With the recent surge of ‘will the United States dollar fail’ talks you may have seen in the media, I’ve decided to discuss this situation with the SWAPD army. If the worst-case scenario comes to life, pretty much everyone on earth will be affected, so this is a Spotlight Discussion worthy article (hence the amazing canvas we’ve made for this topic). Joking aside, I am personally a little worried that there is a good chance some of the predictions I’ve read about may come true. But before we hit the panic attack button, let’s review what’s happening with the dollar.
Will the United States dollar collapse?
“The dollar is failing!” You’ve probably heard this over and over again in the past decade or so. However, that shouldn’t be a reason to dismiss what’s currently happening. First, let’s go over some of the key points that led to this notion of the dollar being in trouble.
- The war in Ukraine. The United States is the biggest funds/weapons supplier in this conflict. The FED has been printing money like crazy to cover the tab.
- Uncertantiy in the banking sector. The most known recent case is the Silicon Valley bank collapse. The United States had to print 300 billion USD to patch the problem. Also, the Swiss-owned Credit Suisse bank took a huge loss and had to be saved by the Swiss government.
- China and Brazil reportedly struck a deal to allow companies to settle their trade transactions in their own currencies, ditching the United States dollar as an intermediary. This is BRICS coming to life, and currently, Saudi Arabia has announced it’s considering the same thing.
- China and Russia have closer than ever ties due to Russia being isolated and China taking advantage of that.
- Some venture capitalists are making wild bets that USD will experience hyperinflation within the next 60-90 days.
- Some prominent US government officials, such as Nancy Pelosi, have been selling valuable stocks at a loss since the beginning of the year.
So, what’s the big deal? If The USD goes down, how am I affected?
Well, a prime example is USDC. It fell 12% instantly when the Silicon Valley bank collapsed. Why? Because USDC held 40 billion in assets in that bank. Since most transactions on SWAPD now happen via stablecoins, we could all suffer if the prophecies come true. Not only that, all bank wire deposits are in USD, so if that fails, we will all have a big problem on our hands. If hyperinflation of the USD becomes a reality, your 1000 USD SWAPD deposit will only get you a tank full of gas.
The dollar collapse will (most likely) cause a domino effect in most parts of the world. Stocks would become worthless, your cash in your bank obsolete, trade would significantly slow down (or come to a step), and layoffs and unemployment would impact every country worldwide. Think this won’t happen? Although the USD never officially collapsed, the world suffers financial meltdowns every 20-30 years. Yes, we’ve recovered each time, but we haven’t seen what would happen if the United States dollar goes bankrupt. That could bring a never seen recession/depression.
The US is printing money like crazy!
The most significant factor keeping the USD strong is the fact that it is the world’s reserve currency. But many countries are tired of being bullied by the US, for example, via sanctions. The US has the power to do major economic devastation to any country, all because USD controls the world. Have you ever had your wire frozen? We deal with blocked wires every week, and 99% of the time, some US bank blocks them due to the US anti-terror and AML laws. Yes, we’re a bad example that doesn’t prove anything. But think about this, if our tiny and insignificant payments get constantly scrutinized, imagine what major world players and countries have to go through to move money. If you don’t align with America’s interests, you will get blocked. And since over 60% of global payments go through the SWIFT system, we are all at the mercy of America.
Conclusion!
I am not an economist or a financial advisor of any sort. This piece only aims to spark a discussion. I personally don’t hold any significant cash reserves, but what I do have, I would like to protect. I would love to hear your opinion on this matter. What would happen IF the dollar fails? I know SWAPD wouldn’t be the same, and to be honest, it would have hard times ahead of it. I personally don’t know how to protect myself from the dollar collapse other than suggesting users to start moving to BitCoin as a form of payment. It’s no doubt that the banking sector is under a big question mark at the moment, so holding stablecoins isn’t a good idea. If anything, BTC has shown us that it should skyrocket in value if banks start collapsing.
