As the Coronavirus grows in prevalence, global economies have suffered, and trade has come to a halt. Globalization may even be over as countries look towards sustaining themselves. This gives way to a question: Is a devaluation of the dollar inevitable? More than 60% of worldwide reserves are in dollars; a staggering amount. As countries grow more self-sufficient and the USA crumbles under pressure due to growing debt and tensions, the dollar bill may soon lose its value. Being used for major e-commerce transactions worldwide as well, the global economy may soon move to a dollar-less world. More digital currency may soon be gain dominance, with the likes of Bitcoins becoming popular. There are various factors to consider when examining the potential devaluation of the dollar. We will discuss some of these in this article.
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Troubles in the USA
While having the highest death toll in the world, the United States has been hit hard by the virus. Continued disruptions in the country are adding fuel to the fire. Protests have broken out throughout the country against the murder of George Floyd at the hands of a police officer. The US government has continued to fall from grace in that regard, unable to enact justice against racism. These protests have led to the burning of shops and small businesses, bringing the government to shame worldwide. As these troubles continue, along with the prevalence of the virus, the dominance of the US may soon be no more.
Additionally, the government’s response to the coronavirus has not been great either. Still recording over 1000 deaths every day, the supposed leading country in the world is struggling. The government’s inadequacy to deal with the virus can be depicted by the successful fight against it led by the likes of New Zealand. China has contained it quite well as well, with businesses starting to open with precautions. The world will soon be shifting from its dependence on America, which may result in a devaluation of the dollar.
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A Loss of Faith in the US dollar
Furthermore, a historically deep drop in oil prices has been disastrous. Add to this Trump’s deteriorating relationship with the Saudis, and it does not paint a pretty picture. Many investors and central banks worldwide hold US dollars because Oil is priced in dollars. Moreover, as oil prices continue to decrease and investors lose faith, America will need to shift focus to other sources of oil. One option might be China, but they will want the commodity to be priced in renminbi. As dependencies decrease, a new world order may emerge which requires fewer dollar bills.
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The Global Financial Crisis of 2007-2008 showed many people the flaws in the Us economy. As we move into another global financial crisis in 2020, trust in banks and governments is even lower as a result of 2008’s results. Hence, a new down is upon us, one that will not depend on the US dollar as much as it did before.
A Global Currency Reset
What does all of this mean? The new world order may emerge very soon. The idea of a Global Currency Reset may become a reality. This states that the US Dollar would lose its position as a currency reserve since the US is “highly leveraged” and “less competitive” as compared to resource-rich countries. Since the value of a currency is based on trust and the ability to pay back debts, the US dollar may soon find its downfall due to the reasons mentioned above. Bitcoins and digital currencies may soon gain prevalence.
Do you think the devaluation of the dollar will go so far that sets off a global currency reset? Let us know in the comments below.
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