Will Debt Crash the Dollar?

Will Debt Crash the Dollar?

February 19, 2019

Ever since the United States was established, people have been talking about the nation’s currency and its long-term viability. Today, lots of people are concerned about the longevity of the U.S. dollar (USD) in a time when our debt is astronomical and the economy seems to be headed for a downturn. For many people, the solution to the uncertainty of the USD is investing in gold. If you’re on the fence about investing in gold or you are unfamiliar with the state of the USD, read on to learn more!

The state of the USD

The USD, like every other major national currency in the world, has a value that’s exclusively backed by the government that established it. In other words, the USD is not intrinsically valuable—it is assigned value by the government. That is the primary weakness of the USD. Unlike gold, a finite resource which cannot be produced at will, the USD can be printed by the government as needed. During an economic crisis, war or other extreme circumstance, the risk of overprinting currency and over-inflation increases, weakening the USD.

Economists are hopeful about the future of the dollar on the global market, but experts agree that there is a chance that the dollar might collapse. The most likely reason for the dollar to collapse is a combination of rising debt and high inflation. When consumer prices rise, the Federal Reserve is forced to raise interest rates significantly. If we can’t pay back the debt that we owe to other countries, like China and Japan, in a timely manner, they might sell our debt to a secondary market, which could trigger a collapse. One of the main reasons why experts are still confident in the future of the USD is because the countries that could theoretically trigger a collapse don’t want it to happen. The United States generates a lot of trade and revenue for countries like Japan and China, and those countries don’t want to lose us as a partner to a currency collapse, so they are willing to renegotiate loan terms and be lenient.

In the event that the dollar collapses, a lot of people who have USD-based assets will be devalued and locked out of the global market. The people who have their assets backed by something like gold or silver, however, will likely maintain the value of their assets and, in many cases, their value might actually increase. In many cases, gold gains value during market dips and uncertainty.

Gold investing

If you’ve never invested in gold before, you probably have a lot of questions, and at Gold Wealth Financial, we have the answers you’re looking for. We know that making a big decision about your financial future can be stressful, but our professional advisers are here to make the process as straightforward and simple as we can. We can explain every aspect of gold investing so that you can make the best decision possible for yourself and your family. Give us a call today to get started with a consultation and to find out more about investing in gold.

- by Steve Hunt

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