On May 15th 2009, Rep. Ron Paul appeared on Morning Joe on MSNBC. He really has a knack for scaring the hell out of people. However, he’s not always wrong.
Watch Rep. Paul discuss his views on the possibility that the dollar will crash:
Ron Paul isn’t the only person talking about the potential for the dollar to “crash”, or become worthless. It’s been an ongoing topic of discussion at least since the dollar was delinked from gold in 1971 by President Nixon, which devalued the dollar overseas.
With recent government spending increases and with the decline of US dominance relative to the past–both monetarily and from a leadership perspective–should people whose net worth is denominated in US dollars be concerned or is this just a way for the opposition to the current administration to gain supporters?
Let me reiterate that a collapse of the dollar would mean that the dollars you have in your wallet and in your bank accounts would be near if not completely worthless.
It would mean, for example, that you’d need $100 to buy a stick of gum instead of $1. Or even that the $50,000 you have saved in your bank account would only pay for one month of expenses instead of a year. Which is actually the case here in Manhattan already, but I digress…
The US economy is structured, developed, well-positioned and stable against political and social unrest as compared to economies that did experience a collapse in their currency (for example, Germany, Argentina and Zimbabwe). So it would take mishandling of major proportions to cause the dollar to become severely devalued or worthless.
However, it’s not a stretch once you’re aware of history and the facts that would lead to a collapse.
I’ll do my best in subsequent blog entries to track the condition of the US dollar plus signals that may point to declining confidence in the dollar overseas.
For example, are China and Russia surreptitiously converting their reserves to another currency? Is the stimulus money positioning our industrial production such that the US economy will be producing and selling enough goods to repay our debts?