the money supply is being expanded and concerns about the federal debt are rising?

Perhaps what we are seeing is a weakening of currencies across the board. We mustn’t forget that ALL currencies have become unhinged from the gold standard, and the US is not the only country to have expanded its debt. While this is not “good news” for the sustainability of the world economy, it is important to understand that the U.S. Dollar remains relatively strong and stable in the world, as a comparison of currencies shows.

Bullish on the Dollar.

wealth-standard-strength-of-the-dollarRecently, our friend Patrick Donahoe interviewed Tom Dyson of the Palm Beach Letter, a financial education newsletter, on the US Dollar in podcast episode #120 of Wealth Standard Radio, “An Uncommon View on the US Monetary System.” Dyson’s view from his analysis is that the dollar is actually strengthening, the same trend we noticed once we looked at the data.

On the podcast, Donahoe and Dyson analyze the state of the US dollar and compare it against the history of the value of the dollar. Tom explains his contrarian views on currency markets and they examine the ripple effect of a strengthening US dollar. Why are they bullish on the dollar while others are waiting for the sky to fall? Listen to Wealth Standard Radio. 

The Big Picture

Benjamin Franklin face

Yes, our economy IS in great danger. We are seeing trends and recommending actions.

We could see a tightening of credit and even a crisis of liquidity, which is why we recommend that any significant cash position be held in a mutual life insurance company (where banks keep billions of their liquidity) and not a bank. 

We may see a dramatic correction or crash of the stock market, and we recommend moving money from securities to non-correlated alternative investments. (Contact us for information about bridge loans and life settlement funds, we have options for both accredited and non-accredited investors.)

The national debt becomes more unsustainable every day, and is an atrocious legacy for our children and grandchildren. We encourage personal responsibility, enthusiastic saving and family banking, as it is neither wise nor healthy to count on our government to “support us”. 

But the dollar? We’re not losing sleep over the dollar. If it helps you sleep better, by all means, go ahead and buy some gold coins (based on weight, not collector coins, unless you REALLY know what you’re doing). We don’t recommend that you take a significant position in gold, especially as the future price of gold is anybody’s guess and gold coins offer little chance of cash flow while they are in your possession. 

Further Recommendations

We suggest to all of our clients and readers:

  1. Focus on what you can control. Don’t obsess over all that you can’t control. Keep your thoughts positive and aim to live and work in a “complaint-free zone.”
  2. Expand your own value. Whether you are an employee, self-employed, a business owner, or full-time investor, you can increase your earnings through continued learning and education, mentorship, and personal growth.
  3. Increase your self-sufficiency. Grow a garden, start a business, learn a new skill, own some real estate. Don’t wait for an employer or the government to bail you out, and own some “real assets” in addition to paper assets.

And don’t forget, we’re here to help! Call us at (877) 889-3981 ext. 120 (Jill) or email if you’d like to schedule a meeting, or simply have some questions for us.

And if you have not yet received our Prosperity Accelerator Pack with our latest ebook, Financial Planning Has Failed, you can subscribe below. It’s free, and you’ll receive our best articles and our weekly Prosperity on Purpose ezine along with instant access to wealth-building resources.

1 thought on “Currency Concerns: Is The U.S. Dollar Stable?”

  1. I recently read The Death of Money by James Rickards, and it predicts the switch from the dollar to SDRs within months after the next big crisis, which would have a huge impact on our savings and investments. He is not just somebody posting on the web. It talked about what would happen in Greece, before it happened. It was a long read – I had to keep renewing the library book – but it was time well spent.

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